-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, UHANJaQgP/EvnuM3/HVg+uKR3AUgIgU8GRQ7AZ2AebYo4+oG0JvQBD14zDPLwl/G AwmsYJudh7GFI7S7d17cWQ== 0000950133-96-000726.txt : 19960523 0000950133-96-000726.hdr.sgml : 19960523 ACCESSION NUMBER: 0000950133-96-000726 CONFORMED SUBMISSION TYPE: SC 14D1 PUBLIC DOCUMENT COUNT: 17 FILED AS OF DATE: 19960522 SROS: NASD SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: A PLUS NETWORK INC CENTRAL INDEX KEY: 0000908526 STANDARD INDUSTRIAL CLASSIFICATION: RADIO TELEPHONE COMMUNICATIONS [4812] IRS NUMBER: 621225322 STATE OF INCORPORATION: TN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 14D1 SEC ACT: 1934 Act SEC FILE NUMBER: 005-42575 FILM NUMBER: 96570934 BUSINESS ADDRESS: STREET 1: 2416 HILLSBORO RD CITY: NASHVILLE STATE: TN ZIP: 37212 BUSINESS PHONE: 6153854500 FORMER COMPANY: FORMER CONFORMED NAME: A PLUS COMMUNICATIONS INC /TN/ DATE OF NAME CHANGE: 19930820 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: METROCALL INC CENTRAL INDEX KEY: 0000906525 STANDARD INDUSTRIAL CLASSIFICATION: RADIO TELEPHONE COMMUNICATIONS [4812] IRS NUMBER: 541215634 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 14D1 BUSINESS ADDRESS: STREET 1: 6677 RICHMOND HWY CITY: ALEXANDRIA STATE: VA ZIP: 22306 BUSINESS PHONE: 7036606677 MAIL ADDRESS: STREET 1: 6677 RICHMOND HWY CITY: ALEXANDRIA STATE: VA ZIP: 22306 SC 14D1 1 SCHEDULE 14D-1 BY METROCALL FOR A+ NETWORK 1 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------ SCHEDULE 14D-1 TENDER OFFER STATEMENT PURSUANT TO SECTION 14(D)(1) OF THE SECURITIES EXCHANGE ACT OF 1934 AND SCHEDULE 13D UNDER THE SECURITIES EXCHANGE ACT OF 1934 ------------------------ A+ NETWORK, INC. (NAME OF SUBJECT COMPANY) METROCALL, INC. (BIDDER) COMMON STOCK, PAR VALUE $0.01 PER SHARE (TITLE OF CLASS OF SECURITIES) 002033-10-8 (CUSIP NUMBER OF CLASS OF SECURITIES) GEORGE P. STAMAS, ESQ. WILMER, CUTLER & PICKERING 2445 M STREET, N.W. WASHINGTON, D.C. 20037 (202) 663-6000 (NAME, ADDRESS AND TELEPHONE NUMBER OF PERSONS AUTHORIZED TO RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF BIDDER) ------------------------ CALCULATION OF FILING FEE - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
TRANSACTION VALUATION*: AMOUNT OF FILING FEE**: - ------------------------------ ------------------------------ $45,165,099 $9,034
- -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- * For purposes of calculating fee only. This amount is based upon (a) the maximum number of Shares to be purchased pursuant to the Offer and (b) the price offered per share. ** The amount of the filing fee, calculated in accordance with Regulation 240.0-11 under the Securities Exchange Act of 1934, as amended, equals 1/50 of one percent of the Transaction Valuation. ------------------------ / / Check box if any part of the fee is offset as provided by Rule 0-11(a)(2) and identify the filing with which the offsetting fee was previously paid. Identify the previous filing by registration statement number, or the form or schedule and the date of its filing. Amount Previously Paid: Not applicable Form or Registration No.: Not applicable Filing Party: Not applicable Date Filed: Not applicable
- -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 2 CUSIP NO. 002033-10-8 14D-1 - ------------------------------------------------------------------------------------------------ 1. NAME OF REPORTING PERSON SS. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON METROCALL, INC. - ------------------------------------------------------------------------------------------------ 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / / (b) / / - ------------------------------------------------------------------------------------------------ 3. SEC USE ONLY - ------------------------------------------------------------------------------------------------ 4. SOURCE OF FUNDS* WC - ------------------------------------------------------------------------------------------------ 5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS / / 2(e) or 2(f) - ------------------------------------------------------------------------------------------------ 6. CITIZENSHIP OR PLACE OF ORGANIZATION DELAWARE - ------------------------------------------------------------------------------------------------ 7. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 0 shares - ------------------------------------------------------------------------------------------------ 8. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN SHARES* / / - ------------------------------------------------------------------------------------------------ 9. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7) 0% - ------------------------------------------------------------------------------------------------ 10. TYPE OF REPORTING PERSON* CO - ------------------------------------------------------------------------------------------------
* SEE INSTRUCTIONS BEFORE FILLING OUT! 3 This Tender Offer Statement on Schedule 14D-1 and Statement on Schedule 13D relates to the offer by Metrocall, Inc., a Delaware corporation (the "Purchaser"), to purchase 2,140,526 outstanding shares of Common Stock, par value $0.01 per share, and the related share purchase rights issued pursuant to the Rights Agreement dated February 16, 1995 by and between the Company (as defined below) and First Union National Bank of North Carolina, as Rights Agent (collectively, the "Shares"), of A+ Network, Inc., a Tennessee corporation (the "Company"), at a purchase price of $21.10 per share net to the seller in cash, without interest thereon, upon the terms and subject to the conditions set forth in the Offer to Purchase dated May 22, 1996 (the "Offer to Purchase"), a copy of which is attached hereto as Exhibit 11(a)(1), and in the related Letter of Transmittal (which, together with the Offer to Purchase, constitute the "Offer"), a copy of which is attached hereto as Exhibit 11 (a)(2). ITEM 1. SECURITY AND SUBJECT COMPANY. (a) The name of the subject company is A+ Network, Inc. and the address of its principal executive offices is 40 South Palafox Street, Pensacola, Florida 32501. (b) The equity securities being sought in the Offer are Common Stock, par value $0.01 per share, of the Company together with the related share purchase rights. (c) The information set forth in Section 6 ("Price Range of Shares; Dividends") of the Offer to Purchase is incorporated herein by reference. ITEM 2. IDENTITY AND BACKGROUND. (a)-(d) and (g) This Statement is filed by the Purchaser. The information set forth in Section 8 ("Certain Information Concerning the Purchaser") of the Offer to Purchase and in Schedule I ("Directors and Executive Officers of the Purchaser") thereto is incorporated herein by reference. (e) and (f) During the last five years, neither the Purchaser nor, to the best knowledge of the Purchaser, any of the persons listed in Schedule I to the Offer to Purchase (i) has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or (ii) was a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting activities subject to, federal or state securities laws or finding any violation of such laws. ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY. (a) and (b) The information set forth in Section 8 ("Certain Information Concerning the Purchaser") and in Section 10 ("Background of the Offer and the Merger; Contacts with the Company") of the Offer to Purchase is incorporated herein by reference. ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION. (a)-(c) The information set forth in Section 9 ("Sources and Amount of Funds") of the Offer to Purchase is incorporated herein by reference. ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER. (a)-(g) The information set forth in the Introduction, Section 10 ("Background of the Offer and the Merger; Contacts with the Company"), Section 11 ("Purpose of the Offer and the Merger; The Merger Agreement; Shareholders' Agreement; Other Agreements; Plans for the Company after the Merger; SEC Regulations"), and Section 12 ("Possible Effects of the Offer on the Market for Shares, NNM Quotation and Exchange and Exchange Act Registration") of the Offer to Purchase is incorporated herein by reference. 4 ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY. (a) and (b) The information set forth in the Introduction and Section 8 ("Certain Information Concerning the Purchaser") of, and Schedule I ("Directors and Executive Officers of the Purchaser") to, the Offer to Purchase is incorporated herein by reference. ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO THE SUBJECT COMPANY'S SECURITIES. The information set forth in the Introduction, Section 8 ("Certain Information Concerning the Purchaser"), Section 10 ("Background of the Offer and the Merger; Contacts with the Company") and Section 11 ("Purpose of the Offer and the Merger; The Merger Agreement; Shareholders' Agreement; Other Agreements; Plans for the Company after the Merger; SEC Regulations") of the Offer to Purchase is incorporated herein by reference. ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED. The information set forth in the Introduction and Section 16 ("Fees and Expenses") of the Offer to Purchase is incorporated herein by reference. ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS. The information set forth in Section 8 ("Certain Information Concerning the Purchaser") of the Offer to Purchase is incorporated herein by reference. ITEM 10. ADDITIONAL INFORMATION. (a) The information set forth in the Introduction and Section 11 ("Purpose of the Offer and the Merger; The Merger Agreement; Shareholders' Agreement; Other Agreements; Plans for the Company after the Merger; SEC Regulations") of the Offer to Purchase is incorporated herein by reference. (b) and (c) The information set forth in the Introduction, Section 2 ("Acceptance for Payment and Payment for Shares") and Section 14 ("Certain Legal Matters; Regulatory Approvals") of the Offer to Purchase is incorporated herein by reference. (d) The information set forth in Section 12 ("Possible Effects of the Offer on the Market for Shares, NNM Quotation and Exchange Act Registration") and Section 14 ("Certain Legal Matters; Regulatory Approvals") of the Offer to Purchase is incorporated herein by reference. (e) None. (f) The information set forth in the Offer to Purchase and the Letter of Transmittal is incorporated herein by reference. ITEM 11. MATERIAL TO BE FILED AS EXHIBITS. (a)(1) Offer to Purchase dated May 22, 1996. (a)(2) Letter of Transmittal. (a)(3) Notice of Guaranteed Delivery. (a)(4) Letter from the Dealer Manager to Brokers, Dealers, Commercial Banks, Trust Companies and Nominees. (a)(5) Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust Companies and Nominees. (a)(6) Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9. (a)(7) Summary Advertisement as published on May 22, 1996. (a)(8) Press Release issued by the Purchaser on May 16, 1996. (b) Not applicable.
2 5 (c)(1) Agreement and Plan of Merger dated as of May 16, 1996 between Metrocall, Inc. and A+ Network, Inc. (c)(2) Shareholders' Option and Sale Agreement dated as of May 16, 1996 between Metrocall, Inc. and certain shareholders of A+ Network, Inc. listed therein. (c)(3) Metrocall Stockholders' Voting Agreement dated as of May 16, 1996 between A+ Network, Inc. and certain stockholders of Metrocall, Inc. listed therein. (c)(4) Agreement dated May 16, 1996 among Metrocall, Inc. and Ray D. Russenberger and Elliot H. Singer regarding voting for director. (c)(5) Non-disclosure/No Conflict Agreement dated May 16, 1996 between Metrocall, Inc. and Ray D. Russenberger. (c)(6) Non-disclosure/No Conflict Agreement dated May 16, 1996 between Metrocall, Inc. and Elliot H. Singer. (c)(7) Employment Agreement dated May 16, 1996 between Metrocall, Inc. and Charles A. Emling III. (c)(8) Opinion of Wheat, First Securities, Inc. dated May 14, 1996. (d) Not applicable. (e) Not applicable. (f) Not applicable.
3 6 SIGNATURE After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this Statement is true, complete and correct. METROCALL, INC. By: /s/ VINCENT D. KELLY ------------------------------------ Name: Vincent D. Kelly Title: Chief Financial Officer and Vice President Date: May 22, 1996 4 7 EXHIBIT INDEX 11(a)(1) Offer to Purchase dated May 22, 1996. 11(a)(2) Letter of Transmittal. 11(a)(3) Notice of Guaranteed Delivery. 11(a)(4) Letter from the Dealer Manager to Brokers, Dealers, Commercial Banks, Trust Companies and Nominees. 11(a)(5) Letter to clients for use by Brokers, Dealers, Commercial Banks, Trust Companies and Nominees. 11(a)(6) Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9. 11(a)(7) Summary Advertisement as published on May 22, 1996. 11(a)(8) Press Release issued by the Purchaser and the Company on May 16, 1996. 11(b) Not applicable. 11(c)(1) Agreement and Plan of Merger dated as of May 16, 1996 between Metrocall, Inc. and A+ Network, Inc. 11(c)(2) Shareholders' Option and Sale Agreement dated as of May 16, 1996 between Metrocall, Inc. and certain shareholders of A+Network, Inc. listed therein. 11(c)(3) Metrocall Stockholders' Voting Agreement dated as of May 16, 1996 between A+ Network, Inc. and certain stockholders of Metrocall, Inc. listed therein. 11(c)(4) Agreement dated May 16, 1996 among Metrocall, Inc. and Ray D. Russenberger and Elliott H. Singer regarding voting for director. 11(c)(5) Non-disclosure/No Conflict Agreement dated May 16, 1996 between Metrocall, Inc. and Ray D. Russenberger. 11(c)(6) Non-disclosure/No Conflict Agreement dated May 16, 1996 between Metrocall, Inc. and Elliot H. Singer. 11(c)(7) Employment Agreement dated May 16, 1996 between Metrocall, Inc. and Charles A. Emling, III. 11(c)(8) Opinion of Wheat, First Securities, Inc. dated May 14, 1996.
5 EX-99.11.A.1 2 OFFER TO PURCHASE DATED MAY 22, 1996 1 OFFER TO PURCHASE FOR CASH 2,140,526 SHARES OF COMMON STOCK (TOGETHER WITH THE RELATED SHARE PURCHASE RIGHTS) OF A+ NETWORK, INC. AT $21.10 NET PER SHARE BY METROCALL, INC. THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON WEDNESDAY, JUNE 19, 1996 UNLESS THE OFFER IS EXTENDED. THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER AT LEAST 2,140,526 SHARES (THE "MINIMUM CONDITION"). THE OFFER IS ALSO SUBJECT TO CERTAIN OTHER TERMS AND CONDITIONS CONTAINED IN THIS OFFER TO PURCHASE. THE OFFER IS NOT CONDITIONED UPON THE PURCHASER OBTAINING FINANCING OR UPON RECEIPT OF FEDERAL COMMUNICATIONS COMMISSION APPROVAL. THE OFFER IS BEING MADE PURSUANT TO THE AGREEMENT AND PLAN OF MERGER DATED AS OF MAY 16, 1996 (THE "MERGER AGREEMENT") BETWEEN METROCALL, INC. (THE "PURCHASER") AND A+ NETWORK, INC. (THE "COMPANY"). IN ACCORDANCE WITH THE MERGER AGREEMENT, FOLLOWING CONSUMMATION OF THE OFFER, THE COMPANY AND THE PURCHASER INTEND TO SEEK THE APPROVAL OF THEIR RESPECTIVE SHAREHOLDERS OF THE MERGER OF THE COMPANY WITH AND INTO THE PURCHASER (THE "MERGER"). THE BOARDS OF DIRECTORS OF THE COMPANY AND THE PURCHASER HAVE APPROVED THE OFFER AND THE MERGER, AND HAVE DETERMINED THAT THE OFFER AND THE MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF, THEIR RESPECTIVE SHAREHOLDERS. THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS ACCEPTANCE OF THE OFFER BY THOSE COMPANY SHAREHOLDERS WHO WISH TO RECEIVE CASH FOR A PORTION OF THEIR SHARES. ------------------------ IMPORTANT Any shareholder desiring to tender shares of common stock, par value $0.01 per share, of the Company (the "Common Stock") and the related share purchase rights (the "Rights" and, together with the shares of Common Stock, the "Shares") should either (1) complete and sign the Letter of Transmittal (or a facsimile thereof) in accordance with the Instructions in the Letter of Transmittal, have such shareholder's signature thereon guaranteed if required by the Instructions to the Letter of Transmittal, mail or deliver the Letter of Transmittal (or such facsimile) and any other required documents to the Depositary (as defined below), and either deliver the certificates representing such Shares to the Depositary along with the Letter of Transmittal or tender such Shares pursuant to the procedure for book-entry transfer set forth in Section 3 or (2) request such shareholder's broker, dealer, commercial bank, trust company or other nominee to effect the transaction for such shareholder. Shareholders having Shares registered in the name of a broker, dealer, commercial bank, trust company or other nominee must contact such broker, dealer, commercial bank, trust company or other nominees if they desire to tender Shares. A shareholder who desires to tender Shares and whose certificates representing such Shares are not immediately available, or who cannot comply in a timely manner with the procedures for book-entry transfer, may tender such Shares by following the procedures for guaranteed delivery set forth in Section 3. Questions and requests for assistance or for additional copies of this Offer to Purchase, the Letter of Transmittal or other tender offer materials may be directed to the Information Agent or the Dealer Manager, at their respective addresses and telephone numbers set forth on the back cover of this Offer to Purchase. Holders of Shares may also contact brokers, dealers, commercial banks or trust companies for assistance concerning the Offer. ------------------------ The Dealer Manager for the Offer is: WHEAT FIRST BUTCHER SINGER May 22, 1996 2 TABLE OF CONTENTS
PAGE ----- INTRODUCTION........................................................................... 1 THE TENDER OFFER....................................................................... 4 1. Terms of the Offer; Prorations............................................... 4 2. Acceptance for Payment and Payment for Shares................................ 6 3. Procedures for Accepting the Offer and Tendering Shares...................... 7 4. Withdrawal Rights............................................................ 10 5. Certain Federal Income Tax Consequences...................................... 10 6. Price Range of Shares; Dividends............................................. 13 7. Certain Information Concerning the Company................................... 13 8. Certain Information Concerning the Purchaser................................. 16 9. Sources and Amount of Funds.................................................. 19 10. Background of the Offer and the Merger; Contacts with the Company............ 19 11. Purpose of the Offer and the Merger; The Merger Agreement; Shareholders' Agreement; Other Agreements; Plans for the Company after the Merger; SEC Regulations.................................................................. 20 12. Possible Effects of the Offer on the Market for Shares, NNM Quotation and Exchange Act Registration.................................................... 34 13. Certain Conditions of the Offer.............................................. 34 14. Certain Legal Matters; Regulatory Approvals.................................. 36 15. Dividends and Distributions.................................................. 40 16. Fees and Expenses............................................................ 40 17. Miscellaneous................................................................ 41 Schedule I. Directors and Executive Officers of the Purchaser.......................... 42 Annex A. Agreement and Plan of Merger, dated May 16, 1996, between Metrocall, Inc. and A+ Network, Inc.............................................................. A-1
i 3 To the Holders of Shares of A+ Network, Inc.: INTRODUCTION Metrocall, Inc., a Delaware corporation (the "Purchaser"), hereby offers to purchase 2,140,526 shares of common stock, par value $0.01 per share (the "Common Stock"), and the related share purchase rights issued pursuant to the Rights Agreement dated February 16, 1995 by and between the Company (as defined below) and First Union National Bank of North Carolina, as Rights Agent (the "Rights" and, together with shares of Common Stock, the "Shares") of A+ Network, Inc., a Tennessee corporation (the "Company"), at $21.10 per Share, net to the seller in cash, without interest thereon, upon the terms and subject to the conditions set forth in this Offer to Purchase and in the related Letter of Transmittal (which together constitute the "Offer"). Tendering shareholders will not be obligated to pay brokerage fees or commissions or, except as otherwise provided in Instruction 6 of the Letter of Transmittal, stock transfer taxes with respect to the purchase by the Purchaser of Shares pursuant to the Offer. The Purchaser will pay all fees and expenses of Wheat First Butcher Singer (the "Dealer Manager"), The Bank of New York (the "Depositary"), and Georgeson & Company Inc. (the "Information Agent"), incurred in connection with the Offer. See Section 16. THE BOARDS OF DIRECTORS OF THE COMPANY AND THE PURCHASER HAVE APPROVED THE OFFER AND THE MERGER, AND HAVE DETERMINED THAT THE OFFER AND THE MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF THEIR RESPECTIVE SHAREHOLDERS. THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS ACCEPTANCE OF THE OFFER BY THOSE COMPANY SHAREHOLDERS WHO WISH TO RECEIVE CASH FOR A PORTION OF THEIR SHARES. THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER AT LEAST 2,140,526 SHARES (THE "MINIMUM CONDITION"). THE OFFER IS ALSO SUBJECT TO CERTAIN OTHER TERMS AND CONDITIONS CONTAINED IN THIS OFFER TO PURCHASE. THE OFFER IS NOT CONDITIONED UPON THE PURCHASER OBTAINING FINANCING OR UPON RECEIPT OF FEDERAL COMMUNICATIONS COMMISSION ("FCC") APPROVAL. SEE "CERTAIN CONDITIONS OF THE OFFER." The Offer is being made pursuant to the Agreement and Plan of Merger, dated as of May 16, 1996 (the "Merger Agreement"), between the Purchaser and the Company. The Merger Agreement provides, among other things, that following the consummation of the Offer, upon the terms and subject to the conditions contained in the Merger Agreement, including approval of the Merger by the shareholders of the Purchaser and the Company in accordance with the relevant provisions of the Delaware General Corporation Law (the "Delaware Law") and of the Tennessee Business Corporation Act (the "Tennessee Law") and receipt of FCC approval, the Company will be merged with and into the Purchaser (the "Merger") and the Purchaser will be the surviving corporation (the "Surviving Corporation"). Upon the effective time of the Merger (the "Effective Time"), each outstanding share of Common Stock and related rights (other than Shares held by the Purchaser or any of its subsidiaries, which will be cancelled) will be converted into the right to receive: (i) that number of shares of Common Stock, par value $.01 of the Purchaser ("Purchaser Shares") equal to the Conversion Ratio, (ii) the same number of Variable Common Rights ("VCRs" and, together with the Purchaser Shares, "Purchaser Securities"), plus (iii) cash in respect of fractional Purchaser Securities, if any. The Conversion Ratio shall be determined by dividing $21.10 by the average of the last bid prices for the Purchaser Shares on the Nasdaq National Market (the "NNM") for the 50 consecutive trading days ending on the trading day that is five days prior to the Closing Date (the "Average Purchaser Share Price"), except that if the Average Purchaser Share Price is greater than $21.88 or less than $17.90, then the Conversion Ratio shall be .96435 or 1.17877, respectively. A copy of the Merger Agreement is attached hereto as Annex A. Each VCR will entitle the holder to receive the amount, not to exceed $5.00 per VCR (unless increased as described below), by which the market value of Purchaser Shares determined as of the first anniversary of the Effective Time (the "Maturity Date"), is less than the "Target Price" of $21.10 per share, adjusted downward, but not upward, based on changes in an index composed of average closing bid prices of 1 4 three other companies in the paging industry. If the Purchaser extends the Maturity Date by one year (the "Extended Maturity Date"), the Target Price will increase to $25.10, adjusted as previously described, and the maximum amount which the holder may receive will be $7.00 per VCR. The market value of the Purchaser Shares for this purpose will be the median of the averages of the last bid price for the Purchaser Shares on each trading day during each 20 trading-day period within the 60 trading days prior to the Maturity Date. In addition, if the last bid price of the Purchaser Shares exceeds $21.10 for any consecutive 50-day period after the Effective Time and before the Maturity Date, or, if the Maturity Date is extended, $25.10 for any 50-day period after the Maturity Date and before the Extended Maturity Date, then the right to receive payments under the VCR will terminate. Any amounts payable under the VCRs will be in cash, Purchaser Shares or common stock equivalents, as determined by the Purchaser. The terms of the VCRs are described in Annex C to the Merger Agreement. The purpose of the Offer is to acquire Shares and to facilitate the Merger. The Purchaser is required to vote all Shares acquired by it pursuant to the Offer in favor of the Merger. Prudential Securities Incorporated ("Prudential Securities"), financial advisor to the Company, has delivered to the Company's Board of Directors a written opinion, dated May 15, 1996, to the effect that, as of such date and based upon and subject to certain matters stated therein, the consideration to be received by holders of Shares (other than the Purchaser and its affiliates) pursuant to the Offer and the Merger taken together, is fair to such holders from a financial point of view (the "Company Fairness Opinion"). A copy of the Company Fairness Opinion, which sets forth the assumptions made, matters considered and limitations on the review undertaken by Prudential Securities, is contained in the Company's Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule 14D-9"), which is being mailed to shareholders herewith. Wheat, First Securities, Inc. ("Wheat"), financial advisor to the Purchaser, has delivered to the Purchaser's Board of Directors a written opinion, dated May 14, 1996, to the effect that, as of such date and based upon and subject to certain matters stated therein, taken together, the consideration to be paid (i) to the holders of Shares pursuant to the Offer, and (ii) to the holders of Shares pursuant to the Merger is fair to the holders of Purchaser Shares from a financial point of view (the "Purchaser Fairness Opinion"). A copy of the Purchaser Fairness Opinion, which sets forth the assumptions made, matters considered and limitations on the review undertaken by Wheat, is contained in the Purchaser's Tender Offer Statement on Schedule 14D-1 ("Schedule 14D-1") filed with the Securities and Exchange Commission (the "Commission" or "SEC") in connection with the Offer. The Company has advised the Purchaser that, as of May 16, 1996 there were 10,263,255 Shares outstanding, and that there were 736,794 shares of Common Stock reserved for issuance pursuant to options (the "Company Options") outstanding under the Company's option plans and otherwise. In addition, up to 1,021,622 Shares may be issued as consideration in pending acquisitions subject to definitive agreements. In connection with the Merger Agreement, the Purchaser also entered into a Shareholders' Option and Sale Agreement (the "Shareholders' Agreement") with certain shareholders of the Company (the "Principal Shareholders") who hold, in the aggregate, approximately 53.8% of the currently outstanding Shares (the "Owned Shares"). Pursuant to the Shareholders' Agreement, each Principal Shareholder agreed, subject to and conditioned upon the consummation of the Offer, to sell to the Company for cash 40% of his or its Owned Shares (the "Cash Purchase Shares") at a price of $21.10 per Share, or such higher price as shall be paid for Shares tendered pursuant to the Offer. The Cash Purchase Shares constitute 2,210,217 Shares, or approximately 21.5% of the outstanding Shares as of May 16, 1996. The Principal Shareholders also agreed to vote the Owned Shares in favor of the Merger and against any other extraordinary corporate transaction such as a merger or acquisition proposal, and any sale of a material amount of the Company's assets. In addition, the Principal Shareholders granted the Purchaser an irrevocable proxy, subject to certain conditions, including receipt of FCC approvals, to vote the Shares then owned by the Principal Shareholders as set forth in the preceding sentence. The Principal Shareholders also granted the Purchaser options to purchase the Owned Shares, subject to certain conditions, in certain circumstances, as described under the heading "Shareholders' Agreement" in Section 11. 2 5 IN ORDER TO VOTE FOR THE MERGER, SHAREHOLDERS OF THE COMPANY AND THE PURCHASER WILL BE REQUIRED TO SUBMIT A PROXY OR VOTE IN PERSON AT THEIR RESPECTIVE SHAREHOLDER MEETINGS, AND ANY POSTPONEMENT OR ADJOURNMENT THEREOF. The Offer does not constitute a solicitation of proxies for any meeting of the Company's or the Purchaser's Shareholders. Such solicitations will be made only pursuant to separate proxy materials complying with the requirements of Section 14(a) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). In addition, the Offer is neither an offer to sell nor a solicitation of offers to buy any securities that may be issued in the Merger. The issuance of such securities is subject to registration under the Securities Act of 1933, as amended (the "Securities Act"), and such securities would be offered only by means of a prospectus complying with the requirements of the Securities Act. The Company and the Purchaser expect to distribute a joint proxy statement and prospectus relating to the Merger and the transactions in connection therewith following consummation of the Offer. THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN IMPORTANT INFORMATION, WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE WITH RESPECT TO THE OFFER. 3 6 THE TENDER OFFER 1. TERMS OF THE OFFER; PRORATION Upon the terms and subject to the conditions of the Offer (including, if the Offer is extended or amended, the terms and conditions of any such extension or amendment), the Purchaser will accept for payment and pay for 2,140,526 Shares validly tendered on or prior to the Expiration Date (as defined below) and not properly withdrawn as provided in Section 4. The term "Expiration Date" means 12:00 midnight, New York City time, on Wednesday, June 19, 1996, unless and until the Purchaser, in its sole discretion (but subject to the terms and conditions of the Merger Agreement), shall have extended the period of time during which the Offer is open, in which event the term "Expiration Date" will mean the latest time and date at which the Offer, as so extended by the Purchaser, shall expire. If more than 2,140,526 Shares are validly tendered on or prior to the Expiration Date and not properly withdrawn, the Purchaser will, upon the terms and subject to the conditions of the Offer, purchase 2,140,526 Shares on a pro rata basis (with adjustments to avoid purchases of fractional Shares) based on the number of Shares validly tendered on or prior to the Expiration Date and not properly withdrawn. In the event that proration of tendered Shares is required, because of the time required to determine the precise number of Shares validly tendered and not properly withdrawn, the Purchaser does not expect to be able to announce the final results of proration or to pay for any Shares until approximately seven NNM trading days after the Expiration Date. Preliminary results of such proration will be announced by press release as promptly as practicable after the Expiration Date. Holders of Shares may obtain such preliminary information from the Information Agent or the Dealer Manager and may be able to obtain such information from their brokers. The Purchaser expressly reserves the right, in its sole discretion (but subject to the terms and conditions of the Merger Agreement which, as described below, limit the Purchaser's right to extend), at any time or from time to time, to extend the period of time during which the Offer is open for any reason, including the failure to satisfy any of the conditions specified in Section 13, and thereby delay acceptance for payment of, and payment for, any Shares, by giving oral or written notice of such extension to the Depositary and making a public announcement, as described below. There can be no assurance that the Purchaser will exercise its right to extend the Offer. During any such extension, all Shares previously tendered and not properly withdrawn will remain subject to the Offer, subject to the rights of a tendering shareholder to withdraw such shareholder's Shares. See Section 4. Subject to the applicable regulations of the Commission, the Purchaser also expressly reserves the right, in its sole discretion (but subject to the terms and conditions of the Merger Agreement), at any time and from time to time, to (i) delay acceptance for payment of or, regardless of whether the Shares were theretofore accepted for payment, payment for any Shares pending receipt of any regulatory approvals specified in Section 14, (ii) terminate the Offer and not accept for payment or pay for any Shares if any of the conditions referred to in Section 13 have not been satisfied or upon the occurrence and during the continuance of any of the events specified in Section 13, and (iii) in accordance with and subject to the limitations imposed by the Merger Agreement, waive any condition or amend the Offer in any respect, in each case, by giving oral or written notice of such delay, termination, waiver or amendment to the Depositary and by making a public announcement thereof. The Purchaser acknowledges (x) that Rule 14e-l(c) under the Exchange Act requires the Purchaser to pay the consideration offered or return the Shares tendered promptly after the termination or withdrawal of the Offer and (y) that the Purchaser may not delay acceptance for payment of, or payment for (except as provided in clause (i) of the preceding sentence), any Shares upon the occurrence of any of the events specified in Section 13 without extending the period of time during which the Offer is open. If the Minimum Condition or any other condition specified in Section 13 is not fulfilled by the Expiration Date, the Purchaser reserves the right (but shall not be obligated) to (i) decline to purchase any of the Shares tendered, return all tendered Shares to tendering shareholders and terminate the Offer, (ii) subject to the terms and conditions of the Merger Agreement, extend the Offer and retain all tendered Shares until the expiration of the Offer, as extended, subject to the terms and conditions of the Offer (including any rights of shareholders to withdraw their Shares) or (iii) subject to the following paragraph, waive or reduce the 4 7 condition and, subject to complying with applicable rules and regulations of the Commission, accept for payment and purchase all Shares validly tendered. The Merger Agreement provides that the Purchaser may not amend or waive the Minimum Condition and may not decrease the offer price or amend any other material condition of the Offer in any manner adverse to the holders of the Shares without the prior written consent of the Company (such consent to be authorized by the Board of Directors of the Company or a duly authorized committee thereof). Notwithstanding the foregoing, (i) if on the Expiration Date (A) there exists an "AN Acquisition Proposal" (as defined in the Merger Agreement) involving a tender offer, the Purchaser may extend the Offer to a date two business days after the date the position of the Company with respect to the tender offer is first published or sent pursuant to Rule 14e-2 under the Exchange Act, or (B) there exists an AN Acquisition Proposal other than a tender offer, the Purchaser may extend the Offer to a date two business days after the first date on which the Company's failure to reject such AN Acquisition Proposal would permit the Purchaser to terminate the Merger Agreement in accordance with its terms, (ii) the Purchaser may extend the Offer at any time when the Minimum Condition or the other conditions set forth in Section 13 are not satisfied for such period of time, not to exceed up to 20 business days in the aggregate, as is reasonably expected to be necessary in order to satisfy the Minimum Condition or the other conditions to the Offer, and (iii) the offer price may be increased in good faith and the Offer may be extended to the extent required by law in connection with such increase, in each case without the consent of the Company. See Section 11. Any extension, delay, termination, waiver or amendment will be followed as promptly as practicable by a public announcement thereof, such announcement, in the case of an extension, to be made no later than 9:00 am., New York City time, on the next business day after the previously scheduled Expiration Date. Without limiting the manner in which the Purchaser may choose to make any public announcement, except as provided by applicable law (including Rules 14d-4(c) and 14d-6(d) under the Exchange Act, which require that material changes be promptly disseminated to holders of Shares) the Purchaser will have no obligation to publish, advertise or otherwise communicate any such public announcement other than by issuing a release to the Dow Jones News Service. If, as permitted by the Merger Agreement, the Purchaser makes a material change in the terms of the Offer or the information concerning the Offer, or waives a material condition of the Offer, the Purchaser will disseminate additional tender offer materials (including by public announcement as set forth above) and extend the Offer to the extent required by Rules 14d-4(c) and 14d-6(d) under the Exchange Act. The minimum period during which an offer must remain open following material changes to the terms of the offer or information concerning the offer, other than a change in price or a change in percentage of securities sought or a change in any dealer's soliciting fee, will depend upon the facts and circumstances, including the relative materiality of the changes. With respect to a change in price or, subject to certain limitations, a change in the percentage of securities sought or a change in any dealer's soliciting fee, a minimum ten business day period from the day of such change is generally required to allow for adequate dissemination to shareholders. Accordingly, if, prior to the Expiration Date, the Purchaser decreases the number of Shares being sought, increases the consideration offered pursuant to the Offer or adds a dealer's soliciting fee, and if the Offer is scheduled to expire at any time earlier than the period ending on the tenth business day from the date that notice of such increase, decrease or addition is first published, sent or given to shareholders, the Offer will be extended at least until the expiration of such ten business day period. For purposes of the Offer, a "business day" means any day other than a Saturday, Sunday or a federal holiday and consists of the time period from 12:01 a.m. through 12:00 midnight, New York City time. The Company has provided the Purchaser with the Company's shareholder list and security position listings for the purpose of disseminating the Offer to holders of Shares. This Offer to Purchase and the related Letter of Transmittal and, if required, other relevant material will be mailed to record holders of Shares and will be furnished to brokers, dealers, banks, trust companies and similar persons whose names, or the names of whose nominees appear on the Company's shareholder list or, if applicable, who are listed as participants in a clearing agency's security position listing for subsequent transmittal to beneficial owners of Shares. 5 8 2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES. Upon the terms and subject to the conditions of the Offer (including, if the Offer is extended or amended, the terms and conditions of any such extension or amendment), the Purchaser will purchase by accepting for payment, and will pay for, 2,140,526 Shares validly tendered on or prior to the Expiration Date and not properly withdrawn (including Shares validly tendered and not withdrawn during any extension of the Offer, if the Offer is extended, subject to the terms and conditions of such extension), promptly after the later of (i) the Expiration Date and (ii) the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"), applicable to the Purchaser's purchase of Shares pursuant to the Offer, subject to possible delay in the event of proration. In addition, subject to complying with Rule 14e-1 under the Exchange Act, the Purchaser expressly reserves the right, in its sole discretion (but subject to the terms and conditions of the Merger Agreement), to delay the acceptance for payment of, or payment for, Shares in order to comply, in whole or in part, with any other applicable law. In all cases, payment for Shares tendered and accepted for payment pursuant to the Offer will be made only after timely receipt by the Depositary of (i) certificates representing such Shares ("Share Certificates") or timely confirmation of book-entry transfer of such Shares ("Book-Entry Confirmation") into the Depositary's account at The Depository Trust Company or the Philadelphia Depository Trust Company (each a "Book-Entry Transfer Facility" and, collectively, the "Book-Entry Transfer Facilities") pursuant to the procedures set forth in Section 3, (ii) the Letter of Transmittal (or a facsimile thereof), properly completed and duly executed, with any required signature guarantees, or an Agent's Message (as defined below) in connection with a book-entry transfer and (iii) any other documents required by the Letter of Transmittal. Accordingly, payment may be made to tendering shareholders at different times if delivery of the Shares and other required documents occurs at different times. The term "Agent's Message" means a message transmitted by a Book-Entry Transfer Facility to, and received by, the Depositary and forming a part of a Book-Entry Confirmation, which states that such Book-Entry Transfer Facility has received an express acknowledgment from the participant in such Book-Entry Transfer Facility tendering the Shares that are the subject of such Book-Entry Confirmation, that such participant has received and agrees to be bound by the terms of the Letter of Transmittal and that the Purchaser may enforce such agreement against such participant. The Company and the Purchaser anticipate filing, as promptly as practicable after the date hereof, with the Federal Trade Commission (the "FTC") and the Antitrust Division of the Department of Justice (the "Antitrust Division") a Premerger Notification and Report Form under the HSR Act with respect to the Offer. Accordingly, it is anticipated that the waiting period under the HSR Act applicable to the Offer will expire at 11:59 p.m., New York City time, on the fifteenth calendar day following the date of such filing. However, prior to the expiration or termination of the waiting period, the FTC or the Antitrust Division may extend the waiting period applicable to the Offer by requesting additional information from the Purchaser. If such a request is made, the waiting period applicable to the Offer will expire on the tenth calendar day after the date of substantial compliance by the Purchaser with such request. Thereafter, the waiting period may only be extended by court order or with the agreement of the Purchaser. The waiting period under the HSR Act may be terminated by the FTC and the Antitrust Division prior to its expiration. The Purchaser will request early termination of the waiting period applicable to the Offer, although there can be no assurance that this request will be granted. See Section 14 for additional information regarding the HSR Act. For purposes of the Offer, the Purchaser will be deemed to have accepted for payment, and thereby purchased, Shares validly tendered and not properly withdrawn if, as and when the Purchaser gives oral or written notice to the Depositary of the Purchaser's acceptance for payment of such Shares pursuant to the Offer. Upon the terms and subject to the conditions of the Offer, payment for Shares so accepted for payment pursuant to the Offer will be made by deposit of the aggregate purchase price therefor with the Depositary, which will act as agent for tendering shareholders for the purpose of receiving payment from the Purchaser and transmitting payment to tendering shareholders whose Shares have been accepted for payment. Under no circumstances will interest on the purchase price of the Shares be paid by the Purchaser, regardless of any delay in making such payment. Upon the deposit of funds with the Depositary for the purpose of making 6 9 payment to validly tendering shareholders, the Purchaser's obligation to make such payment shall be satisfied and such tendering shareholders must thereafter look solely to the Depositary for payment of the amounts owed to them by reason of the acceptance for payment of Shares pursuant to the Offer. If any tendered Shares are not accepted for payment pursuant to the terms and conditions of the Offer for any reason (including proration), or if Share Certificates are submitted for more Shares than are tendered, Share Certificates representing Shares not purchased or not tendered will be returned, without expense to the tendering shareholder (or, in the case of Shares tendered by book-entry transfer of such Shares into the Depositary's account at a Book-Entry Transfer Facility pursuant to the procedures for book-entry transfer set forth in Section 3, such Shares will be credited to an account maintained at such Book-Entry Transfer Facility), as soon as practicable following expiration or termination of the Offer. If, on or prior to the Expiration Date, the Purchaser increases the consideration to be paid per Share, the Purchaser will pay such increased consideration for all Shares purchased pursuant to the Offer, whether or not such Shares have been tendered or purchased prior to such increase in consideration. Subject to the terms and conditions of the Merger Agreement, the Purchaser reserves the right to transfer or assign, in whole or in part from time to time, to one or more of its affiliates, the right to purchase the Shares tendered pursuant to the Offer, but any such transfer or assignment will not relieve the Purchaser of its obligations under the Offer, nor will any such transfer or assignment in any way prejudice the rights of tendering shareholders to receive payment for Shares validly tendered and accepted for payment pursuant to the Offer. 3. PROCEDURES FOR ACCEPTING THE OFFER AND TENDERING SHARES. General. Except as set forth below, in order for Shares to be validly tendered pursuant to the Offer, the Letter of Transmittal (or a facsimile thereof), properly completed and duly executed, together with any required signature guarantees, or an Agent's Message in connection with a book-entry delivery of Shares, and any other documents required by the Letter of Transmittal, must be received by the Depositary at one of its addresses set forth on the back cover of this Offer to Purchase on or prior to the Expiration Date, and either (i) Share Certificates representing tendered Shares must be received by the Depositary at such address or such Shares must be tendered pursuant to the procedures for book-entry transfer set forth below (and a Book- Entry Confirmation must be received by the Depositary), in each case on or prior to the Expiration Date, or (ii) the guaranteed delivery procedures set forth below must be complied with. No alternative, conditional or contingent tenders will be accepted and no fractional Shares will be purchased. All tendering shareholders, by execution of the Letter of Transmittal (or facsimile thereof) waive any right to receive any notice of the acceptance of their Shares for payment. The method of delivery of Share Certificates, the Letter of Transmittal and all other required documents, including delivery through any Book-Entry Transfer Facility, is at the option and sole risk of each tendering shareholder and, except as otherwise provided in this Section 3, the delivery will be deemed made only when actually received by the Depositary. If delivery is by mail, registered mail with return receipt requested, properly insured, is recommended. In all cases, sufficient time should be allowed to ensure timely delivery. Book-Entry Transfer. The Depositary will make a request to establish accounts with respect to the Shares at each of the Book-Entry Transfer Facilities for purposes of the Offer within two business days after the date of this Offer to Purchase. Any financial institution that is a participant in the system of any Book-Entry Transfer Facility may make book-entry delivery of Shares by causing such Book-Entry Transfer Facility to transfer such Shares into the Depositary's account at such Book-Entry Transfer Facility in accordance with such Book-Entry Transfer Facility's procedure for such transfer. However, although delivery of Shares may be effected through book-entry transfer into the Depositary's account at a Book-Entry Transfer Facility, the Letter of Transmittal (or facsimile thereof), properly completed and duly executed, together with any required signature guarantees, or an Agent's Message in connection with a book-entry transfer, and any other documents required by the Letter of Transmittal, must, in any case, be received by the Depositary at one of its addresses set forth on the back cover of this Offer to Purchase on or prior to the Expiration Date in order for 7 10 such shares to be validly tendered pursuant to the Offer, or the tendering shareholder must comply with the guaranteed delivery procedure described below. Delivery of documents to a Book-Entry Transfer Facility in accordance with such Book-Entry Transfer Facility's procedures does not constitute delivery to the Depositary. Signature Guarantees. Signatures on all Letters of Transmittal must be guaranteed by a firm that is a bank, broker, dealer, credit union, savings association or other entity which is a member in good standing of the Securities Transfer Agents Medallion Program, the Stock Exchanges' Medallion Program or the New York Stock Exchange, Inc. Medallion Signature Program (an "Eligible Institution"), unless the Shares tendered thereby are tendered (i) by a registered holder of Shares who has not completed either the box entitled "Special Delivery Instructions" or the box entitled "Special Payment Instructions" on the Letter of Transmittal or (ii) for the account of an Eligible Institution. See Instruction 1 of the Letter of Transmittal. If the Share Certificates are registered in the name of a person other than the signer of the Letter of Transmittal, or if payment is to be made, or Share Certificates for unpurchased Shares are to be returned, to a person other than the registered holder(s), then the tendered Share Certificates must be endorsed or accompanied by appropriate stock powers signed exactly as the name(s) of the registered holder(s) appear on the Share Certificates with the signature(s) on such Share Certificates or stock powers guaranteed by an Eligible Institution as provided above and in the Letter of Transmittal. See Instructions 1 and 5 of the Letter of Transmittal. Guaranteed Delivery. If a shareholder desires to tender Shares pursuant to the Offer and such shareholder's Share Certificates are not immediately available or time will not permit all of the required documents to reach the Depositary on or prior to the Expiration Date, or the procedure for book-entry transfer cannot be completed on a timely basis, such Shares may nevertheless be tendered, provided that all of the following conditions are satisfied: (a) such tender is made by or through an Eligible Institution; (b) a properly completed and duly executed Notice of Guaranteed Delivery, substantially in the form provided by the Purchaser herewith, is received by the Depositary, as provided below, on or prior to the Expiration Date; and (c) the Share Certificates (or a Book-Entry Confirmation) for all tendered Shares, in proper form for transfer, in each case together with the Letter of Transmittal (or a facsimile thereof), properly completed and duly executed, with any required signature guarantees or, in the case of a book-entry transfer, an Agent's Message and any other documents required by the Letter of Transmittal are received by the Depositary within three NNM trading days after the date of execution of such Notice of Guaranteed Delivery. The Notice of Guaranteed Delivery may be delivered by hand or transmitted by telegram, facsimile transmission or mail to the Depositary and must include a guarantee by an Eligible Institution in the form set forth in the Notice of Guaranteed Delivery and a representation that the shareholder on whose behalf the tender is being made is deemed to own the Shares being tendered within the meaning of the Rule 14e-4 under the Exchange Act. Notwithstanding any other provision hereof, payment for Shares accepted for payment pursuant to the Offer will in all cases be made only after timely receipt by the Depositary of Share Certificates therefor (or Book-Entry Confirmation of the transfer of such Shares into the Depositary's account at a Book-Entry Transfer Facility), a properly completed and duly executed Letter of Transmittal (or facsimile thereof), together with any required signature guarantees or, in the case of a book-entry transfer, an Agent's Message, and any other documents required by the Letter of Transmittal. Accordingly, payment might not be made to all tendering shareholders at the same time, and will depend upon when Share Certificates or Book-Entry Confirmations of such Shares are received into the Depositary's account at a Book-Entry Transfer Facility. Backup Federal Tax Withholding. Under the federal income tax laws, the Depositary may, under certain circumstances, be required to withhold 31% of the amount of any payments made to certain 8 11 shareholders pursuant to the Offer. To prevent such backup federal income tax withholding with respect to payments made to certain shareholders of the purchase price of Shares purchased pursuant to the Offer, each such shareholder must provide the Depositary with such shareholder's correct taxpayer identification number and certify that such shareholder is not subject to backup federal income tax withholding by completing the Substitute Form W-9 included in the Letter of Transmittal. See Instruction 9 of the Letter of Transmittal. Appointment as Proxy. A tender of Shares does not constitute a vote, or the appointment of a proxy, in connection with the Merger. In order to vote for the Merger, Company Shareholders will be required to submit a proxy or vote in person at the shareholders meeting of the Company held for purposes of approving the Merger, or any postponement or adjournment thereof. By executing the Letter of Transmittal, a tendering shareholder irrevocably appoints designees of the Purchaser, and each of them, as the shareholder's attorneys-in-fact and proxies in the manner set forth in the Letter of Transmittal, each with full power of substitution with respect to any Shares tendered thereby (and with respect to any and all other Shares or other securities issued or issuable in respect of such Shares on or after May 16, 1996), effective when, if and to the extent the Purchaser accepts for payment and pays for such Shares. All such powers of attorney and proxies will be considered irrevocable and coupled with an interest in the tendered shares. This appointment will be effective when, and only to the extent that, the Purchaser accepts such Shares for payment and deposits the purchase price therefor with the Depositary. Upon such payment, all prior powers of attorney and proxies given by such shareholder with respect to such Shares (and other Shares and securities) will, without further action, be revoked, and no subsequent powers of attorney and proxies may be given nor any subsequent written consents executed by such shareholder (and, if given or executed, will not be deemed effective). The designees of the Purchaser will, with respect to such Shares and other securities, be empowered to exercise all voting and other rights of such shareholder as they in their sole discretion may deem proper at any annual or special meeting of the Company's Shareholders, or any adjournment or postponement thereof, by written consent in lieu of any such meeting or otherwise. The Purchaser reserves the right to require that, in order for Shares to be deemed validly tendered, immediately upon the Purchaser's payment for such Shares, the Purchaser must be able to exercise full voting and other rights of a record and beneficial holder, including voting at any meeting of shareholders. Determination of Validity. All questions as to the validity, form, eligibility (including the time of receipt) and acceptance for payment of any tendered Shares pursuant to any of the procedures described above will be determined by the Purchaser, in its sole discretion, which determination will be final and binding on all parties. The Purchaser reserves the absolute right to reject any and all tenders of any particular Shares determined by it not to be in appropriate form or the acceptance of or payment for which may, in the opinion of its counsel, be unlawful. The Purchaser also reserves the absolute right to waive any of the conditions of the Offer (subject to the terms and conditions of the Merger Agreement) or any defect or irregularities in the tender of any particular Shares, whether or not similar defects or irregularities are waived in the case of any other Shares. The Purchaser's interpretations of the terms and conditions of the Offer (including the Letter of Transmittal and Instructions thereto) will be final and binding. No tender of Shares will be deemed to have been validly made until all defects and irregularities have been cured or waived. None of the Purchaser, any of its affiliates or assigns, the Dealer Manager, the Information Agent, the Depositary, nor any other person will be under any duty to give notification of any defects or irregularities in tenders or incur any liability for failure to give any such notification. Other Requirements. It is a violation of Section 14(e) of the Exchange Act and Rule 14e-4 promulgated thereunder for a person, directly or indirectly, to tender Shares for his own account unless the person so tendering (i) has a net long position equal to or greater than his amount of (x) Shares tendered or (y) other securities immediately convertible into, exercisable, or exchangeable for the amount of Shares tendered and will acquire such Shares for tender by conversion, exercise or exchange of such other securities and (ii) will cause such Shares to be delivered in accordance with the terms of the Offer. Rule 14e-4 provides a similar restriction applicable to the tender or guarantee of a tender on behalf of another person. A tender of Shares made pursuant to any one of the procedures set forth above will constitute the tendering shareholder's acceptance of the terms and conditions of the Offer, including the tendering 9 12 shareholder's representation and warranty that (i) such shareholder has a net long position in the Shares being tendered within the meaning of Rule 14e-4 and (ii) the tender of such Shares complies with Rule 14e-4. THE PURCHASER'S ACCEPTANCE FOR PAYMENT OF SHARES TENDERED PURSUANT TO THE OFFER WILL CONSTITUTE A BINDING AGREEMENT BETWEEN THE TENDERING SHAREHOLDER AND THE PURCHASER UPON THE TERMS AND SUBJECT TO THE CONDITIONS OF THE OFFER. 4. WITHDRAWAL RIGHTS. Except as otherwise provided in this Section 4, tenders of Shares made pursuant to the Offer are irrevocable. Shares tendered pursuant to the Offer may be withdrawn at any time on or prior to the Expiration Date and, unless theretofore accepted for payment as provided herein, may also be withdrawn after July 20, 1996. If the Purchaser extends the Offer, is delayed in, or delays, its acceptance for payment or payment for Shares or is unable to accept for payment or pay for Shares for any reason, then, without prejudice to the Purchaser's other rights under the Offer, tendered Shares may nevertheless be retained by the Depositary, on behalf of the Purchaser, and may not be withdrawn except to the extent tendering shareholders are entitled to and duly exercise withdrawal rights as described in this Section 4. Any such delay will be accompanied by an extension of the Offer to the extent required by law. In order for a withdrawal to be effective, a written, telegraphic or facsimile transmission notice of withdrawal must be timely received by the Depositary at one of its addresses or numbers set forth on the back cover of this Offer to Purchase. Any such notice of withdrawal must specify the name of the person who tendered the Shares to be withdrawn, the number of Shares to be withdrawn and (if Share Certificates have been delivered or otherwise identified to the Depositary) the name of the registered holder of the Shares to be withdrawn, if different from that of the tendering shareholder. If Share Certificates to be withdrawn have been delivered or otherwise identified to the Depositary, then, prior to the physical release of such Share Certificates, the tendering shareholder must also submit the serial numbers shown on such Share Certificates to be withdrawn and the signature(s) on the notice for withdrawal must be guaranteed by an Eligible Institution, except in the case of Shares tendered for the account of an Eligible Institution. If Shares have been tendered pursuant to the procedures for book-entry transfer, as set forth in Section 3, any notice of withdrawal must specify the name and number of the account at the Book-Entry Transfer Facility to be credited with the withdrawn Shares and must otherwise comply with the procedure of such Book-Entry Transfer Facility, in which case a notice of withdrawal will be effective if delivered to the Depositary by any method of delivery described in the first sentence of this paragraph. Withdrawals may not be revoked and any Shares properly withdrawn will thereafter be deemed not to have been validly tendered for purposes of the Offer. However, withdrawn Shares may be re-tendered at any time on or prior to the Expiration Date by following one of the procedures described in Section 3. All questions as to the form and validity (including the time of receipt) of any notice of withdrawal will be determined by the Purchaser, in its sole discretion, whose determination will be final and binding. None of the Purchaser, any of its affiliates or assigns, the Dealer Manager, the Information Agent, the Depositary or any other person will be under any duty to give notification of any defects or irregularities in any notice of withdrawal or incur any liability for failing to give any such notification. 5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES. The following is a summary of the material federal income tax consequences of the Offer and the Merger to the holders of Shares. This summary is based upon the provisions of the Internal Revenue Code of 1986, as amended (the "Code"), applicable Treasury regulations thereunder, judicial decisions and current administrative rulings. The discussion does not address all aspects of federal income taxation that may be relevant to particular taxpayers in light of their personal investment circumstances or to taxpayers subject to special treatment under the Code (for example, life insurance companies, foreign corporations, qualified retirement plans, individuals who are not citizens or residents of the United States, and holders whose Shares were 10 13 acquired pursuant to the exercise of employee stock options or otherwise as compensation) and does not address any aspect of state, local or foreign taxation. This summary also assumes that the Shares are held as capital assets at the time of the Offer. EACH HOLDER OF SHARES IS URGED TO CONSULT SUCH HOLDER'S TAX ADVISOR AS TO THE SPECIFIC TAX CONSEQUENCES TO SUCH HOLDER OF THE OFFER AND THE MERGER, INCLUDING THE APPLICATION OF STATE, LOCAL AND FOREIGN TAX LAWS. Consequences of Sale of Shares in the Offer A shareholder who sells Shares for cash in the Offer will recognize gain or loss measured by the difference between the amount of cash received and the tax basis in the Shares tendered and sold by such shareholder pursuant to the Offer. Such gain or loss will constitute capital gain or loss, and will be long-term capital gain or loss if the holding period for such Shares is greater than one year at the time such Shares are tendered. The tax basis and the holding period of Shares must be calculated separately for Shares acquired at different times. A shareholder will be treated as having sold particular shares to the extent the particular shares are adequately identified. Adequate identification may occur through specification, at the time of the tender and sale, to a broker or other agent having custody of the particular Shares to be tendered and sold, and written confirmation of such specification within a reasonable time from such broker or agent. In the absence of adequate identification, the Shares tendered and sold will be charged against the earliest lots acquired by the shareholder. Under a pending legislative proposal made by the President, basis of Shares sold would be determined by averaging the basis of all Shares held by the shareholder; however, if enacted in the form proposed by the President, this proposal would not become effective until 30 days after its enactment. Consequences of the Merger The Merger Agreement provides that it is the intention of the parties that the Merger will qualify as a tax-free reorganization under Section 368(a)(1)(A) of the Code. However, no opinion of counsel or IRS ruling is being obtained concerning the tax effects of the Merger. Except where otherwise indicated, the following summary assumes that the Merger will qualify as a tax-free reorganization. If the Merger is a tax-free reorganization, a shareholder will receive Purchaser Shares without recognition of taxable gain or loss, but will be potentially taxable on the receipt of VCRs and cash in lieu of fractional Purchaser Securities. VCRs do not qualify as consideration that may be received tax free in the Merger. VCRs will be taken into account as taxable merger consideration in the computation of gain and of the basis of Purchaser Shares, in the manner described below. A shareholder who owns Shares at the time of the Merger will not recognize loss, but will recognize gain to the extent of the lesser of (i) the "shareholder's gain" (as defined below) and (ii) the fair market value of the VCRs and the amount of any cash received in lieu of fractional Purchaser Securities (the VCRs and cash in lieu of fractional Purchaser Securities are referred to herein as the "taxable merger consideration"). The "shareholder's gain" is the excess, if any, of (x) the fair market value of the Purchaser Shares and the taxable merger consideration, over (y) the shareholder's basis in his or her Shares exchanged in the Merger. A shareholder's basis in the Purchaser Shares received in the Merger will be equal to the shareholder's basis in the Shares exchanged in the Merger, increased by the amount of any gain recognized in the Merger and reduced by the amount of taxable merger consideration. A shareholder's holding period for the Purchaser Shares received in the merger will include the shareholder's holding period for the Shares. See the discussion below, however, concerning delay in beginning the holding period for Purchaser Shares under certain circumstances with respect to the simultaneous holding of VCRs. 11 14 Except in the case of a shareholder who owns more than a minimal interest in Purchaser after the Merger, any gain from the receipt of taxable merger consideration will be capital gain, and will be long-term capital gain or loss if the holding period for such Shares is greater than one year. See Rev. Rul. 76-385, 1976-2 C.B. 92. If a shareholder holds more than a minimal interest in Purchaser after the merger, any gain from the receipt of taxable merger consideration will either be capital gain or dividend income depending on the applicability of the provisions of Code Section 302. Shareholders are urged to consult their tax advisors to determine whether they should be considered as holding a minimal interest for this purpose; and, if not, the proper characterization of their taxable merger consideration. Tax Consequences of VCRs; Consequences of Straddle Treatment VCRs do not qualify as consideration that may be received tax free in the Merger. VCRs will be taken into account as taxable merger consideration in the computation of gain and of the basis of Purchaser Shares, in the manner described above under "Consequences of the Merger." VCRs are treated for federal income tax purposes as cash settlement options to sell Purchaser stock. See Revenue Ruling 88-31, 1988-1 C.B. 302. Gain or loss from the disposition, lapse, or receipt of payments with respect to the VCRs will be capital gain or loss, measured by the difference between the basis of the VCRs and the amount received (if any) in the disposition, lapse, or payment; the recognition of loss may be deferred under the "straddle" rules discussed below. The gain or loss will be long-term capital gain or loss if the holding period for the VCR is greater than one year. A shareholder's basis in a VCR will be its fair market value upon issuance. A shareholder who owns Purchaser Shares and VCRs will be treated as owning a "straddle," as defined in section 1092(c)(1) of the Code, for each pair of one Purchaser Share and one VCR (securities within such a pair are referred to herein as "offsetting" securities). Under the rules applicable to straddles: - Any loss from one offsetting security may not be taken into account except to the extent that the loss exceeds the unrecognized gain (if any) from the other offsetting security as of the last day of the taxable year; - Any loss so deferred may be carried into the succeeding taxable year, and either taken into account or deferred under the same rules; - If the shareholder has held Shares for one year or less as of the date of the Merger, the holding period for the Purchaser Shares received in the Merger will not begin until the shareholder no longer holds offsetting VCRs. The holding period for a VCR will not begin until the shareholder no longer holds offsetting Purchaser Shares. For example, if a shareholder has a loss from the disposition or expiration of VCRs for which the holding period is one year or less, the loss will be a short term capital loss that will be deferred until the following year, to the extent of the shareholder's unrealized gain as of the last day of the year in the corresponding number of Purchaser Shares held on such day. The loss will again be deferred in succeeding years to the extent of the shareholder's unrealized gain as of the last day of each succeeding year in the corresponding number of Purchaser Shares held on such day. Gain on VCRs or Purchaser Shares will not be deferred under the straddle rules. Consequences if No Tax-Free Reorganization The Purchaser and the Company do not intend to seek an opinion of counsel or a ruling from the Internal Revenue Service concerning the federal income tax consequences of the Merger. No assurance can be given that the IRS will not challenge the qualification of the Merger as a tax-free reorganization. If such a challenge were sustained by a court, each shareholder at the time of the Merger would recognize capital gain or loss measured by the difference between the fair market value of all the consideration received in the Merger and the shareholder's basis in the Shares exchanged in the Merger. Each shareholder's holding period in any Purchaser Share or VCR received in the Merger would begin on the later of the date of the Merger or the date on which the shareholder no longer holds an offsetting security. The basis of the Purchaser Shares and VCRs received in the Merger would be their respective fair market values on the date of the Merger. 12 15 Any acquisition of Shares that does not occur by reason of the Merger, including any acquisition from a Principal Shareholder pursuant to the exercise of the Purchaser's options to purchase Shares in certain circumstances, will be a fully taxable disposition to the seller, even if the seller receives Purchaser Shares in the acquisition. Other Tax Considerations In addition to the federal income tax consequences described above, shareholders may be subject to state, local, and foreign tax consequences as a result of the Offer and the Merger. Shareholders should consult their tax advisors concerning such other tax consequences as well as the matters described herein. 6. PRICE RANGE OF SHARES; DIVIDENDS. The Common Stock is traded in the over-the-counter market and is included on the NNM under the symbol "ACOM." The following table sets forth the high and low closing sales prices per Share of Common Stock on the NNM, as reported in publicly available sources for each of the quarters indicated since January 1, 1994.
HIGH LOW ------- ------- YEAR ENDED DECEMBER 31, 1994: First Quarter.......................................... $14 $ 9 1/2 Second Quarter......................................... 11 3/4 7 1/2 Third Quarter.......................................... 13 3/4 9 1/4 Fourth Quarter......................................... 15 3/8 11 3/4 YEAR ENDED DECEMBER 31, 1995: First Quarter.......................................... 14 3/4 12 1/4 Second Quarter......................................... 15 1/2 11 3/4 Third Quarter.......................................... 16 1/4 12 1/4 Fourth Quarter......................................... 16 11 1/4 YEAR ENDED DECEMBER 31, 1996: First Quarter.......................................... 12 1/2 10 1/4 Second Quarter (through May 21, 1996).................. 20 7/16 10 3/4
As of May 16, 1996, there were 181 holders of record of the Common Stock and in excess of 3,000 beneficial owners of the Common Stock. On May 15, 1996, the last full trading day prior to the public announcement of the execution of the Merger Agreement and of the Purchaser's intention to commence the Offer, the closing sale price per share of Common Stock as reported on the NNM was $15 1/2. On May 21, 1996, the last full trading day prior to the commencement of the Offer, the closing sale price per Share of Common Stock as reported on the NNM was $20 7/16. Shareholders are urged to obtain current market quotations for the Common Stock. The Company has advised the Purchaser that the Company has never declared or paid any cash dividends in respect of the Shares. The Company has agreed in the Merger Agreement that prior to the Merger it will not declare, set aside for payment or pay any dividends. 7. CERTAIN INFORMATION CONCERNING THE COMPANY. Except as otherwise set forth herein, the information concerning the Company set forth in this Section 7 and elsewhere in this Offer to Purchase has been furnished by the Company or has been taken from, or is based upon, publicly available documents on file with the Commission and other public sources. Shareholders are urged to review the publicly available information concerning the Company before acting on the Offer. Although the Purchaser has no knowledge of any facts that would indicate that any statements contained herein which are based on such documents are untrue, the Purchaser takes no responsibility for the accuracy 13 16 or completeness of the information concerning the Company furnished by the Company or contained in such documents or herein or for any failure by the Company to disclose events which may have occurred and which may have affected or may affect the significance or accuracy of any such information but that are unknown to the Purchaser. General. The Company is a leading provider of paging services, operating primarily in the southeastern United States. On October 24, 1995, the Company consummated the merger of Network Paging Corporation ("Network") into the Company, resulting in an increase in the number of pagers and voicemail units in service from approximately 248,000 to approximately 495,000. At December 31, 1995, the Company had 529,450 pagers and voicemail units in service, serviced by a network of approximately 485 transmitters located in Alabama, Florida, Georgia, Louisiana, Mississippi, North Carolina, South Carolina, Tennessee and Texas. Through an interconnected network (the "USA Network") of approximately 120 independent local and regional paging companies (the "Network Affiliates") throughout the United States, the Company augments its paging coverage in areas where direct service through the Company's own transmission network facilities is not available. The Company is engaged in two principal business segments, mobile network services and telemessaging services. The Company's mobile network services business segment provides paging, voicemail and other mobile communication services and equipment and represents several cellular service providers for sale and distribution of cellular phones and services. The Company's telemessaging services business segment provides a variety of message management services over the telephone to a diverse client base. The Company was incorporated under the laws of Tennessee in 1985 as A+ Communications Inc. Simultaneous with the merger with Network, the name was changed to A+ Network, Inc. The Company maintains executive offices at 40 South Palafox Street, Pensacola, Florida 32501 where its telephone number is (904) 438-1653 and at 2416 Hillsboro Road, Nashville, Tennessee 37212 where its telephone number is (615) 385-4500. The Company is subject to the disclosure requirements of the Exchange Act and in accordance therewith is required to file reports, proxy statements and other information with the Commission relating to its business, financial condition and other matters. In addition, the Company has filed a statement on Schedule 14D-9 regarding its recommendation to the Company's Shareholders with respect to the Offer. Such reports, proxy statements, Schedule 14D-9 and other information are available for inspection at the Commission's public reference facilities at 450 Fifth Street, N.W., Washington, D.C. 20349 and should also be available for inspection at the regional offices of the Commission located at 1 World Trade Center, Suite 1300, New York, New York 10048 and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies may be obtained at prescribed rates from the Commission's principal office at 450 Fifth Street, N.W., Washington, D.C. 20549. In addition, certain material filed by the Company should also be available for inspection at the offices of the NASD, Reports Section, 1735 K Street, N.W., Washington, D.C. 20006. Financial Information. Set forth below is certain selected consolidated financial data with respect to the Company and its subsidiaries excerpted or derived from the audited consolidated financial statements contained in the Company's Annual Report on Form 10-K for its fiscal year ended December 31, 1995 (the "Company 10-K") and the unaudited financial statements contained in the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1996 (the "Company 10-Q"). More comprehensive financial information is included in the Company 10-K, the Company 10-Q and in other documents filed by the Company with the Commission (which may be inspected or obtained in the manner set forth above), and the following data is qualified in its entirety by reference to such report and other documents and all of the financial information (including any related notes) contained herein or incorporated by reference. 14 17 A+ NETWORK, INC. SELECTED CONSOLIDATED FINANCIAL DATA (IN THOUSANDS, EXCEPT UNIT, PER SHARE AND PER UNIT DATA)
THREE MONTHS ENDED YEARS ENDED DECEMBER 31, MARCH 31, ------------------------------ ------------------ 1993 1994 1995 1995 1996 ------- ------- -------- ------- ------- (UNAUDITED) STATEMENT OF OPERATIONS DATA: Revenues: Mobile communications.............................. $26,838 $38,659 $ 47,083 $10,049 $19,547 Telemessaging...................................... 10,065 11,227 11,359 2,757 2,887 ------- ------- -------- ------- ------- Total revenues................................ 36,903 49,886 58,442 12,806 22,434 Costs of equipment sales........................... (4,563) (8,525) (6,490) (2,086) (2,219) ------- ------- -------- ------- ------- 32,340 41,361 51,952 10,720 20,215 Costs and expenses: Operating expenses................................. 16,796 20,723 26,943 2,460 4,595 Depreciation and amortization...................... 4,318 7,476 14,835 3,111 6,552 Selling............................................ 7,064 11,594 12,467 2,733 3,601 General and administrative......................... 4,625 5,096 7,175 4,693 7,680 Restructuring charges.............................. -- -- 669 -- 396 ------- ------- -------- ------- ------- Total costs and expenses...................... 32,803 44,889 62,089 12,997 22,824 Operating loss......................................... (463) (3,528) (10,137) (2,277) (2,609) Interest expense, net.................................. 816 547 3,708 373 3,106 Loss before extraordinary item......................... (1,280) (4,075) (13,845) (2,650) (5,715) Extraordinary item..................................... (236) -- (607) -- -- ------- ------- -------- ------- ------- Net loss............................................... $(1,516) $(4,075) $(14,452) $(2,650) $(5,715) ======== ======== ========= ======== ======== Loss before extraordinary item per share............... $ (.35) $ (.68) $ (2.03) $ (.44) $ (.56) Extraordinary item per share........................... (.07) -- (.09) -- -- ------- ------- -------- ------- ------- Loss per share......................................... $ (.42) $ (.68) $ (2.12) $ (.44) $ (.56) ======== ======== ========= ======== ======== Weighted average shares outstanding.................... 3,648 5,966 6,822 5,972 10,263 OTHER DATA: Pager and voicemail units in service (at period end)............................................. 126,976 216,199 529,450 228,733 569,841 EBITDA(1).......................................... 3,855 3,947 4,697 835 3,943 Cash provided by operating activities.............. 1,935 1,043 2,347 269 946 Capital expenditures............................... 7,302 19,098 12,396 1,815 7,668 Acquisition expenditures........................... 10,751 1,411 20,595 1,333 --
MARCH 31, 1996 --------- BALANCE SHEET DATA (AT PERIOD END): Current assets...................................... $14,559 $10,287 $ 72,147 $ 67,896 Total assets........................................ 45,256 54,611 211,013 208,234 Total debt.......................................... 2,721 15,158 124,101 124,114 Shareholders' equity................................ 36,052 32,225 69,464 63,749
- --------------- (1) EBITDA consists of operating income plus depreciation and amortization. EBITDA is a financial measure commonly used in the Company's industry and should not be construed as an alternative to operating income (as determined in accordance with generally accepted accounting principles ("GAAP")), as an indicator of operating performance or as an alternative to cash flows from operating activities (as determined in accordance with GAAP) or as a measure of liquidity. EBITDA is also the primary financial measure by which the Company's covenants are calculated under its bond indenture and bank loan agreements. EBITDA does not represent funds available for dividends, reinvestment or other discretionary activities. Certain Projections. During the course of discussions between the Purchaser and the Company that led to the execution of the Merger Agreement (see Section 10), the Company provided the Purchaser with 15 18 certain non-public business and financial information about the Company including projections of earnings before interest, taxes, depreciation and amortization ("EBITDA") for 1996 (on a pro forma basis, assuming that certain acquisitions were completed as of January 1, 1996) and for 1997. These projections indicated EBITDA of $23,910,000 (on a pro forma basis) in 1996 and of $30,910,000 in 1997. The Company does not as a matter of course make public any projections as to future performance or earnings, and the projections set forth above are included in this Offer to Purchase only because the information was provided to the Purchaser. These projections were not prepared with a view to public disclosure or compliance with published guidelines of the Commission or the guidelines established by the American Institute of Certified Public Accountants regarding projections. The projections constitute forward-looking statements within the meaning of Section 27A of the Securities Act, and Section 21E of the Exchange Act, and are intended to be covered by the safe harbors created thereby. Neither the Purchaser nor the Company, nor either of their financial advisors, assumes any responsibility for the accuracy of these projections. While presented with numerical specificity, these projections are based upon a variety of assumptions relating to the business of the Company which may not be realized and are subject to significant uncertainties and contingencies, all of which are difficult to predict and many of which are beyond the control of the Company. These uncertainties include, without limitation, the Company's ability to continue to realize historical internal growth rates, to close and integrate acquisitions that are currently under definitive agreements and to realize operating margin improvements. Although the Company believes that the assumptions underlying the forward-looking statements are reasonable, any of the assumptions could be inaccurate and the uncertainties and contingencies referred to above may arise. Therefore there can be no assurance that the forward-looking statements will prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by the Company, the Purchaser or any other person that the objectives and plans of the Company will be achieved. There can be no assurance that the projections will be realized, and actual results may vary materially and adversely from those shown. 8. CERTAIN INFORMATION CONCERNING THE PURCHASER. General. The Purchaser, a Delaware corporation, is currently the sixth largest paging company in the United States, based on 1,009,548 pagers in service at March 31, 1996, providing local, regional and nationwide paging and other wireless messaging services. The Purchaser currently operates regional and nationwide paging networks throughout the United States and has historically concentrated its selling efforts in four operating regions: (i) the Northeast (Massachusetts through Delaware); (ii) the Mid-Atlantic (Maryland and the Washington, D.C. metropolitan area); (iii) the Southeast (Virginia and Florida); and (iv) the West (California, Nevada and Arizona). Through the Metrocall Nationwide Wireless Network, the Purchaser can provide paging services in approximately 864 U.S. cities which include the top 100 Standard Metropolitan Statistical Areas ("SMSAs"). In February and April 1996, the Purchaser announced five separate acquisitions which, when consummated, will add approximately 770,000 subscribers to its base of pagers in service. Through these acquisitions the Purchaser will expand its operations into the Midwest, Southwest and Southeast, while strengthening its existing customer base in the Northeast. On a pro forma basis taking into account these acquisitions, the Purchaser believes it would be the fifth largest paging company in the United States. On a combined basis (pro forma for all acquisitions), the Company and the Purchaser would service a total subscriber base consisting of approximately 2.5 million units in service, and would constitute the fourth largest paging company in the United States. The Purchaser Shares are traded on the NNM under the symbol "MCLL." The principal executive offices of the Purchaser are located at 6677 Richmond Highway, Alexandria, Virginia, 22306. The Purchaser is subject to the disclosure requirements of the Exchange Act and in accordance therewith is required to file reports, proxy statements and other information with the Commission relating to its business, financial condition and other matters. Such reports, proxy statements and other information are available for inspection and copying at prescribed rates at the offices of the Commission and the NASD as set forth in Section 7. 16 19 The name, business address, principal occupation, five-year employment history and citizenship of each of the directors and executive officers of the Purchaser are set forth in Schedule I hereto. Certain Transactions. Except for the Merger Agreement and as otherwise set forth in this Offer to Purchase, neither the Purchaser nor, to the best knowledge of the Purchaser, any of the persons listed in Schedule I to this Offer to Purchase, nor any associate or majority-owned subsidiary of any of the foregoing, beneficially owns or has a right to acquire, directly or indirectly, any Shares; and neither the Purchaser nor, to the best knowledge of the Purchaser, any of the persons or entities referred to above, nor any of the respective executive officers, directors, or subsidiaries of any of the foregoing, beneficially owns or has a right to acquire, directly or indirectly, any Shares; and neither the Purchaser nor, to the best knowledge of the Purchaser, any of the persons or entities referred to above, nor any of the respective executive officers, directors or subsidiaries of any of the foregoing, has effected any transaction in the Shares during the past 60 days. Except as provided in the Merger Agreement and as otherwise set forth in this Offer to Purchaser, neither the Purchaser nor, to the best knowledge of the Purchaser, any of the persons listed on Schedule I hereto, has any contract, arrangement, understanding or relationship with any other person with respect to any Shares or other securities of the Company, including, but not limited to, any contract, arrangement, understanding or relationship concerning the transfer or voting of any such Shares or other securities, joint ventures, loan or option arrangements, puts or calls, guaranties of loans, guaranties against loss or the giving or withholding of proxies. Except as set forth in this Offer to Purchase, since January 1, 1993, there have been no contracts, negotiations or transactions between the Purchaser, any subsidiary of the Purchaser or, to the best knowledge of the Purchaser, any of the persons listed on Schedule I hereto, on the one hand, and the Company or any of its officers, directors or affiliates, on the other hand, concerning a merger, consolidation or acquisitions, a tender offer or other acquisition of securities, an election of directors, or a sale or other transfer of a material amount of assets. Except as set forth in this Offer to Purchase, neither the Purchaser nor, to the best knowledge of the Purchaser, any of the persons listed on Schedule I hereto has, since January 1, 1993, had any business relationships or transactions with the Company or any of its executive officers, directors or affiliates that would require disclosure herein under the rules and regulations of the Commission applicable to the Offer. Financial Information. Set forth below is certain selected consolidated financial data with respect to the Purchaser and its subsidiaries excerpted or derived from the audited consolidated financial statements contained in the Purchaser's Report on Form 10-K for the year ended December 31, 1995 (the "Purchaser 10-K") and the unaudited financial statements contained in the Purchaser's Report on Form 10-Q for the quarter ended March 31, 1996 (the "Purchaser 10-Q"). More comprehensive financial information is included in the Purchaser 10-K, the Purchaser 10-Q and in other documents filed by the Purchaser with the Commission (which may be inspected and copies thereof obtained at the offices of the Commission as set forth in Section 7), and the following data is qualified in its entirety by reference to such reports and other documents and all of the financial information and related notes contained therein or incorporated by reference. 17 20 METROCALL, INC. SELECTED CONSOLIDATED FINANCIAL DATA (DOLLARS IN THOUSANDS, EXCEPT UNIT, PER SHARE AND PER UNIT DATA)
THREE MONTHS ENDED YEAR ENDED DECEMBER 31, MARCH 31, 1996 ------------------------------- -------------------- 1993 1994(1) 1995 1995 1996 ------- -------- -------- ------- --------- (UNAUDITED) CONSOLIDATED STATEMENT OF OPERATIONS DATA: Service, rent and maintenance revenues......................... $33,111 $ 49,716 $ 92,160 $22,109 $ 23,750 Product sales.................................................. 4,549 8,139 18,699 3,698 6,189 ------- -------- -------- ------- --------- Total revenues............................................. 37,660 57,855 110,859 25,797 29,939 Net book value of products sold................................ (4,130) (6,962) (15,527) (3,153) (4,650) ------- -------- -------- ------- --------- Net revenues............................................... 33,530 50,893 95,332 22,644 25,289 Operating expenses before depreciation and amortization(2)..... 27,438 34,741 69,611 16,109 18,568 Depreciation and amortization.................................. 6,525 13,829 31,504 5,769 11,491 ------- -------- -------- ------- --------- Income (loss) from operations.................................. (433) 2,323 (5,783) 766 (4,770) Interest and other income...................................... 77 161 2,011 (17) 1,354 Interest expense............................................... (1,331) (3,726) (12,533) (2,579) (4,209) ------- -------- -------- ------- --------- Loss before income tax benefit (provision) and extraordinary item......................................................... (1,687) (1,242) (16,305) (1,830) (7,625) Income tax benefit (provision)................................. (59) 152 595 140 (64) ------- -------- -------- ------- --------- Loss before extraordinary item................................. (1,746) (1,090) (15,710) (1,690) (7,689) Extraordinary item(3).......................................... (439) (1,309) (4,392) -- -- ------- -------- -------- ------- --------- Net income (loss).......................................... $(2,185) $ (2,399) $(20,102) $(1,690) $ (7,689) ======= ======== ======== ======= ======== Net loss per common share: Loss per common share before extraordinary item............ $ (0.14) $ (1.34) $ (0.16) $ (0.53) Extraordinary item, net of income tax benefit.............. (0.16) (0.38) -- -- -------- -------- ------- --------- Net loss per common share.................................. $ (0.30) $ (1.72) $ (0.16) $ (0.53) ======== ======== ======= ======== OPERATING AND OTHER DATA: Units in service (end of period)............................... 247,716 755,546 944,013 787,920 1,009,548 EBITDA(4)...................................................... $10,923 $ 16,152 $ 27,771 $ 6,535 $ 6,721 EBITDA margin(5)............................................... 32.6% 31.7% 29.1% 28.9% 26.6% ARPU(6)........................................................ $ 12.29 $ 10.53 $ 9.15 $ 9.55 $ 8.11 Average monthly operating expense per unit(7).................. $ 8.39 $ 7.36 $ 6.71 $ 6.96 $ 6.34 Units in service per employee (end of period).................. 716 1,007 1,047 1,018 1,188 Capital expenditures........................................... $13,561 $ 19,091 $ 44,058 $ 8,727 $ 16,889 DECEMBER 31, ------------------------------- MARCH 31, 1993 1994 1995 1996 ------- -------- -------- -------------------- CONSOLIDATED BALANCE SHEET DATA: Cash and cash equivalents...................................... $ 1,014 $ 2,773 $123,574 $115,150 Total assets................................................... 33,857 200,580 340,614 337,294 Total long-term debt........................................... 12,102 104,846 154,055 153,995 Total shareholders' equity..................................... 13,729 68,136 155,238 147,549
- --------------- (1) 1994 includes the results of operations of acquired companies from their respective acquisition dates. (2) Includes the impact of non-recurring charges for the forgiveness of certain shareholder notes receivable of approximately $4.8 million in 1993, and severance and other compensation costs incurred as part of a management reorganization charge of approximately $2.0 million in 1995. (3) In 1993, 1994, and 1995 the Purchaser refinanced balances outstanding under its then existing credit facilities. As a result of these refinancings the Purchaser recorded extraordinary items of approximately $439,000, $1.3 million and $4.4 million, respectively, representing charges to expense unamortized deferred financing costs and other costs, net of any income tax benefits, related to those credit facilities. (4) EBITDA (earnings before interest, taxes, depreciation and amortization) is a standard measure of financial performance in the paging industry, but should not be considered in isolation or as an alternative to net income (loss), income (loss) from operations, cash flows from operating activities, or any other measure of performance under GAAP. EBITDA excludes non-recurring charges for the forgiveness of certain shareholder notes receivable of approximately $4.8 million in 1993 and approximately $2.0 million incurred as part of a management reorganization charge in 1995. (5) EBITDA margin is calculated by dividing (a) EBITDA by (b) net revenues. (6) ARPU (average monthly recurring revenue per unit) is calculated by dividing (a) monthly service, rent and maintenance revenues for the period by (b) the average number of units in service for the period. (7) Average monthly operating expense per unit is calculated by dividing (a) total operating expenses before depreciation and amortization for the period by (b) the average number of units in service for the period. Operating expenses exclude non-recurring charges for the forgiveness of certain shareholder notes receivable of approximately $4.8 million in 1993 and approximately $2.0 million incurred as part of a management reorganization charge in 1995. 18 21 9. SOURCES AND AMOUNT OF FUNDS. The total amount of funds required by the Purchaser to purchase 2,140,526 Shares pursuant to the Offer and to pay related fees and expenses is estimated to be approximately $45.5 million. The Purchaser intends to obtain such funds from existing cash on hand. The cost of purchasing the Cash Purchase Shares pursuant to the Shareholders' Agreement is estimated to be approximately $46.6 million. At May 20, 1996, cash balances totaled approximately $103.1 million. Of the total, approximately $3 million represented escrowed funds for pending acquisition transactions with approximately $100.1 million available for completion of this Offer and the purchase of the Cash Purchase Shares. 10. BACKGROUND OF THE OFFER AND THE MERGER; CONTACTS WITH THE COMPANY. Strategic business combinations and acquisitions have been a major component of the Purchaser's long term strategy since completion of its initial public offering in July 1993. At that time, the Purchaser actively began to seek out acquisition candidates in the paging and wireless messaging industry with operations either complementary to its own or which provide opportunities for geographic expansion. In August and November 1994, the Purchaser completed the acquisitions of FirstPAGE USA, Inc. and MetroPaging, Inc. (formerly AllCity Paging, Inc.), respectively. In late September and early October 1995, the Purchaser completed a secondary equity offering and a senior subordinated notes offering, respectively, with combined net proceeds of approximately $252.0 million, to fund expansion of its local, regional and nationwide transmission networks and future acquisitions. To assist in the acquisition portion of its strategy, the Purchaser engaged financial advisors to provide it strategic advice and assist in identifying and analyzing possible business combinations or acquisitions. The Company was one company identified as a candidate for possible merger or acquisition. On or about November 16, 1995, representatives of the Company and the Purchaser, along with the Purchaser's financial advisor, had an introductory meeting in Chicago. The Purchaser indicated at the meeting that it might be interested in pursuing a business combination of the two companies. The Company responded that consideration of such a transaction might be premature, since the Company had only recently completed the merger of A+ Communications, Inc. and Network. Thereafter, the parties executed a confidentiality agreement, and, from time to time, met and exchanged financial and business information. During this time, no proposals regarding a transaction were made. On March 14, 1996, the parties met in Atlanta, Georgia, with their respective financial advisors. At that meeting, the parties began to explore the terms of a possible business combination of the two companies. Thereafter, and throughout April 1996, the parties conducted preliminary due diligence and from time to time had discussions regarding the possible terms of a proposed transaction. On May 1, 1996, the Purchaser's Board authorized its management and advisors to proceed to negotiate a merger with the Company, subject to board approval. On May 6, 1996, the parties' senior management, including members of their respective boards, and their professional advisors, met in New York City to discuss the financial terms and structure of the possible combination. Beginning on May 8, the parties and their advisors met in Washington, D.C. and began to negotiate the terms of the Merger Agreement, the Shareholders' Agreement, and related documents. The Purchaser's Board held telephonic board meetings on Monday, May 13, and Tuesday, May 14, and approved the proposed Merger and related transactions, subject to satisfactory finalization of the documents, on May 14. The parties continued to negotiate final documentation through May 15. The Purchaser conditioned its willingness to enter into the transactions contemplated by the Merger Agreement upon the Principal Shareholders' entering into the Shareholders' Agreement. The Purchaser was unwilling to commence the Offer or to agree to the Merger unless the Purchaser received assurances from the Principal Shareholders that would, as a practical matter, commit the Principal Shareholders to vote all of their Shares for the Merger and, if necessary, to sell their Shares to the Purchaser to the extent legally permissible in circumstances where there was a competing offer for the Company. The Company, for its part, conditioned its willingness to enter into the proposed combination on receiving assurances that a substantial block of stockholders of the Company would vote in favor of the Merger. Accordingly, as described below, stockholders 19 22 holding approximately 30% of the outstanding Purchaser Shares have granted proxies to the Company to vote in favor of the Merger. The negotiations leading up to the Merger Agreement also included discussions about the structure and membership of the Surviving Corporation's Board of Directors. The parties' agreements on these matters are described under the headings "The Merger Agreement -- The Merger" and "Other Agreements -- Purchaser Stockholders Voting Agreement" in Section 11, below. The parties executed the definitive agreement effective May 16, 1996. The agreement was announced on May 16, 1996. 11. PURPOSE OF THE OFFER AND THE MERGER; THE MERGER AGREEMENT; SHAREHOLDERS' AGREEMENT; OTHER AGREEMENTS; PLANS FOR THE COMPANY AFTER THE MERGER; SEC REGULATIONS. Purpose of the Offer and the Merger The Offer, the purchase of the Shares pursuant to the Shareholders' Agreement and the Merger are intended to permit the business combination of the Purchaser and the Company. The purpose of the Offer is to acquire 2,140,526 Shares and to facilitate the Merger. The number of Shares for which Purchaser is tendering is equal to 40% of the outstanding Shares held by persons other than the Principal Shareholders plus 40% of the Shares to be issued in an acquisition by the Company that is expected to close in the immediate future. Based on the information supplied by the Company, if the Purchaser purchases 2,140,526 Shares pursuant to the Offer, and purchases an additional 2,210,217 Shares from the Principal Shareholders pursuant to the Shareholders' Agreement, the Purchaser will beneficially own approximately 42% of the voting power of the Company as of May 16, 1996 (36% if all Shares issuable pursuant to outstanding options and in connection with pending acquisitions are included). In addition, pursuant to the Shareholders' Agreement, the Principal Shareholders of the Company have agreed to vote all Shares owned by them in favor of the Merger. Together with the 42% to be purchased by the Purchaser pursuant to the Offer and from the Principal Shareholders, approximately 75% of the Shares issued and outstanding on May 16, 1996 (64% including Shares issuable pursuant to outstanding options and in connection with pending acquisitions) will effectively be committed to vote for the Merger. The Shareholders' Agreement also grants the Purchaser options to acquire additional Shares from the Principal Shareholders in certain circumstances described under "The Shareholders' Agreement," below, which Shares may be owned and voted by the Purchaser at the time the Merger is voted on by the Shareholders of the Company. The purchase of Shares pursuant to the Offer, together with the rights granted to the Purchaser under the Shareholders' Agreement, will substantially increase the likelihood that the Merger will be effected. The Offer provides a means for Shareholders of the Company who wish to do so to receive cash for at least a portion of their Shares. The purpose of the Merger is to effect a business combination of the Purchaser and the Company. Following (i) the completion of the Offer, (ii) approval of the Merger by the respective shareholders of the Company and the Purchaser and (iii) the satisfaction of the other conditions described in the Merger Agreement, including without limitation the receipt of FCC approval, the Company and the Purchaser intend to consummate the Merger. Although the Purchaser and the Company have agreed to use all reasonable efforts to consummate the Merger, and the rights granted by the Shareholders' Agreement may, as a practical matter, provide the Purchaser with the ability to cause the consummation of the Merger on the terms set forth in the Merger Agreement, there can be no assurance that the Merger will be consummated or as to the timing of the Merger because the Merger is subject to certain conditions, some of which are beyond the control of the Purchaser and the Company. See "Conditions to the Merger" in this Section 11. If the Merger does not take place, the Purchaser and the Company have agreed in the Merger Agreement that under certain circumstances the Company may repurchase the Shares acquired in the Offer or such Shares will be sold by Purchaser in a distribution as described below under the heading "The Merger Agreement -- Repurchase Option." 20 23 The Merger Agreement The following is a brief summary of certain provisions of the Merger Agreement, a copy of which is included as Annex A to this Offer to Purchase and is incorporated herein by reference. This summary does not purport to be complete and is qualified in its entirety by reference to the Merger Agreement. All shareholders of the Company are urged to read the Merger Agreement in its entirety. Capitalized terms used herein and not otherwise defined have the same meaning as in the Merger Agreement. The Offer. The Merger Agreement provides for the commencement of the Offer as promptly as practicable and in any event within five business days of the announcement of the Offer. The obligation of the Purchaser to consummate the Offer and accept for payment any Shares tendered is subject to the satisfaction of certain conditions (including the Minimum Condition) which are described in Section 13. The Merger Agreement provides that the Purchaser may not amend or waive the Minimum Condition and may not decrease the offer price or decrease the Minimum Condition or amend any other material condition of the Offer in any manner adverse to the holders of the Shares without the prior written consent of the Company (such consent to be authorized by the Board of Directors of the Company or a duly authorized committee thereof). Notwithstanding the foregoing, (i) if on the Expiration Date (A) there exists an AN Acquisition Proposal (as defined below) involving a tender offer, the Purchaser may extend the Offer to a date two business days after the date the position of the Company with respect to the tender offer is first published or sent pursuant to Rule 14e-2 under the Exchange Act, or (B) there exists an Acquisition Proposal other than a tender offer, the Purchaser may extend the Offer to a date two business days after the first date on which the Company's failure to reject such Acquisition Proposal would permit the Purchaser to terminate the Merger Agreement as described below under "Termination"; (ii) the Purchaser may extend the Offer at any time when the Minimum Condition or the other conditions set forth in Section 13 are not satisfied for such period of time, not to exceed 20 business days in the aggregate, as is reasonably expected to be necessary in order to satisfy the Minimum Condition or the other conditions to the Offer; and (iii) the offer price may be increased in good faith and the Offer may be extended to the extent required by law in connection with such increase, in each case without the consent of the Company. The Merger. The Merger Agreement provides that, subject to the terms and conditions thereof and the satisfaction or waiver of the other conditions to the Merger, including FCC approval, and in accordance with the Delaware Law and the Tennessee Law, the Company will be merged with and into the Purchaser, the separate existence of the Company will cease, and the Purchaser will continue its existence as the surviving corporation (the "Surviving Corporation"). In the Merger, each outstanding Share (other than Shares held by the Purchaser, which will be canceled) will be converted into the right to receive: (i) that number of Purchaser Shares equal to the Conversion Ratio, (ii) the same number of VCRs, plus (iii) cash in respect of fractional Purchaser Securities, if any. The Conversion Ratio shall be determined by dividing $21.10 by the Average Purchaser Share Price, except that if the Average Purchaser Share Price is greater than $21.88 or less than $17.90, then the Conversion Ratio shall be .96435 or 1.17877, respectively. Each VCR will entitle the holder to receive the amount, not to exceed $5.00 per VCR (unless increased as described below), by which the market value of Purchaser Shares determined as of the first anniversary of the Effective Time (the "Maturity Date"), is less than the "Target Price" of $21.10 per share, adjusted downward, but not upward, based on changes in an index composed of average closing bid prices of three other companies in the paging industry. If the Purchaser extends the Maturity Date by one year (the "Extended Maturity Date"), the Target Price will increase to $25.10, adjusted as previously described, and the maximum amount which the holder may receive will be $7.00 per VCR. The market value of the Purchaser Shares for this purpose will be the median of the averages of the last bid price for the Purchaser Shares on each trading day during each twenty trading day period within the 60 trading days prior to the Maturity Date. In addition, if the last bid price of the Purchaser Shares exceeds $21.10 for any consecutive 50-day period after the Effective Time and before the Maturity Date or, if the Maturity Date is extended, $25.10 for any 50-day period after the Maturity Date and before the Extended Maturity Date, then the right to receive payments under the VCR will terminate. Any amounts payable under the VCRs will be in cash, Purchaser Shares or common stock equivalents, as determined by the Purchaser. The terms of the VCRs are described in Annex C to the Merger Agreement. 21 24 The Surviving Corporation will not issue fractional Purchaser Securities. In lieu of any fractional Purchaser Securities, the holder of a Share converted in the Merger will be entitled to receive a cash payment determined by multiplying (i) $21.10 by (ii) the fractional Purchaser Security to which such holder would be entitled. The Merger Agreement provides that the Certificate of Incorporation and By-Laws of the Purchaser will become the Certificate of Incorporation and By-Laws of the Surviving Corporation. In addition, under the Merger Agreement the directors of the Purchaser immediately prior to the Effective Time, which shall include Elliott H. Singer and Ray D. Russenberger (who are currently directors of the Company), will become the directors of the Surviving Corporation following the Merger as set forth in Annex B to the Merger Agreement, and the officers of the Purchaser immediately prior to the Effective Time will become the officers of the Surviving Corporation following the Merger, in each case until their successors are elected and qualified. Two of the current directors of the Purchaser, Steven D. Jacoby and Vincent D. Kelly, will resign as directors immediately prior to the Effective Time. The Merger Agreement also contains special provisions that will come into effect if, pursuant to the rights granted to the Purchaser under the Shareholders' Agreement, the Purchaser is required to purchase Shares when, among other conditions, the Offer has expired without Shares being purchased and no other Shares have been acquired pursuant to a subsequent tender offer by the Purchaser. In that event, the aggregate merger consideration to shareholders of the Company other than the Purchaser will consist of 40% cash and 60% Purchaser Securities. If the Merger is consummated pursuant to this provision, holders of Shares will have the right to elect the number of Shares for which they wish to receive cash at $21.10 per Share and the number of Shares for which they wish to receive Purchaser Securities. The amount payable in either type of consideration will be pro-rated as necessary if either the amount of cash or Purchaser Securities elected by the shareholders exceeds the percentages set forth above. Treatment of Stock Options. Each outstanding option (a "Company Option") to purchase Common Stock granted pursuant to the Company's 1987 Stock Incentive Plan, 1992 Key Employee Incentive Stock Plan, 1992 Non-Qualified Stock Option Plan for Non-Employee Directors or the 1992 Employee Stock Purchase Plan (collectively, the "Company Option Plans") and certain options granted to a former employee that has not or have not vested prior to the Effective Time will become fully exercisable and vested as of the Effective Time of the Merger. Each Company Option that is not an "incentive stock option" under Section 422 of the Code, shall, at the option of the holder thereof, either (i) be converted automatically into an option to purchase such number of Purchaser Securities equal to the number of Shares subject to such Company Option immediately prior to the Effective Time multiplied by the Conversion Ratio, with the exercise price adjusted accordingly, but otherwise on the same terms and conditions as were applicable under any applicable Company Option Plan and the underlying stock option agreement, or (ii) up to a maximum of 40% of the Shares subject to the Company Options held by each option holder (which percentage will be determined by such holder) shall be cancelled and the holder shall be entitled to receive with respect to each such Share, a cash payment equal to the amount per Share paid upon purchase of Shares pursuant to this Offer less the exercise price relating to such Shares, with the remaining Company Options converted as described pursuant to clause (i). Company Options that are incentive stock options will be adjusted in accordance with Section 424(a) of the Code. The Surviving Corporation will notify option holders regarding their rights under the Company Option Plans as soon as practicable after the Effective Time. Currently exercisable options may be exercised and the Shares received thereby tendered into the Offer or be subject to exchange in the Merger. Employee Arrangements. The Merger Agreement provides that for a period of not less than three years following the Effective Time of the Merger, Purchaser will use its best efforts to maintain a Southeast/ Southwest regional operations center in Pensacola, Florida, but such center may be closed in the event of a sale or merger of Purchaser after the Effective Time. The Merger agreement also provides that the Company's current executive officers, managers, salespeople and staff will continue to participate in the Company's benefit plans and employee agreements as in effect on the date of the Merger Agreement until the Effective Time. In addition, the Merger Agreement contains certain provisions with respect to the integration, after the 22 25 Effective Time, of the Company's executive officers, managers, salespeople and staff into the operations of the Purchaser, including provisions for such employees' compensation, bonuses, benefits and severance. Indemnification. The Merger Agreement provides that the Purchaser shall, or shall cause the Surviving Corporation to, from and after the Effective Time, to the fullest extent permitted by the Delaware Law, the Company's Certificate of Incorporation, By-laws or indemnification agreements in effect on the date of the Merger Agreement, including provisions relating to advancement of expenses incurred in the defense of any action or suit, indemnify, defend and hold harmless all persons who are on the date of the Merger Agreement, or have been at any time prior to the date of the Merger Agreement, or who become prior to the Effective Time, an officer, director, employee or agent of the Company or its subsidiaries, or who are or were serving at the request of the Company or any of its subsidiaries as a director, officer, employee or agent of another corporation, partnership, trust, limited liability company or other business enterprise (each, an "Indemnified Party") against all losses, claims, damages, liabilities, costs and expenses, judgments, fines, losses and amounts paid in settlement in connection with any actual or threatened claim, proceedings or investigations that are based upon or arise out of such person's service as a director, officer, employee or agent of the Company or any subsidiaries or the Merger Agreement or any transactions contemplated thereby. The Merger Agreement also provides for the preservation of all rights to indemnification, advancement of expenses, exculpation, limitation of liability and any and all similar rights now existing in favor of the employees, agents, directors or officers of the Company and its subsidiaries under their respective charters or by-laws, under indemnification agreements or otherwise, for six years after the Effective Time, and for the Surviving Corporation to use all reasonable efforts to maintain directors' and officers' liability insurance maintained by the Company (or substantially similar coverage) for six years after the Effective Time. Representations and Warranties. The Merger Agreement contains certain customary representations and warranties of the parties. The Company has represented that its Board of Directors has (a) duly adopted and approved the Offer, the Merger Agreement and the Merger, (b) determined that each of the Offer and the Merger is fair to and in the best interests of its shareholders, (c) resolved to recommend acceptance of the Offer by those shareholders of the Company who wish to receive cash for a portion of their Shares, and (d) resolved to recommend approval of the Merger by its shareholders. The Purchaser has represented that its Board of Directors has taken comparable actions as set forth in clauses (a), (b) and (d) above and has represented that it has sufficient funds available to purchase Shares pursuant to the Offer and to pay all fees and expenses related to the transactions contemplated by the Merger Agreement and that neither the Purchaser nor any of its affiliates beneficially owns any Shares. Each of the Company and the Purchaser has made certain other representations and warranties to the other regarding, among other things: (i) their respective organization, subsidiaries and capitalization; (ii) their respective authority to enter into and perform their respective obligations under the Merger Agreement; (iii) the compliance of the transactions contemplated by the Merger Agreement with their respective Certificates of Incorporation and By-laws, certain agreements and applicable laws; (iv) the accuracy and completeness of their respective Exchange Act filings with the Commission, including for the Company the Schedule 14D-9 filed in connection with the Offer and for the Purchaser the Schedule 14D-1 filed in connection with the Offer, as well as the proxy statement to be filed in connection with the Merger, (v) the absence of undisclosed liabilities, (vi) the absence of material adverse changes in the condition, results of operations, business and assets of each and their respective subsidiaries, taken as a whole, since December 31, 1995; (vii) litigation; (viii) transactions with their respective affiliates; (ix) environmental matters; (x) employee benefit plans and contracts; (xi) taxes; and (xii) brokers' fees. The representations and warranties contained in the Merger Agreement do not survive beyond the Effective Time. Conduct of Business Pending the Merger. Conduct of Business by the Company. The Merger Agreement provides that, prior to the Effective Time, except (x) as otherwise contemplated therein, (y) as agreed in writing by the Purchaser or (z) for the consummation of pending acquisitions disclosed by the Company to the Purchaser, (i) the business of the Company and its subsidiaries shall be conducted only in, and the Company and its subsidiaries will not take any action except in, the ordinary and usual course of business and consistent with past practice, and the 23 26 Company and its subsidiaries will use all reasonable efforts, consistent with past practice, to maintain and preserve their respective business organizations, assets, employees and advantageous business relationships; (ii) the Company will not, directly or indirectly, (A) sell, transfer or pledge or agree to sell, transfer or pledge any Shares, preferred stock or capital stock of any of its subsidiaries beneficially owned by it, or (B) split, combine or reclassify the outstanding Shares, or any outstanding capital stock of any of the subsidiaries of the Company; (iii) neither the Company nor any of its subsidiaries will (A) amend its certificate of incorporation or bylaws, (B) issue, grant, sell, pledge, dispose of or encumber any shares of, or securities convertible into or exchangeable for, or options, warrants, calls, commitments or rights of any kind to acquire, any shares of capital stock of any class of the Company or its subsidiaries or any other ownership interests (including but not limited to stock appreciation rights or phantom stock), other than Shares reserved for issuance on the date of the Merger Agreement pursuant to the exercise of Company Options outstanding on the date of the Merger Agreement, and options automatically granted pursuant to the 1992 Non-Qualified Stock Option Plan for Non-Employee Directors, (C) with the exception of existing liens in favor of the Company's bank lender, transfer, lease, license, sell, mortgage, pledge, dispose of, or encumber any material assets other than in the ordinary and usual course of business and consistent with past practice, (D) modify the terms of any indebtedness or incur any indebtedness other than borrowings under existing agreements, (E) incur any material liability, other than borrowings permitted by clause (D) above of money under existing agreements or incurrence of other liabilities in the ordinary and usual course of business and consistent with past practice, or (F) redeem, purchase or otherwise acquire directly or indirectly any of its capital stock; (iv) the Company will not declare, set aside or pay any dividend or other distribution payable in cash, stock or property with respect to its capital stock; (v) neither the Company nor any of its subsidiaries shall modify, amend or terminate certain specified agreements or waive, release or assign any material rights or claims, except in the ordinary course of business and consistent with past practice; (vi) each of the Company and its subsidiaries shall maintain in full force and effect such types and amounts of insurance issued by insurers of recognized responsibility insuring it with respect to its respective business and properties, in such amount and against such losses and risk as is usually carried by persons engaged in the same or similar business; (vii) neither the Company nor any of its subsidiaries will (A) except for or on behalf of subsidiaries, assume, guarantee, endorse or otherwise become liable or responsible (whether directly, contingently or otherwise) for the obligations of any other person, (B) make any loans, advances or capital contributions to, or investments in, any other person (other than to subsidiaries of the Company pursuant to the Company's written obligations on the date of the Merger Agreement), other than in the ordinary course of business and consistent with past practice, or (C) enter into any commitment or transaction with respect to any of the foregoing (including, but not limited to, any borrowing, capital expenditure or purchase, sale or lease of assets); (viii) neither the Company nor any of its subsidiaries will change any of the accounting methods used by it unless required by generally accepted accounting principles; (ix) neither the Company nor any of its subsidiaries will adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of the Company or any of its subsidiaries (other than the Merger and transactions permitted by the Merger Agreement); (x) neither the Company nor any of its subsidiaries will take, or agree to take, any action that would result in any of the conditions set forth in the Merger Agreement or to the Offer not being satisfied, unless the Company's directors make a Fiduciary Determination (as defined below); (xi) neither the Company nor any of its subsidiaries will acquire (by merger, consolidation, or acquisition of stock or assets or otherwise) any corporation, partnership or other business organization or division of any such entity; provided, that the Company may engage in such a transaction if (A) the Company notifies the Purchaser prior to entering into any such transaction, (B) the purchase price for each such transaction is payable only in cash and such price does not exceed $5,000,000, and (C) the purchase price for each such transaction does not exceed eight times annualized EBITDA for the most recently ended calendar quarter; (xii) neither the Company nor any of its subsidiaries will increase the compensation or fringe benefits of any of its directors, officers or employees, except for increases in salary or wages of employees of the Company or its subsidiaries who are not officers or directors of the Company in the ordinary course of business and consistent with past practice and may not establish or alter other employee benefit plans or employee agreements; (xiii) neither the Company nor any of its subsidiaries will make any material tax election or settle or compromise any material federal, state, local or foreign tax liability except for settlements that would not be material to the Company or do not otherwise materially impair the business of the Company; (xiv) neither the Company nor 24 27 any of its subsidiaries will settle or compromise any pending or threatened suit, action or claim that is material to the transactions contemplated by the Merger Agreement; (xv) neither the Company nor any of its subsidiaries will pay, discharge or satisfy any claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge or satisfaction in the ordinary course of business and consistent with past practice of liabilities (A) reflected or reserved against in the financial statements of the Company, (B) incurred in the ordinary course of business and consistent with past practice, or (C) incurred in a manner not otherwise prohibited under the Merger Agreement; (xvi) the Company shall not effect a registration under the Securities Act with respect to Shares held by any person and entity, other than the registration on a Registration Statement on Form S-8 of Shares to be issued pursuant to Company Options and the registration of Shares pursuant to registration rights agreements in effect on the date of the Merger Agreement or pursuant to the Shareholders' Agreement; (xvii) neither the Company nor any of its subsidiaries will modify or amend any of the acquisitions disclosed by it to the Purchaser in any manner that would increase the consideration payable pursuant to such transaction; and (xviii) neither the Company nor any of its subsidiaries will authorize or enter into an agreement to do any of the foregoing. Conduct of Business by the Purchaser. The Merger Agreement also provides that, prior to the Effective Time, except (x) as contemplated by the Merger Agreement or the Shareholders' Agreement, (y) as agreed in writing by the Company, or (z) for the consummation of certain pending acquisitions disclosed by the Purchaser to the Company, (i) the Purchaser will not (A) amend its certificate of incorporation or by-laws, or (B) redeem, purchase or otherwise acquire directly or indirectly any of its capital stock, provided, that the Purchaser may amend its Certificate of Incorporation to increase the number of authorized Purchaser Shares by 7,500,000 shares contemporaneously with approval of the Merger; (ii) the Purchaser will not declare, set aside or pay any dividend or other distribution payable in cash, stock or property with respect to its capital stock; (iii) the Purchaser will not, directly or indirectly, split, combine or reclassify the outstanding Purchaser Shares; (iv) with the exception of the existing liens in favor of the Purchaser's bank lenders, neither the Purchaser nor any of its subsidiaries will issue, grant, sell, pledge, dispose of or encumber any additional shares of, or securities convertible into or exchangeable for, or options, warrants, calls, commitments or rights of any kind to acquire, any shares of capital stock of any class of the Purchaser or its subsidiaries, other than (A) issuances of Purchaser Shares reserved for issuance on the date of the Merger Agreement upon exercise of employee stock options outstanding on the date of the Merger Agreement, (B) issuance by the Purchaser of Purchaser Shares or other Purchaser securities for the fair market value thereof, and (C) the granting (and issuance of shares upon exercise) of options pursuant to the existing option plans with an exercise price equal to the fair market value thereof on the date of grant; (v) the Purchaser will not adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of the Purchaser or any subsidiary; (vi) neither the Purchaser nor any of its subsidiaries will take, or agree to take, any action that would result in any of the conditions set forth in the Merger Agreement or to the Offer not being satisfied; (vii) neither the Purchaser nor any of its subsidiaries will acquire (by merger, consolidation, or acquisition of stock or assets or otherwise) any corporation, partnership or other business organization or division of any such entity, provided, that the Purchaser may make acquisitions to the extent that they (A) comply with the requirement that any issuance of Purchaser Shares must be for fair market value, (B) do not involve businesses that would be considered "significant subsidiaries" within the meaning of Rule 1-02(v) of Regulation S-X, and (C) do not result in the issuance of more than 3,000,000 Purchaser Shares in the aggregate; (viii) neither the Purchaser nor any of its subsidiaries shall engage in any business other than that conducted in the telecommunications industry; and (ix) neither the Purchaser nor any of its subsidiaries will authorize or enter into an agreement to do any of the foregoing. Response to Other Offers. Pursuant to the Merger Agreement, each of the Purchaser, the Company and their respective affiliates are required to immediately cease all existing discussions or negotiations, if any, with any parties (other than each other) conducted with respect to proposal relating to (i) a possible acquisition of the Purchaser or the Company, as the case may be, whether by merger, purchase of all or substantially all of the assets of the Purchaser or the Company, as the case may be, or any similar transaction, or (ii) a tender offer for more than 5% of the common stock of the Purchaser or the Company (excluding any transaction otherwise permitted by the Merger Agreement) (any such proposal with respect to the Company being 25 28 referred to herein as an "AN Acquisition Proposal" and with respect to either the Purchaser or the Company, an "Acquisition Proposal"). The Merger Agreement provides that each of the Purchaser and the Company may furnish information and access (in each case only in response to a request made after the date of the Merger Agreement which was not encouraged, solicited or initiated by Purchaser, the Company or their affiliates) pursuant to appropriate confidentiality agreements, and may participate in discussions and negotiate with such party concerning any Acquisition Proposal, but only if (i) with respect to the Company, such party has submitted a written proposal to the Board of Directors of the Company relating to any such transaction involving economic consideration per share that such Board of Directors reasonably believes is economically superior to the consideration to be paid pursuant to the Merger Agreement and which does not include or contemplate any condition relating to the obtaining of funds for such Acquisition Proposal, and (ii) with respect to both the Company and the Purchaser, such Board of Directors has made a Fiduciary Determination. Each of the Purchaser and the Company must provide the Company or the Purchaser, respectively, notice of and copies or summaries of all written or oral Acquisition Proposals and will keep the Company or the Purchaser, respectively, advised of all such Acquisition Proposals. Except as permitted by the Merger Agreement, neither the Purchaser, Company nor any of their affiliates will, directly or indirectly, encourage, or solicit submission of any inquiries, proposals or offers by; participate in or initiate any discussions or negotiations with; disclose any information about the Company or the Purchaser, respectively, or their respective subsidiaries to, or otherwise assist, facilitate or encourage, or enter into any agreement or understanding with any third party in connection with any Acquisition Proposal, except that the Board of Directors of each of the Purchaser and the Company will not recommend that the shareholders of the Purchaser or the Company, respectively, tender their shares in connection with any tender offer unless such Board of Directors makes a Fiduciary Determination. Neither the Purchaser nor the Company will release any third party from, or waive any provisions of, any confidentiality or standstill agreement unless its Board of Directors makes a Fiduciary Determination. A "Fiduciary Determination" means the directors constituting a majority of all directors then in office of the Company or the Purchaser, as the case may be (other than the designees of the Purchaser to the Board of Directors of the Company), reasonably determine in good faith, after consultation with and based upon the advice of independent legal counsel, that the taking of action or the failure to take action (or withdraw or modify any recommendation) would constitute a breach of such directors' fiduciary duties to shareholders of the Company or the Purchaser, as the case may be, under applicable law. Registration Statement: Shareholders' Meetings. The Merger Agreement provides that the Company and the Purchaser will prepare and file with, and use their best efforts to have cleared by, the Commission, and thereafter promptly mail to their shareholders, a proxy statement for the meetings of the shareholders of the Company and the Purchaser, which will also constitute the prospectus to be filed by the Company pursuant to the Securities Act relating to the issuance of Purchaser Securities in the Merger. The Merger Agreement further provides that the Purchaser will take any action required to be taken under foreign or state securities or Blue Sky laws in connection with the issuance of Purchaser Securities in the Merger. The Merger Agreement further provides that, subject to the fiduciary duties of the Company's Board of Directors and the Purchaser's Board of Directors under applicable law, as the case may be, each of the Company and the Purchaser will take all action necessary to convene a meeting of its shareholders as promptly as practicable after consummation of the Offer to consider and vote upon the Merger. Subject to a Fiduciary Determination, each of the Company and the Purchaser will (i) recommend that their respective shareholders vote in favor of adoption of the Merger Agreement and (ii) use their respective best efforts to cause to be solicited proxies from shareholders of the Company or the Purchaser, as the case may be, to be voted at their respective shareholder meetings in favor of the adoption of the Merger Agreement and to take all other actions necessary or advisable to secure the vote or consent of shareholders required to effect the Merger. The Purchaser is required to vote all Shares purchased in the Offer or pursuant to the Shareholders' Agreement in favor of the adoption of the Merger Agreement and the Merger. 26 29 Repurchase Option. The Merger Agreement contains certain provisions regarding repurchase or disposition of Shares acquired by the Purchaser in the event the Merger is not consummated. The Merger Agreement provides that in the event of an Interest Payment Event (as defined below), the Company will have the right (which right may be assigned) to repurchase all Shares purchased by the Purchaser pursuant to the Offer or the Shareholders' Agreement (the "Repurchase Shares") at a price per Share equal to the price paid for such Shares plus an interest factor of 10.125% per annum; provided that such repurchase shall not occur any earlier than six months and one day after the Shares were acquired by the Purchaser. In the event of a Repurchase Event (as defined below) which is not an Interest Payment Event, the Company will have the right (which right may be assigned) to repurchase the Repurchase Shares at a price per Share equal to the price paid for such Shares. The Company's rights to repurchase the Repurchase Shares under either event described in this paragraph is referred to herein as the "Repurchase Option." If (a) a Repurchase Event occurs and the Company has not elected to purchase any Repurchase Shares as described above or (b) upon request by the Purchaser within 90 days after termination of the Merger Agreement for (i) material breach of any of its obligations by the Company, (ii) failure of the Company's shareholders to approve the Merger, or (iii) withdrawal, modification or change by the Board of Directors of the Company of its approval or recommendation of the Merger Agreement, the Offer or the Merger, or failure by such Board of Directors to recommend against an Acquisition Proposal, then the Company and the Purchaser shall cooperate in good faith to sell all of the Repurchase Shares in an orderly and reasonably widespread distribution. (Clauses (ii) and (iii) above are hereinafter referred to as a "Company Termination Event.") The Merger Agreement provides that in the event of a Repurchase Event and until the earlier of one year after the occurrence of such event or the sale or distribution of all Repurchase Shares, the Purchaser agrees not to (a) acquire any additional Shares or voting stock of the Company, (b) solicit proxies or participate in a proxy contest or propose or advise any other entity to propose any Acquisition Proposal, or (c) participate in a voting trust or act in concert with any person for the purpose of holding any voting stock of the Company, and agrees to vote the Repurchase Shares pro rata with the other shareholders of the Company with respect to all matters. Notwithstanding the foregoing, the Purchaser may (x) tender or exchange Repurchase Shares into any tender offer or Acquisition Proposal recommended by the Board of Directors of the Company or (y) pledge the Repurchase Shares pursuant to a bona fide pledge to secure indebtedness of the Company or any of its subsidiaries, provided that such Repurchase Shares will remain subject to the Repurchase Option. A "Repurchase Event" shall occur automatically if (i) either (A) the Offer has been consummated or (B) a Scenario II Trigger Event (as defined in the Shareholders' Agreement and as described under "The Shareholders' Agreement," below) shall have occurred, (ii) the Company is not in material breach of any of its obligations under the Merger Agreement entitling the Purchaser to terminate the Merger Agreement, (iii) there has been no Company Termination Event, and (iv) the Merger Agreement has been terminated in accordance with its terms. An "Interest Payment Event" shall mean, in the case of a Repurchase Event, the occurrence of any of the following (i) a final regulatory order by the FCC or any state authority has been entered prohibiting the transfer of the Company's licenses to the Purchaser, (ii) the entry of a non-appealable final order by a court of competent jurisdiction prohibiting the consummation of the Merger, or (iii) November 16, 1996 (provided that, if at November 16, 1996 the sole reason the Merger shall not have occurred is the failure to obtain a final regulatory order permitting the consummation of the Merger from the FCC, such date shall be February 16, 1997). Conditions to the Merger. The Merger Agreement provides that the respective obligations of the Purchaser and the Company to effect the Merger are subject to the satisfaction on or prior to the Closing Date of each of the following conditions: (i) the Purchaser has purchased Shares pursuant to the Offer or pursuant to the Shareholders' Agreement; (ii) the Merger Agreement has been approved and adopted by the shareholders of the Company and the Purchaser; (iii) no statute, rule, order, decree or regulation has been enacted or promulgated by any foreign or domestic governmental entity which prohibits the consummation of the Merger and all foreign or domestic governmental consents, orders and approvals required for the 27 30 consummation of the Merger and all foreign or domestic governmental consents, orders and approvals required for the consummation of the Merger have been obtained and are in effect at the Effective Time; (iv) there is no order or injunction of a court or other governmental authority in effect precluding, restraining, enjoining or prohibiting consummation of the Merger; (v) an order permitting the Merger to be consummated has been received from the FCC (or at the election of the Purchaser and the Company, approval has been received from the FCC), and orders permitting the Merger to be consummated has been received from requisite State Authorities; (vi) the expiration or early termination of any waiting period under the HSR Act has occurred; (vii) the registration statement for the Purchaser Securities to be issued in the Merger has been declared effective and no stop order is in effect with respect thereto; and (vii) the Purchaser Shares to be issued in the Merger have been admitted for quotation on NNM. The obligation of the Company to effect the Merger is subject to the satisfaction on or prior to the Closing Date of the following additional conditions: (i) the Purchaser has performed and complied in all material respects with all obligations and agreements under the Merger Agreement; (ii) the representations and warranties of the Purchaser contained in the Merger Agreement were true and correct in all material respects at the time when made and shall be true in all material respects on the Closing Date, except for representations made as of a certain date and changes specifically permitted by the Merger Agreement; (iii) except for the transactions contemplated by the Merger Agreement and the Shareholders' Agreements, and except for matters which affect generally the economy or the industry in which the Purchaser and its subsidiaries are engaged, as of the Closing Date, there has not occurred any change in the business, properties, assets, liabilities, financial condition, cash flows, operations, licenses, franchises or results of operations of the Purchaser or its subsidiaries which has a material adverse effect on the Purchaser and its subsidiaries, taken as a whole; (iv) receipt by the Company of a certificate from the Purchaser attesting to compliance with the conditions set forth in clauses (i), (ii) and (iii) above; and (vi) receipt by the Company of the opinion of the Purchaser's legal counsel with respect to the due authorization and issuance of the Purchaser Securities to be issued in the Merger. The obligation of the Purchaser to effect the Merger is subject to the satisfaction or prior to the Closing Date of the following additional conditions; (i) the Company has performed or complied in all material respects with all obligations and agreements under the Merger Agreement; (ii) the representations and warranties of the Company contained in the Merger Agreement were true and correct in all material respects at the time when made and shall be true in all material respects on the Closing Date, except for representations made as of a certain date and changes specifically permitted by the Merger Agreement; (iii) except for the transactions contemplated by the Merger Agreement and the Shareholders' Agreement, and except for matters which affect generally the economy or the industry in which the Company and its subsidiaries are engaged, as of the Closing Date, there has not occurred any change in the business, properties, assets, liabilities, financial condition, cash flows, operations, licenses, franchises or results of operations of the Company or its subsidiaries which has a material adverse effect on the Company and its subsidiaries, taken as a whole; and (iv) receipt by the Purchaser of a certificate from the Company attesting to compliance with the conditions set forth in clauses (i), (ii) and (iii) above. Termination. The Merger Agreement provides that it may be terminated prior to the Effective Time, whether before or after shareholder approval, by the mutual written consent of the Purchaser and the Company. The Merger Agreement may also be terminated prior to the Effective Time, whether before or after shareholder approval, by either the Company or the Purchaser (i) if any governmental entity has issued an order, decree or ruling or taken any other action permanently restraining, enjoining or otherwise prohibiting the transactions contemplated by this Agreement and such order, decree, ruling or other action shall have become final and non-appealable; or (ii) if the Merger has not occurred by November 16, 1996, except that if at November 16, 1996, the sole reason the Merger has not occurred is the failure to obtain a final order permitting the consummation of the Merger from the FCC, the Purchaser may extend this date to February 16, 1997, provided that the foregoing date may be extended for an additional 60 days at the Purchaser's option following a Scenario II Option or a Scenario II Mandatory Share Purchase (as defined in the Shareholders' Agreement and described below) if necessary to allow time to convene a meeting of the shareholders of the Purchaser or the Company. 28 31 The Merger Agreement may also be terminated prior to the Effective Time, whether before or after shareholder approval, by the Company (i) if the Purchaser has terminated the Offer, or the Offer has expired, without the Purchaser purchasing any Shares pursuant thereto, or the Purchaser has not commenced the Offer within five business days of its public announcement (except if the Company is in material breach of any of its covenants or agreements in the Merger Agreement or the Shareholder's Agreement); (ii) if the Purchaser has failed to perform and comply in all material respects with all material obligations and agreements under the Merger Agreement and the Shareholders' Agreement (and such failure has not been cured); or (iii) if the Merger Agreement and the transactions contemplated thereby shall not have been approved and adopted by the requisite vote of the holders of the capital stock of the Purchaser; or (iv) if the Board of Directors of the Purchaser shall have (A) withdrawn or modified or changed in any manner adverse to the Company its approval or recommendation of the Merger Agreement, the Offer or the Merger or (B) shall have failed to recommend against an Acquisition Proposal involving a tender offer or failed to reject any other Acquisition Proposal within ten business days of receipt by the Board of Director of the Purchaser of such proposal or shall have executed an agreement in principle or definitive agreement relating to an Acquisition Proposal or similar business combination with a person or entity other than the Company (or the Board of Directors of the Purchaser resolves to do any of the foregoing). The Merger Agreement may also be terminated prior to the Effective Time, whether before or after shareholder approval, by the Purchaser (i) if, prior to the Effective Time, the Board of Directors of the Company has (A) withdrawn, or modified or changed in any manner adverse to the Purchaser its approval or recommendation of the Merger Agreement, the Offer or the Merger or (B) has failed to recommend against an Acquisition Proposal involving a tender offer or failed to reject any other Acquisition Proposal within ten business days of receipt by the Board of Directors of the Company of such proposal or has executed an agreement relating to an Acquisition Proposal with a person or entity other than the Purchaser (or the Board of Directors of the Company resolves to do any of the foregoing); (ii) if the Purchaser has terminated the Offer, or the Offer shall have expired without the Purchaser purchasing any Shares thereunder, or the Purchaser has not consummated the Offer within five business days of its public announcement (except if the Purchaser has failed to purchase Shares in the Offer in violation of the material terms of the Merger Agreement); (iii) if the Company has failed to perform and comply in all material respects with all material obligations and agreements under the Merger Agreement (and such failure has not been cured); or (iv) if the Merger Agreement and transactions contemplated thereby shall not have been adopted by the requisite vote of the holders of the capital stock of the Company, provided that all Shares then owned by the Purchaser are voted in favor of the such proposal. Termination Fees. The Merger Agreement provides that if, prior to the Effective Time, it is terminated by the Purchaser and (i) the Board of Directors of the Company has (A) withdrawn, modified or changed in any manner adverse to the Purchaser its approval or recommendation of the Merger Agreement, the Offer or the Merger or (B) has failed to recommend against an Acquisition Proposal involving a tender offer or failed to reject any other Acquisition Proposal within ten business days of receipt by the Board of Directors of the Company of such proposal or has executed an agreement in principle (or similar agreement) or definitive agreement relating to an Acquisition Proposal or similar business combination with a person or entity other than the Purchaser (or the Board of Directors of the Company resolves to do any of the foregoing) or (ii) the Merger Agreement and the transactions contemplated thereby have not been adopted by the requisite vote of the holders of the capital stock of the Company and the Purchaser has voted all Shares owned by it in favor of the Merger, then the Company will immediately pay to the Purchaser a termination fee equal to $10,000,000 in cash. The Merger Agreement also provides that if, prior to the Effective Time, it is terminated by the Company and (i) the Board of Directors of the Purchaser has (A) withdrawn, modified or changed in any manner adverse to the Company its approval or recommendation of the Merger Agreement, the Offer or the Merger or (B) has failed to recommend against an Acquisition Proposal involving a tender offer or failed to reject any other Acquisition Proposal within ten business days of receipt by the Board of Directors of the Purchaser of such proposal or has executed an agreement in principle (or similar agreement) or definitive agreement relating to an Acquisition Proposal or similar business combination with a person or entity other than the 29 32 Company (or the Board of Directors of the Purchaser resolves to do any of the foregoing) or (ii) the Merger Agreement and the transactions contemplated thereby have not been adopted by the requisite vote of the holders of the capital stock of the Purchaser, then the Purchaser will immediately pay to the Company a termination fee equal to $10,000,000 in cash. Amendment and Modification. The Merger Agreement provides that the Merger Agreement may be amended or modified, whether before or after any vote of the shareholders of the Company and the Purchaser, except that after the approval of the Merger Agreement by the shareholders of the Company, no such amendment or modification may change the Conversion Ratio. The Shareholders' Agreement The following is a summary of the Shareholders' Agreement. Such summary is qualified in its entirety by reference to the text of the Shareholders' Agreement, a copy of which is filed as Exhibit 11(c)(2) to the Schedule 14D-1 and is incorporated herein by reference. The Shareholders' Agreement is by and among the Purchaser and certain shareholders of the Company: Brownlee O. Currey, Jr., Charles A. Emling III, Ray Russenberger, Irby C. Simpkins, Elliott H. Singer, Summit Investors II, L.P., and Summit Ventures III, L.P., (the "Principal Shareholders"). It grants the Purchaser certain rights with respect to the Shares owned by each Principal Shareholder (the "Owned Shares"). The Owned Shares subject to the Shareholders' Agreement aggregate 5,525,543 shares of voting common stock, representing approximately 53.8% of the Shares outstanding on the date of the Merger Agreement. The principal terms of the Shareholders' Agreement are as follows. Sale of Shares. The Shareholders' Agreement provides that, subject to and conditioned upon the consummation of the Offer, each of the Principal Shareholders will sell to the Purchaser a number of Shares equal to 40% of each of their Owned Shares (the "Cash Purchase Shares") for a cash purchase price of $21.10 per Share, or such higher price as shall be paid for Shares tendered pursuant to the Offer. The Cash Purchase Shares constitute 2,210,217 Shares or approximately 21.5% of outstanding Shares as of May 16, 1996. Voting Agreement and Proxy. Pursuant to the Shareholders' Agreement, each Principal Shareholder has agreed during the term of the Shareholders' Agreement to vote in favor of the transactions contemplated by the Merger Agreement and against (i) any extraordinary corporate transaction, such as a merger, rights offering, reorganization, recapitalization or liquidation involving the Company or any of its subsidiaries, or (ii) any sale or transfer of a material amount of assets of the Company or any of its subsidiaries or the issuance of any securities of the Company or any subsidiary. The Shareholders' Agreement also appoints the Purchaser or its officers as each Principal Shareholder's proxy during the Option Period (defined below) to vote all Owned Shares (other than Shares purchased by the Purchaser) as specified above. The Proxy is exercisable only during the Option Period. The Principal Shareholders also granted the Purchaser certain options to purchase Shares, each subject to a separate set of conditions, as described below. Scenario I Option. Pursuant to the Shareholders' Agreement, each Principal Shareholder granted the Purchaser an irrevocable option (the "Scenario I Option") to purchase all, but not less than all, of the Owned Shares (the "Scenario I Option Shares") other than the Cash Purchase Shares previously purchased by Purchaser and certain Owned Shares of Mr. Ray Russenberger which are subject to previous options in favor of certain employees of the Company (the "RR Option Shares"). The Scenario I Option may be exercised by Purchaser following satisfaction of the Exercise Conditions (defined below) for a period commencing upon the later to occur of (i) 61 days after Purchaser has delivered evidence of financing enabling the Company to finance an offer to repurchase the Company's 11 7/8% Subordinated Notes in accordance with the terms of the change in control provisions of the indenture governing such notes, and (ii) the receipt by Purchaser of an FCC order approving the license transfer resulting from the Merger, and ending on the earlier of six months after the closing of the purchase by 30 33 Purchaser of the Cash Purchase Shares or the termination of Shareholders' Agreement in accordance with its terms (the "Option Period"). The Exercise Conditions, each of which is required to be satisfied prior to the exercise of the Scenario I Option, are: (i) the occurrence of the closing of the purchase by Purchaser of the Cash Purchase Shares; (ii) approval of the Merger Agreement by the shareholders of the Purchaser; and (iii) the absence of any material breach by Purchaser of its obligations and agreements in the Merger Agreement. The consideration to be paid to each shareholder upon exercise by Purchaser of the Scenario I Option will equal: (i) such number of Purchaser Shares equal to the Conversion Ratio as of the date of the closing of the Scenario I Option, multiplied by the number of Scenario I Option Shares owned by such shareholder, (ii) a number of VCRs to become effective upon the Effective Time, in an amount equal to the number of Purchaser Shares to be received pursuant to clause (i), plus cash, if any, for fractional Purchaser Securities calculated pursuant to the formula in Section 2.3(f) of the Merger Agreement. The consideration for the Scenario I Option Shares is subject to upward adjustment such that Purchaser will pay each Principal Shareholder such additional Purchaser Securities, together with cash for fractional Shares and VCRs, as are necessary to provide each Principal Shareholder the same Merger consideration per Share as all shareholders of the Company receive in the Merger. Scenario II Transactions. The Shareholders' Agreement provides that the Purchaser shall be granted an option to purchase from the Principal Shareholders certain Owned Shares equal to more than 40% and less than 49.9% (or such lesser percentage required by applicable law) of the outstanding Shares, as specified by the Purchaser, upon the occurrence of a "Scenario II Trigger Event". A Scenario II Trigger Event shall have occurred if (i) prior to expiration of the Offer, the Company receives an AN Acquisition Proposal or if the proposal to adopt the Merger Agreement shall not have been adopted by the shareholders of the Company and all Shares owned by Purchaser are voted in favor of the proposal, (ii) the Offer expires in accordance with its terms without any Shares accepted for payment in circumstances in which all conditions to the Offer other than the Minimum Condition (as defined in the Merger Agreement) or a condition relating to an injunction enjoining the Merger shall have been satisfied, and (iii) within two business days after the expiration of the Offer, Purchaser gives notice to the Company and the Principal Shareholders of its election not to terminate the Merger Agreement in accordance with its terms. By giving such notice, Purchaser shall have elected to exercise its rights under Section 3.3 of the Shareholders' Agreement relating to Scenario II transactions. The consideration for Shares purchased under this option will be (i) for a number of Shares equal to the Cash Purchase Shares, $21.10 per Share in cash, or, if higher, the highest price per Share as had been offered by Purchaser pursuant to the Offer prior to its termination or expiration; and (ii) for each remaining Share (the "Scenario II Trigger Shares"), (a) such number of Purchaser Shares equal to the Conversion Ratio as of the date of the closing of the purchase of the Scenario II Trigger Shares, multiplied by the number of Scenario II Trigger Shares, (b) a number of VCRs to become effective upon the Effective Time, in an amount equal to the number of Purchaser Shares to be received pursuant to clause (a), plus cash, if any, for fractional Purchaser Shares and VCRs calculated pursuant to the formula in Section 2.3(f) of the Merger Agreement. The consideration shall be adjusted upward in the same manner as specified in connection with the Scenario I Option. Scenario II Option. Subject to the Closing of the sale of the Shares as described in the previous section, the Purchaser is obligated under the Shareholders' Agreement to use its reasonable best efforts to commence a new tender offer, to the extent permitted by applicable law, including the receipt of requisite FCC regulatory approvals, pursuant to which Purchaser shall offer to purchase no less than the number of Shares constituting the Minimum Condition for the Offer at a price no less than the highest price offered in the Offer ("Scenario II Tender Offer"). In such event, and subject to and conditioned upon the purchase of Shares pursuant to the Scenario II Tender Offer, Purchaser has an exclusive and irrevocable option during the Option Period, to purchase all, but not less than all, of the Owned Shares other than Shares previously purchased by Purchaser and the RR Option Shares (the "Scenario II Option Shares"), which option (the "Scenario II Option") shall have the same terms and conditions (other than the number of shares to be purchased) as the Scenario I Option. 31 34 Scenario II Mandatory Share Purchase. In the event that a Scenario II Tender Offer as described above expires without Purchaser purchasing any shares, the Shareholders' Agreement obligates the Purchaser to use its reasonable best efforts to acquire as soon as practicable the remainder of the Scenario II Option Shares. In such event, the Purchaser shall have an exclusive and irrevocable option during the Option Period ("Mandatory Option") to purchase all, but not less than all, of the remainder of the Scenario II Option Shares and the Purchaser shall be required to exercise such option as promptly as possible. The Purchaser is also prohibited from effecting the Merger unless prior to the Effective Time, the Purchaser shall have exercised the Mandatory Option, which shall have the same terms and conditions (other than the number of shares to be purchased) as the Scenario I Option. In such circumstance, the consideration in the Merger to the shareholders other than the Purchaser would be 40% cash and 60% Purchaser Securities. Other Provisions. The Shareholders' Agreement contains certain representations and warranties, and restricts the Principal Shareholders' ability to transfer or encumber the Owned Shares, including tendering into the Offer or any other tender offer. The Shareholders' Agreement also provides for a "shelf" registration of any Purchaser Securities received by the Principal Shareholders pursuant to the Shareholders' Agreement that are not otherwise registered in connection with the Merger. Termination. The Shareholders' Agreement shall terminate on the earliest of (i) the expiration of the Option Period, (ii) the purchase by the Purchaser of all Owned Shares (other than the RR Option Shares) pursuant to Shareholders' Agreement, (iii) the agreement of the parties to the Shareholders' Agreement to terminate the Shareholders' Agreement, (iv) consummation of the Merger, (v) two business days after termination or expiration of the Offer without the purchase of any Shares pursuant thereto unless Purchaser shall have purchased Shares following a Scenario II Trigger Event in accordance with the Shareholders' Agreement, and (vi) termination of the Merger Agreement pursuant to its terms, and in any event the Shareholders' Agreement shall terminate on March 16, 1997, except as to certain provisions on expenses, fees, registration rights and indemnification which shall survive termination of the Shareholders' Agreement. Other Agreements Purchaser Stockholders Voting Agreement. In connection with the execution of the Merger Agreement, certain stockholders of the Purchaser owning in the aggregate approximately 30% of the outstanding common stock of the Purchaser executed an agreement (the "Purchaser Stockholders Voting Agreement") with the Company pursuant to which each such stockholder appointed the Company or its officers, his or her proxy to vote all the Purchaser Shares then beneficially owned by such stockholder (i) in favor of the transactions contemplated by the Merger Agreement; and (ii) against any extraordinary corporate transaction, such as a merger, rights offering, reorganization, recapitalization or liquidation involving the Purchaser or any of its subsidiaries, or the issuance of any securities of the Purchaser or any subsidiary, in each case, to the extent prohibited by the Merger Agreement. The foregoing is a summary of the Purchaser Stockholders Voting Agreement and is qualified in its entirety by reference to the text of the agreement, a copy of which is filed as Exhibit 11(c)(3) to the schedule 14D-1 and is incorporated herein by reference. Non-Competition Agreements. Pursuant to Nondisclosure/No Conflict Agreements, each of Ray D. Russenberger and Elliott H. Singer have agreed, effective as of the Effective Time, in exchange for a payment of $325,000 per year for three years (and the extension of certain fringe benefit programs to them), to refrain from competing in the business of (for Singer) one-way or two-way paging and of (for Russenberger) the paging, voicemail, telemessaging, or cellular operations of the Purchaser, and to refrain from disclosing confidential information about the Company and the Purchaser. The obligation not to compete will continue only for so long as Messrs. Russenberger and Singer serve as members of the Board of Directors of the Surviving Corporation, and the obligation of nondisclosure continues indefinitely. Pursuant to the Nondisclosure/No Conflict Agreements, Messrs. Russenberger and Singer have agreed to resign voluntarily under the terms of their current employment agreements with the Company, effective upon the consummation of the Merger. The foregoing is a summary of the Nondisclosure/No Conflict Agreements and is qualified in its entirety by reference to the text of the Nondisclosure/No Conflict Agreements, copies of which are filed as Exhibits 11(c)(5) and 11(c)(6) to the Schedule 14D-1 and are incorporated herein by reference. 32 35 Employment Agreement. Pursuant to an Employment Agreement, Charles A. Emling III, currently President and Chief Executive Officer of the Company, has agreed, effective as of the Effective Time, to serve as President, Southeast Region of the Surviving Corporation, with salary of $200,000 per year (and customary employee benefits). The term of the Employment Agreement will begin at the Effective Time and run for one year, subject to automatic annual extension unless either party notifies the other that the contract should be terminated and such notice is given at least 90 days before an anniversary of the effective date of the Merger. If Mr. Emling is terminated without "cause" (as defined in the Employment Agreement) or resigns with "good reason" (as defined therein), he will be paid his then current salary for a period of one year after such termination. Mr. Emling has agreed to refrain from competing, directly or indirectly, with the Surviving Corporation and its affiliates, while employed and for one year thereafter, in the one-way and two-way paging and telemessaging business in any "market area" (where "market areas" are generally locations in which the Company or its predecessors have conducted business and those in which the Surviving Corporation conducts business during the term of the Employment Agreement). During employment and for a year after, Mr. Emling will not solicit away employees or customers of the Company or the Purchaser. The Employment Agreement will replace Mr. Emling's current employment agreement with the Company. The foregoing is a summary of the Employment Agreement and is qualified in its entirety by reference to the text of the Employment Agreement, a copy of which is filed as Exhibit 11(c)(7) to the Schedule 14D-1 and incorporated herein by reference. Agreement to Vote. In connection with the execution of the Merger Agreement, Elliott H. Singer and Ray D. Russenberger, shareholders of the Company who are expected to become stockholders of the Surviving Corporation at the Effective Time, executed an agreement with the Purchaser pursuant to which they are obligated, provided that they are directors of the Surviving Corporation at the time of election of directors at the first annual meeting of the Surviving Corporation occurring after the date of the voting agreement, to vote all shares of common stock of the Surviving Corporation they own at the time of election in favor of Suzanne S. Brock as a director. The foregoing is a summary of the agreement and is qualified in its entirety by reference to the text of the agreement, a copy of which is filed as Exhibit 11(c)(4) to the Schedule 14D-1 and incorporated herein by reference. Plans for the Company After the Merger Except as described in this Offer to Purchase, based on its current knowledge of the Company, the Purchaser has no present plans or proposals which relate to or would result in any extraordinary corporate transaction, such as a merger, reorganization, liquidation, or sale or transfer of a material amount of assets involving the Company or any of its subsidiaries, or any material changes in the Company's capitalization, dividend policy, corporate structure or business or the composition of its board of directors or management. However, the Purchaser is continuing its review of the Company and its assets, corporate structure, capitalization, operations, properties, policies, management and personnel. After the completion of such review (subject to the provisions of the Merger Agreement), the Purchaser may propose or develop alternative plans or proposals, including mergers, transfers of a material amount of assets or other transactions or changes of the nature described above. The Purchaser reserves the right, subject to the terms and conditions of the Merger Agreement, to effect any such plans and proposals. SEC Regulations The SEC has adopted Rule 13e-3 under the Exchange Act which is applicable to certain "going private" transactions. The Purchaser believes that Rule 13e-3 will not be applicable to the Merger if it is consummated within one year after termination of the Offer and the consideration offered in the Merger is not less than the consideration offered to purchase Shares pursuant to the Offer. However, if the Purchaser is deemed to have become an affiliate of the Company pursuant to the Offer and if the Merger is consummated more than one year after completion of the Offer or an alternative acquisition transaction is effected whereby shareholders of the Company receive consideration less than that paid pursuant to the Offer, in either case at a time when the Shares are still registered under the Exchange Act, the Purchaser may be required to comply with Rule 13e-3, unless the Shares are being exchanged for an equity security, having substantially the same rights as the 33 36 Shares, that is registered under Section 12 of the Exchange Act and is quoted on the NNM or listed on any exchange. If applicable, Rule 13e-3 would require, among other things, that certain financial information concerning the Company and certain information relating to the fairness of the Merger and the consideration offered to minority shareholders be filed with the SEC and distributed to minority shareholders prior to the consummation of the Merger. 12. POSSIBLE EFFECTS OF THE OFFER ON THE MARKET FOR SHARES, NNM QUOTATION AND EXCHANGE ACT REGISTRATION. The purchase of Shares by the Purchaser pursuant to the Offer will reduce the number of Shares that might otherwise trade publicly and may reduce the number of holders of Shares. This could adversely affect the liquidity and market value of the remaining Shares held by the public. The consummation of the Offer is not expected to have any effect on the continued quotation of the Common Stock on the NNM or the registration of the Common Stock under the Exchange Act. The Common Stock is expected to continue to qualify as "margin securities" under the rules of the Board of Governors of the Federal Reserve System. 13. CERTAIN CONDITIONS OF THE OFFER. Notwithstanding any other provisions of the Offer, and in addition to (and not in limitation of) the Purchaser's rights to extend and amend the Offer at any time in its sole discretion (subject to the provisions of the Merger Agreement), the Purchaser shall not be required to accept for payment or, subject to any applicable rules and regulations of the SEC, including Rule 14e-1(c) under the Exchange Act (relating to the Purchaser's obligations to pay for or return tendered Shares promptly after termination or withdrawal of the Offer), pay for, and may delay the acceptance for payment of or, subject to the restriction referred above, the payment for, any tendered Shares, and may amend the Offer consistent with the terms of the Merger Agreement or terminate the Offer if (i) any applicable waiting period under the HSR Act has not expired or terminated prior to the expiration of the Offer, (ii) the Minimum Condition has not been satisfied, or (iii) at any time on or after May 16, 1996 and before the time of acceptance of Shares for payment pursuant to the Offer, any of the following events shall occur: (a) the affirmative vote of the holders of more than a majority of the outstanding Shares is required to consummate the Merger or the Purchaser is not entitled to vote Shares, including any Shares acquired pursuant to the Shareholders' Agreement, for the Merger; (b) any change shall have occurred in the business, properties, assets, liabilities, capitalization, shareholder's equity, financial condition, cash flows, operations, licenses, franchises or results of operations of the Company or its subsidiaries which has a Material Adverse Effect (as defined in the Merger Agreement) on the Company and its subsidiaries taken as a whole, except for matters which affect generally the economy or industry in which the Company and its subsidiaries are engaged; (c) (I) there shall have been instituted or pending any, or there is threatened any, action, proceeding, application or counterclaim by any government or governmental authority or agency, or by the Company or an affiliate of the Company, which (i) challenges or seeks to challenge the acquisition by the Purchaser (or any affiliate of the Purchaser) of the Shares, restrain or prohibit the making or consummation of the Offer or the Merger, prohibits the performance by the Purchaser of the Offer, the Merger, the Shareholders' Agreement or any agreements contemplated thereby, or seeks to obtain any material damages directly or indirectly relating to the transactions contemplated by the Offer, the Merger, or Shareholders' Agreement, (ii) seeks to make the purchase of, or payment for, some or all of the Shares pursuant to the Offer or the Merger or Shareholders' Agreement illegal or results in a material delay in the ability of the Purchaser to accept for payment or pay for some or all of the Shares, (iii) seeks to prohibit or limit the ownership or operation by the Purchaser (or any affiliate of the Purchaser) of all or any material portion of the business or assets of the Company and its subsidiaries or of the Purchaser and its affiliates or to compel the Purchaser (or any affiliate of the Purchaser) to dispose of or to hold separately all or any material portion of the business or assets of the Purchaser or any of its affiliates or of 34 37 the Company or any of its subsidiaries or seeks to impose any material limitation on the ability of the Purchaser, or any other affiliate of the Purchaser, to conduct the Company's or any of its subsidiary's business or own such assets, (iv) seeks to impose or confirm material limitations on the ability of the Purchaser (or any affiliate of the Purchaser) to acquire or hold or to exercise full rights of ownership of the Shares, including but not limited to, the right to vote the Shares purchased by them on all matters properly presented to the shareholders of the Company, or (v) seeks to require divestiture by the Purchaser of any of its Subsidiaries or affiliates of all or any of the Shares, or (II) there shall have been instituted any action, proceeding, application or counterclaim by any person (other than a governmental entity or the Company, or an affiliate of the Company), before any court or governmental regulatory or administrative agency, authority or tribunal, with respect to the matters set forth in subsections (i)-(v) above, which has resulted in the issuance of a temporary restraining order ("TRO"), preliminary injunction or permanent injunction enjoining the Merger, this Agreement or the transactions contemplated hereby if such TRO, preliminary injunction or permanent injunction has not been removed or rescinded within 20 business days after the original expiration date of the Offer; (d) there shall be any action taken, or any statute, rule, regulation shall be enacted, promulgated, entered, enforced or deemed applicable to, or any order shall be entered or enforced with respect to, the Offer, the Merger or the Shareholders' Agreement by any government, governmental authority or court, domestic, foreign or supranational, other than the routine application to the Offer, the Merger or other subsequent business combination of waiting periods under the HSR Act or approval of license transfers under the Communications Act of 1934, as amended (the "Communications Act") or by state regulatory agencies that is reasonably likely to, directly or indirectly, result in any of the consequences referred to in clauses (i) through (v) of subsection (c)(I) above; (e) the representations and warranties of the Company set forth in the Merger Agreement shall not have been true and correct in all material respects on the date of the Merger Agreement or shall not be true and correct as of the date of consummation of the Offer as though made on or as of such date or the Company shall have breached or failed to perform or comply with any obligation, agreement or covenant required by the Merger Agreement to be performed or complied with by it except, in such cases, (i) for changes specifically permitted by the Merger Agreement and (ii) those representations and warranties that address matters only as of a particular date which are true and correct as of such date; (f) the Merger Agreement shall have been terminated in accordance with its terms; (g) (i) it shall have been publicly disclosed that any person, entity or "group" (as defined in Section 13(d) (3) of the Exchange Act), other than the Purchaser, shall have acquired beneficial ownership (determined pursuant to Rule 13d-3 promulgated under the Exchange Act) of more than 25% of any class or series of capital stock of the Company (including the Shares) through the acquisition of stock, formation of a group or otherwise, other than any person or group existing on the date hereof which beneficially owns more than 25% of any class or series of capital stock of the Company, or (ii) the Company shall have entered into or announced its intention to enter into a definitive agreement or agreement in principle with any person with respect to an acquisition proposal or similar business combination; (h) the Company's Board of Directors shall have withdrawn, or modified or changed in any manner adverse to the Purchaser (including by amendment of the Schedule 14D-9) its recommendation of the Offer, the Merger Agreement, or the Merger, or recommended an acquisition proposal, or shall have resolved to do any of the foregoing; or (i) any party to the Shareholders' Agreement other than the Purchaser shall have breached or failed to perform, in each case in any material respect, any of its agreements under such agreement or any of the representations and warranties of any such party set forth in such agreement shall not be true in any material respect, in each case, when made or at any time prior to the consummation of the Offer as if made at and as of such time, or the Shareholders' Agreement shall have been invalidated or terminated with respect to any Shares subject thereto; 35 38 which in the reasonable judgment of the Purchaser, in any such case, and regardless of the circumstances giving rise to such condition, makes it inadvisable to proceed with the Offer and/or with such acceptance for payment or payments. The foregoing conditions are for the sole benefit of the Purchaser and may be asserted by the Purchaser regardless of any circumstances giving rise to any condition and may be waived by the Purchaser, in whole or in part at any time and from time to time in the sole discretion of the Purchaser. The failure by the Purchaser (or any affiliate of the Purchaser) at any time to exercise any of the foregoing rights will not be deemed a waiver of any right and each right will be deemed an ongoing right which may be asserted at any time and from time to time. 14. CERTAIN LEGAL MATTERS; REGULATORY APPROVALS. General. Based on a review of publicly available Commission filings by the Company and other publicly available information concerning the Company and representations of the Company in the Merger Agreement, except as described below, the Purchaser is not aware of any license or regulatory permit that appears to be material to the business of the Company and its subsidiaries that might be adversely affected by the Purchaser's acquisition of Shares as contemplated herein. Except as described in this Section 14, the Purchaser is not aware of any other material filing, approval or other action by any federal or state governmental or administrative authority that would be required for the acquisition of Shares by the Purchaser as contemplated herein. Should any such other approval or action be required, it is currently contemplated that such approval or other action would be sought. Except as described below under "Antitrust", there is, however, no present intention to delay the purchase of Shares tendered pursuant to the Offer pending the outcome of any such other approval or action. There can be no assurance that any such other approval or action, if needed, would be obtained without substantial conditions or that adverse consequences might not result to the Purchaser's or the Company's business in the event that such other approvals were not obtained or such other actions were not taken. The Purchaser's obligation under the Offer to accept for payment and pay for Shares is subject to certain conditions, including conditions relating to the legal matters discussed in this Section 14. Antitrust. Under the HSR Act and the rules promulgated thereunder by the FTC, certain acquisition transactions may not be consummated unless certain information has been furnished to the FTC and the Antitrust Division and certain waiting period requirements have been satisfied. The acquisition of Shares pursuant to the Offer is subject to such requirements. See Section 2. The Company and the Purchaser anticipate filing, as soon as practicable after the date hereof, with the Antitrust Division and the FTC a Premerger Notification and Report Form, in connection with the purchase of Shares pursuant to the Offer. Under the provisions of the HSR Act applicable to the Offer, the purchase of Shares pursuant to the Offer may not be consummated until the expiration of a 15-calendar day waiting period following the filing by the Purchaser. Accordingly, it is anticipated that the waiting period under the HSR Act applicable to the Offer will expire at 11:59 p.m., Eastern time, on the fifteenth calendar day following such filing, unless such waiting period is earlier terminated by the FTC or the Antitrust Division or extended by a request from the FTC or the Antitrust Division for additional information or documentary material prior to the expiration of the waiting period. Pursuant to the HSR Act, the Purchaser will request early termination of the waiting period applicable to the Offer. There can be no assurance, however, that the 15-day HSR Act waiting period will be terminated early. If either the FTC or the Antitrust Division were to request additional information or documentary material from the Purchaser, the waiting period would expire at 11:59 p.m., Eastern time, on the tenth calendar day after the date of substantial compliance by the Purchaser with such request. Thereafter, the waiting period could be extended again only by court order or with the consent of the Purchaser. If the acquisition of Shares is delayed pursuant to a request by the FTC or the Antitrust Division for additional information or documentary material pursuant to the HSR Act, the Offer may, at the discretion of the Purchaser, subject to the terms and conditions of the Merger Agreement, be extended and, in any event 36 39 the purchase of and payment for Shares will be deferred until the applicable waiting period expires or is terminated. Unless the Offer is extended, any extension of the waiting period will not give rise to any additional withdrawal rights. See Section 4. Although the Company is required to file certain information and documentary material with the Antitrust Division and the FTC in connection with the Offer, neither the Company's failure to make such filings nor a request from the Antitrust Division or the FTC for additional information or documentary material made to the Company will extend the waiting period applicable to the Offer. The FTC and the Antitrust Division as well as state antitrust enforcement agencies frequently scrutinize the legality under the antitrust laws of transactions such as the proposed acquisitions of Shares pursuant to the Offer and the Merger. At any time before or after the Purchaser's acquisition of Shares pursuant to the Offer, any such agency could take such action under the antitrust laws as it deems necessary or desirable in the public interest, including seeking to enjoin the acquisition of Shares pursuant to the Offer or the Merger or seeking divestiture of Shares acquired by the Purchaser or divestiture of substantial assets of the Purchaser, the Company or their respective subsidiaries. Private parties may also bring legal action under federal and state antitrust laws under certain circumstances. If any such action by the FTC, the Antitrust Division or any other person should be threatened or commenced, the Purchaser may extend, terminate or amend the Offer. See Section 13. There can be no assurance that a challenge to the Offer on antitrust grounds will not be made or if such challenge is made that the result will be favorable. Based upon an examination of information available to it relating to the businesses in which the Purchaser and its subsidiaries and the Company and its subsidiaries are engaged, the Purchaser believes that consummation of the Offer and the Merger will not violate the antitrust laws. The Purchaser will not accept for payment any Shares tendered pursuant to the Offer unless and until the waiting period requirements imposed by the HSR Act with respect to the Offer have been satisfied. State Takeover Statutes. Tennessee Statute. The Tennessee Business Combination Act (the "Combination Act") provides that any corporation to which the Combination Act applies, including the Company, shall not engage in any "business combination" with an "interested shareholder" for a period of five years following the date that such shareholder became an interested shareholder unless prior to such date the board of directors of the corporation approved either the business combination or the transaction which resulted in the shareholder becoming an interested shareholder. In the Merger Agreement, the Company has represented that the Board of Directors has duly and validly approved the transactions contemplated by the Merger Agreement so as to render inapplicable the provisions of Section 48-103-206 of the Combination Act, and that the Combination Act is not applicable to such transactions. The Combination Act defines "business combination" generally to mean any: (i) merger or consolidation; (ii) share exchange; (iii) sale, lease, exchange, pledge, mortgage or other transfer (in one transaction or a series of transactions) of assets representing 10% or more of (A) the market value of consolidated assets, (B) the market value of the corporation's outstanding shares or (C) the corporation's consolidated net income; (iv) issuance or transfer of shares from the corporation to the interested shareholder; (v) plan of liquidation; (vi) transaction in which the interested shareholder's proportionate share of the outstanding shares of any class of securities is increased; or (vii) financing arrangements pursuant to which the interested shareholder, directly or indirectly, receives a benefit except proportionately as a shareholder. The Combination Act defines "interested shareholder," generally, to mean any person who is the beneficial owner, either directly or indirectly, of 10% or more of any class or series of the outstanding voting stock, or any affiliate or associate of the corporation who has been the beneficial owner, either directly or indirectly, of 10% or more of the voting power of any class or series of the corporation's stock at any time within the five-year period preceding the date in question. Consummation of a business combination that is subject to the five-year moratorium is permitted after such period if the transaction (i) complies with all applicable charter and bylaw requirements and applicable Tennessee law and (ii) is approved by at least two-thirds of the outstanding voting stock not beneficially owned by the interested shareholder, or when the 37 40 transaction meets certain fair price criteria. The fair price criteria include, among others, the requirements that the per share consideration received in any such business combination by each of the shareholders is equal to the highest of (i) the highest per share price paid by the interested shareholder during the preceding five-year period for shares of the same class or series plus interest thereon from such date at a treasury bill rate less the aggregate amount of any cash dividends paid and the market value of any dividends paid other than in cash since such earliest date, up to the amount of such interest, (ii) the highest preferential amount, if any, such class or series is entitled to receive on liquidation or (iii) the market value of the shares on either the date the business combination is announced or the date when the interested shareholder reaches the 10% threshold, whichever is higher, plus interest thereon less dividends as noted above. Delaware Statute. Section 203 of the Delaware Law prohibits business combination transactions involving a Delaware corporation (such as the Purchaser) and an "interested shareholder" (defined generally as any person that directly or indirectly beneficially owns 15% or more of the outstanding voting stock of the subject corporation) for three years following the date such person became an interested shareholder, unless special requirements are met or certain exceptions apply, including that prior to such date the board of directors of the subject corporation approved either the business combination or the transaction which resulted in such person being an interested shareholder. The Board of Directors of the Purchaser has duly and validly approved the transactions contemplated by the Merger Agreement, including the Offer, the Merger and the acquisition of Shares pursuant thereto, and therefore the provisions of Section 203 are not applicable to such transactions. General. A number of other states have adopted laws and regulations applicable to attempts to acquire securities of corporations which are incorporated, or have substantial assets, shareholders, principal executive offices or principal places of business, or whose business operations otherwise have substantial economic effects, in such states. In 1982, in Edgar v. MITE Corp., the Supreme Court of the United States invalidated on constitutional grounds the Illinois Business Takeover Statute, which, as a matter of state securities law, made takeovers of corporations meeting certain requirements more difficult. However, in 1987 in CTS Corp. v. Dynamics Corp. of America, the Supreme Court held that the State of Indiana may, as a matter of corporate law, and, in particular, with respect to those aspects of corporate law concerning corporate governance, constitutionally disqualify a potential acquiror from voting on the affairs of a target corporation without the prior approval of the remaining shareholders. The state law before the Supreme Court was by its terms applicable only to corporations that had a substantial number of shareholders in the state and were incorporated there. The Company, directly or through subsidiaries, conducts business in a number of states throughout the United States, some of which have enacted takeover laws. The Purchaser does not know whether any of these laws will, by their terms, apply to the Offer and has not necessarily complied with any such laws. Should any person seek to apply any state takeover law, the Purchaser will take such action as then appears desirable, which may include challenging the validity or applicability of any such statute in appropriate court proceedings. In the event it is asserted that one or more state takeover laws is applicable to the Offer and the Merger, and an appropriate court does not determine that it is inapplicable or invalid as applied to the Offer, the Purchaser might be required to file certain information with, or receive approvals from, the relevant state authorities. In addition, if enjoined, the Purchaser might be unable to accept for payment any Shares tendered pursuant to the Offer, or be delayed in continuing or consummating the Offer. In such case, the Purchaser may not be obligated to accept for payment any Shares tendered. See Section 13. FCC Approval. The construction, modification, operation, ownership and acquisition of paging systems are subject to regulation by the FCC under the Communications Act. The FCC has promulgated rules and regulations governing, among other things, applications to construct and operate paging systems within specified geographic areas, applications to transfer control of or assign paging licenses and technical and operational standards for the operation of paging systems (such as construction deadlines, maximum power and antenna height, and coordination with adjacent co-channel users). The present regulatory structure governing paging companies is subject to revision in light of changes to the Communications Act and pending FCC proposals that, if adopted, may increase competition for subscribers to wireless communication services and increase competition for access to certain underlying services, facilities (such as telephone numbers) 38 41 necessary for the Company and the Purchaser to conduct their business and impose competitive bidding rules for mutually exclusive paging applications. The respective operating subsidiaries of the Company and the Purchaser are licensed by the FCC to provide paging services in the respective geographic areas in which they have operations. The Communications Act requires prior FCC approval for the transfer of actual or legal control of companies holding FCC authorizations. The Communications Act requires that the FCC find that the proposed acquisition or transfer would serve the public interest, convenience and necessity as a prerequisite to granting its approval. The FCC may also require that the purchaser or transferee demonstrate that it possesses the requisite legal and technical qualifications to operate the licensed facilities in order for the transfer to be approved. The Merger Agreement and the Shareholders' Agreement provide that (pending completion of the Merger) the Purchaser shall not assume, either directly or indirectly, de jure or de facto control of the Company without the prior consent of the FCC or any appropriate state authority. Approval by the FCC is not a condition to the acquisition of Shares pursuant to the Offer. However, the prior approval of the FCC must be obtained to consummate the Merger. The Purchaser intends to file with the FCC, as soon as practicable, applications seeking FCC approval to take control of the Company. There can be no assurance that the FCC will grant such approval or that, if granted, such FCC approval will be on a timely basis or on terms and conditions acceptable to the Purchaser, or that any such approval will not be subject to judicial review. In the event of a challenge by an adverse party, the termination date established in the Merger Agreement may not allow time for regulatory approvals to be received, or if received for the approvals to become final. Under the Communications Act, the amount of capital stock that aliens or their representatives may own or vote in an FCC-licensed company is generally limited to 20% or 25% in the parent of such a company. The Purchaser believes that it and the Company currently meet this requirement. Should this restriction ever be found to be violated, the FCC may revoke or refuse to grant or renew a license, or refuse to approve the transfer of control of such license. State Regulatory Approval. In addition to regulation by the FCC, certain states impose various regulations on the common carrier paging operations of the Purchaser and the Company. Historically, regulation in some states required the Purchaser to obtain certain certificates of public convenience and necessity before constructing, modifying or expanding paging facilities or offering or abandoning paging services. Rates, terms and conditions under which the Purchaser or the Company provided service, or any changes to those rates, have also been subject to state regulation. However, under the federal Budget Reconciliation Act of 1993 (the "Budget Act"), as a general rule states are preempted from exercising rate and entry regulation of carriers such as the Purchaser and the Company which are deemed to be providing Commercial Mobile Radio Service ("CMRS"). States may, however, petition the FCC for authority to continue to regulate CMRS rates, which petitions are to be evaluated by the FCC applying the statutory criteria set forth in the Budget Act. In May 1995, the FCC rejected such petitions by New York, Louisiana, Hawaii, Arizona, Ohio, California and Connecticut. Prior state approval is not required to acquire Shares pursuant to the Offer. Some states regulating paging services have required the prior approval of transactions that result in the assignment or transfer of control of a certificated paging carrier, notwithstanding federal preemption. It is possible that one or more states may assert a right to review and approve the Merger. In such event, the Purchaser may choose to challenge such assertion, seek to obtain such approval or take such other or further actions as it deems necessary or advisable at the time. If any state were to claim a right to approve the Merger, there is no assurance that any challenge to override or overturn that claim would be successful or that any approval, if sought, would be granted or, if granted, would be on a timely basis or on terms and conditions acceptable to the Purchaser. 15. DIVIDENDS AND DISTRIBUTIONS. If, on or after May 16, 1996, the Company should declare or pay any dividend or other distribution (including, without limitation, the issuance of additional Shares pursuant to stock dividend or stock split or the issuance of rights for the purchase of any securities) with respect to the Shares that is payable or distributable to shareholders of record on a date occurring prior to the transfer to the name of the Purchaser or its nominees 39 42 or transferees on the Company's stock transfer records of the Shares purchased pursuant to the Offer, then, without prejudice to the Purchaser's rights described in Section 13, (i) the purchase price per Share payable by the Purchaser pursuant to the Offer will be reduced in the amount of any such cash dividend or distribution, and (ii) the whole of any non-cash dividend or distribution (including, without limitation, additional Shares or rights as aforesaid) will be required to be remitted promptly and transferred by each tendering shareholder to the Depositary for the account of the Purchaser accompanied by appropriate documentation of transfer and pending such remittance or appropriate assurance thereof, the Purchaser will be entitled to all rights and privileges as owner of any such non-cash dividend, distribution or right, and may withhold the entire purchase price or deduct from the purchase price the amount or value of such non-cash dividend, distribution or right, as determined by the Purchaser in its sole discretion. If, on or after May 16, 1996, the Company should split the Shares or combine or otherwise change the Shares or its capitalization, then, without prejudice to the Purchaser's rights described in Section 13, appropriate adjustments to reflect such split, combination or change may be made by the Purchaser in the purchase price and other terms of the Offer, including, without limitation, the number or type of securities offered to be purchased. 16. FEES AND EXPENSES. Wheat is acting as financial advisor to the Purchaser in connection with the Merger and related matters and is acting as Dealer Manager in connection with the Offer. In consideration of its services, the Purchaser has agreed to pay Wheat a transaction fee (the "Transaction Fee") equal to .5% of the aggregate transaction consideration upon closing of the Merger. The Purchaser is obligated to pay Wheat $100,000 upon execution of the definitive Merger Agreement (to be credited against the Transaction Fee). The Purchaser is also obligated to pay Wheat an additional $250,000 as a result of the delivery of the Purchaser Fairness Opinion, and an additional $100,000 as compensation for its role as Dealer Manager. If within one year of the closing of the Offer, the Purchaser has acquired less than 50.1% of the Company's outstanding Common Stock, the Purchaser will pay Wheat a fee of $500,000. In the event the Merger is terminated, the Purchaser will pay Wheat a fee in the amount of 10% of any termination fee, topping fee or expense reimbursement received by the Purchaser from the Company. In addition, the Purchaser has agreed to reimburse Wheat for its out-of-pocket expenses (including the fees and expenses of its counsel) and to indemnify it against certain claims, loans and obligations, including certain liabilities under U.S. federal securities law. The Purchaser has also retained Daniels & Associates ("Daniels") as a financial advisor in connection with the Merger, and has agreed to pay Daniels a fee equal to .75% of the aggregate transaction consideration upon closing of the Merger. The Purchaser has retained Georgeson & Company Inc. to act as the Information Agent and the Bank of New York as the Depositary in connection with the Offer. The Information Agent may contact holders of Shares by mail, telephone, telex, telecopy, telegraph and personal interview and may request brokers, dealers, commercial banks, trust companies and other nominees to forward the Offer material to beneficial owners. Each of the Information Agent and the Depositary will receive reasonable and customary compensation for its services and will be reimbursed for certain reasonable out-of-pocket expenses and will be indemnified against certain liabilities and expenses in connection with the Offer, including certain liabilities under U.S. federal securities laws. The Purchaser will not pay any fees or commissions to any broker or dealer or any other person for soliciting tenders of Shares pursuant to the Offer (other than to the Dealer Manager and the Information Agent). Brokers, dealers, commercial banks and trust companies will, upon request, be reimbursed by the Purchaser for customary mailing and handling expenses incurred by them in forwarding materials to their customers. 17. MISCELLANEOUS. The Offer is being made solely by this Offer to Purchase and the related Letter of Transmittal and is being made to all holders of Shares. The Purchaser is not aware of any state where the making of the Offer is 40 43 prohibited by administrative or judicial action pursuant to any valid state statute. If the Purchaser becomes aware of any valid state statute prohibiting the making of the Offer or the acceptance of Shares pursuant thereto, the Purchaser will make a good faith effort to comply with such statute or seek to have such statute declared inapplicable to the Offer. If, after such good faith effort, the Purchaser cannot comply with such state statute, the Offer will not be made to, nor will tenders be accepted from, or on behalf of, the holders of Shares in such state. In any jurisdiction where the securities, blue sky or other laws require the Offer to be made by a licensed broker or dealer, the Offer shall be deemed to be made on behalf of the Purchaser by the Dealer Manager or one or more registered brokers or dealers that are licensed under the laws of such jurisdiction. The Purchaser has filed with the Commission a Schedule 14D-1 together with exhibits, pursuant to Rule 14d-3 promulgated by the Commission under the Exchange Act, furnishing certain additional information with respect to the Offer. Such statement and any amendments thereto, including exhibits, may be examined and copies may be obtained at the same places and in the same manner as set forth with respect to information about the Company in Section 7 (except that such statement and amendments may not be available in the regional offices of the Commission). NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATION ON BEHALF OF THE PURCHASER NOT CONTAINED HEREIN OR IN THE LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED ON AS HAVING BEEN AUTHORIZED. METROCALL, INC. May 22, 1996 41 44 SCHEDULE I DIRECTORS AND EXECUTIVE OFFICERS OF THE PURCHASER The names, business address, position with the Purchaser, present principal occupation or employment and five-year employment history of each of the directors and executive officers of the Purchaser, together with the names, principal businesses and addresses of any corporations or other organizations in which such principal occupations are conducted, is set forth below. Each individual is a United States citizen and, unless otherwise indicated, each individual's business address is 6677 Richmond Highway, Alexandria, Virginia 22306. Unless otherwise indicated, no director or executive officer of the Purchaser beneficially owns any Shares (or rights to acquire Shares). Ronald V. Aprahamian has been a member of the Board of Directors since June 1995. Mr. Aprahamian is Chairman and Chief Executive Officer of The Compucare Company, a healthcare computer software and services firm. Mr. Aprahamian also serves as a Consulting Director for the Riggs National Bank of Washington, D.C., and serves on the board of directors of Sunrise Assisted Living Inc. Mr. Aprahamian's business address is 12110 Sunset Hills Road, Suite 600, Reston, Virginia 22090. Harry L. Brock, Jr. founded Metrocall and has served as Chairman of the Board (through January 1996) and President (through August 1995) and a director of Metrocall since 1982, and its predecessor companies since 1965. Mr. Brock was a founding partner of Cellular One of Washington ("Cellular One"), one of the first operating cellular systems. Mr. Brock is the husband of Suzanne S. Brock. Richard M. Johnston has served as Chairman of the Board of Directors since January 1996, and has been a member of the Board of Directors since September 1994. Mr. Johnston has been Vice President for Investments of The Hillman Company, an investment firm which is a greater than 5% beneficial owner of Metrocall's Common Stock, since 1970. Mr. Johnston's business address is 2000 Grant Building, Pittsburgh, PA 15219. Suzanne S. Brock has been Secretary, Treasurer (through August 1995) and a director of Metrocall since 1982. Ms. Brock has been employed by Metrocall and its predecessor companies since 1965. Ms. Brock has agreed to resign as Secretary effective May 31, 1996. Ms. Brock is the wife of Harry L. Brock, Jr. William L. Collins, III has been President and Chief Executive Officer of the Company since January 1996 and has served as Director and Vice Chairman of the Board since September 1994. From 1988 to 1994, Mr. Collins was the Chairman of the Board, Chief Executive Officer, President and a director of FirstPAGE USA, Inc. and its predecessor companies. Mr. Collins serves as Chairman of the Board of Directors of USA Telecommunications, Inc. ("USATel"). From 1977 to 1988, Mr. Collins was President of C&C, Inc. ("C&C"), a national communications marketing and management company. Francis A. Martin, III has been a member of the Board of Directors since November 1994. Mr. Martin is a principal of U.S. Media Group and Chairman of the Board, President and Chief Executive Officer of U.S. Media Holdings, Inc., having previously served as President and Chief Executive Officer of Chronicle Broadcasting Company, a publicly-held television broadcasting company. Mr. Martin's business address is 275 Battery Street, Suite 1850, San Francisco, California 94111. Steven D. Jacoby has been Chief Operating Officer and Vice President since September 1994. Mr. Jacoby joined Metrocall from FirstPAGE USA, Inc. where he served as Chief Operating Officer, Vice President and Secretary since 1988. Mr. Jacoby has been a director of Metrocall since September 1994. Mr. Jacoby was a principal of C&C, a national communications marketing and management company from 1987 to 1988. Mr. Jacoby was Director of Operations for Vanguard Cellular Systems, Inc. from 1985 to 1987. Vincent D. Kelly has been the Chief Financial Officer and Vice President of the Purchaser since January 1989. Mr. Kelly has also served as Treasurer since August 1995. Mr. Kelly also served dual roles as Chief Operating Officer and Chief Financial Officer of the Purchaser from February 1993 through August 31, 1994, when the Company acquired FirstPAGE USA, Inc. Mr. Kelly has been a director of the Company since 1990. Prior to joining the Company, Mr. Kelly was an accountant with Bruner, Kane & McCarthy, Ltd., certified public accountants. 42 45 Christopher A. Kidd has been a director of the Company since 1990. Mr. Kidd joined Metrocall in November 1986 and served as the Chief Executive Officer and Vice President from February 1993 until January 1996. He served as Chief Operating Officer from January 1989 until February 1993. Mr. Kidd has also served as General Manager and Controller. Pursuant to a written agreement dated February 7, 1996, Mr. Kidd will continue his term as a director only until May 31, 1996. Mr. Kidd's business address is 1110 Key Drive, Alexandria, Virginia 22302. 43 46 ANNEX A - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- AGREEMENT AND PLAN OF MERGER BETWEEN METROCALL, INC. AND A+ NETWORK, INC. MAY 16, 1996 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 47 TABLE OF CONTENTS
PAGE ---- ARTICLE I THE OFFER AND MERGER SECTION 1.1 The Offer................................................................ 1 SECTION 1.2 AN Actions............................................................... 3 SECTION 1.3 The Merger............................................................... 4 SECTION 1.4 Effective Time........................................................... 4 SECTION 1.5 Certificate of Incorporation and By-Laws................................. 4 SECTION 1.6 Directors and Officers of Surviving Corporation.......................... 4 ARTICLE II CONVERSION OF SHARES; EXCHANGE PROCEDURES SECTION 2.1 Conversion of Shares..................................................... 5 SECTION 2.2 Certain Definitions...................................................... 5 SECTION 2.3 Exchange of Certificates................................................. 5 SECTION 2.4 AN Option Plans.......................................................... 6 SECTION 2.5 AN Subordinated Notes.................................................... 7 SECTION 2.6 Cash Election Merger..................................................... 7 ARTICLE III REPRESENTATIONS AND WARRANTIES OF AN SECTION 3.1 Organization............................................................. 9 SECTION 3.2 Capitalization........................................................... 9 SECTION 3.3 Authorization; Validity of Agreement; AN Action.......................... 10 SECTION 3.4 Consents and Approvals; No Violations; Licenses.......................... 11 SECTION 3.5 SEC Reports and Financial Statements..................................... 12 SECTION 3.6 No Undisclosed Liabilities............................................... 12 SECTION 3.7 Absence of Certain Changes............................................... 12 SECTION 3.8 Employee Benefit Plans; ERISA; Labor..................................... 12 SECTION 3.9 Litigation............................................................... 14 SECTION 3.10 No Default; Compliance with Applicable Laws.............................. 14 SECTION 3.11 Taxes.................................................................... 14 SECTION 3.12 Environmental Matters.................................................... 15 SECTION 3.13 Insurance................................................................ 15 SECTION 3.14 Offer Documents; Proxy Statement; Registration Statement; Other Information............................................................ 15 SECTION 3.15 Transactions with Affiliates............................................. 16 SECTION 3.16 Brokers.................................................................. 16 ARTICLE IV REPRESENTATIONS AND WARRANTIES OF MC SECTION 4.1 Organization............................................................. 16 SECTION 4.2 Capitalization........................................................... 16 SECTION 4.3 Authorization; Validity of Agreement; MC Action.......................... 17 SECTION 4.4 Consents and Approvals; No Violations; Licenses.......................... 18 SECTION 4.5 SEC Reports and Financial Statements..................................... 18 SECTION 4.6 No Undisclosed Liabilities............................................... 19 SECTION 4.7 Absence of Certain Changes............................................... 19
i 48
PAGE ---- SECTION 4.8 Employee Benefit Plans; ERISA; Labor..................................... 19 SECTION 4.9 Litigation............................................................... 20 SECTION 4.10 No Default; Compliance with Applicable Laws.............................. 21 SECTION 4.11 Taxes.................................................................... 21 SECTION 4.12 Environmental Matters.................................................... 21 SECTION 4.13 Insurance................................................................ 21 SECTION 4.14 Offer Documents; Proxy Statement; Registration Statement; Other Information............................................................ 21 SECTION 4.15 Transactions with Affiliates............................................. 22 SECTION 4.16 Financing................................................................ 22 SECTION 4.17 Share Ownership.......................................................... 22 SECTION 4.18 Brokers.................................................................. 22 ARTICLE V COVENANTS SECTION 5.1 Interim Operations of AN and MC.......................................... 22 SECTION 5.2 Stockholder Approval; Meetings; Etc...................................... 25 SECTION 5.3 Proxy Statement, Registration Statement, Etc............................. 25 SECTION 5.4 Compliance with the Securities Act....................................... 26 SECTION 5.5 Nasdaq Listing........................................................... 27 SECTION 5.6 Approvals and Consents; Cooperation...................................... 27 SECTION 5.7 Access to Information.................................................... 28 SECTION 5.8 Employee Benefits and Relocation Matters................................. 28 SECTION 5.9 No Solicitation by AN.................................................... 28 SECTION 5.10 No Solicitation by MC.................................................... 29 SECTION 5.11 Brokers or Finders....................................................... 30 SECTION 5.12 Publicity................................................................ 30 SECTION 5.13 Notification of Certain Matters.......................................... 30 SECTION 5.14 Directors' and Officers' Insurance and Indemnification................... 30 SECTION 5.15 Expenses................................................................. 31 SECTION 5.16 Repurchase Option........................................................ 31 SECTION 5.17 Fair Price Statute....................................................... 33 SECTION 5.18 Further Assurances....................................................... 33 ARTICLE VI CONDITIONS SECTION 6.1 Conditions to Each Party's Obligation To Effect the Merger............... 34 SECTION 6.2 Conditions to Obligations of AN to Effect the Merger..................... 34 SECTION 6.3 Conditions to Obligations of MC to Effect the Merger..................... 35 ARTICLE VII TERMINATION SECTION 7.1 Termination.............................................................. 35 SECTION 7.2 Termination Fee.......................................................... 37 SECTION 7.3 Effect of Termination.................................................... 37
ii 49
PAGE ---- ARTICLE VIII MISCELLANEOUS SECTION 8.1 Amendment and Modification............................................... 37 SECTION 8.2 Nonsurvival of Representations and Warranties............................ 37 SECTION 8.3 Notices.................................................................. 37 SECTION 8.4 Headings................................................................. 38 SECTION 8.5 Interpretation........................................................... 38 SECTION 8.6 Counterparts............................................................. 38 SECTION 8.7 Entire Agreement; Third Party Beneficiaries.............................. 38 SECTION 8.8 Governing Law............................................................ 39 SECTION 8.9 Assignment............................................................... 39 SECTION 8.10 Further Assurances....................................................... 39 ANNEXES Annex A -- Conditions to the Offer Annex B -- Directors of the Surviving Corporation Annex C -- Terms of VCRs Annex D -- Employment and Employee Benefits SCHEDULES AN: Schedule 3.1 -- Subsidiaries of AN Schedule 3.2 -- AN Capitalization; AN Pending Transactions Schedule 3.4(a) -- AN Consents and Approvals Schedule 3.4(c) -- AN FCC Authorizations Schedule 3.6 -- Undisclosed Liabilities Schedule 3.7 -- Certain Changes Schedule 3.8 -- Employee Benefit Plans Schedule 3.9 -- Litigation Schedule 3.11 -- Taxes Schedule 3.15 -- Transactions with Affiliates Schedule 5.1(a) -- Permitted Activities by AN MC: Schedule 4.1 -- Subsidiaries of MC Schedule 4.2 -- MC Capitalization; Commitments Regarding MC Securities Schedule 4.4 -- MC Consents and Approvals Schedule 4.6 -- Undisclosed Liabilities Schedule 4.7 -- Certain Changes Schedule 4.8 -- Employee Benefit Plans Schedule 4.9 -- Litigation Schedule 4.11 -- Taxes Schedule 4.15 -- Transactions with Affiliates Schedule 5.1(b) -- Permitted Activities by MC
iii 50 INDEX OF DEFINED TERMS
PAGE ---- A+ Network............................................................................. 11 Affiliates............................................................................. 26 AN..................................................................................... 1 AN Benefit Plans....................................................................... 12 AN Certificates........................................................................ 5 AN Comfort Letter...................................................................... 26 AN Employee Agreements................................................................. 12 AN ERISA Affiliate..................................................................... 12 AN Fairness Opinion.................................................................... 4 AN Financial Advisor................................................................... 4 AN Financial Statements................................................................ 12 AN Material Agreements................................................................. 11 AN Option.............................................................................. 6 AN Option Plans........................................................................ 7 AN Pending Transactions................................................................ 9 AN SEC Documents....................................................................... 12 AN State Certificates.................................................................. 11 AN Termination Fee Event............................................................... 32 Average Parent Share Price............................................................. 5 CERCLA................................................................................. 15 Claim.................................................................................. 31 Closing................................................................................ 4 Closing Date........................................................................... 4 Code................................................................................... 1 Combination Act........................................................................ 1 Communications Act..................................................................... 11 Confidentiality Agreement.............................................................. 28 Conversion Ratio....................................................................... 5 D&O Insurance.......................................................................... 31 DGCL................................................................................... 1 Effective Time......................................................................... 4 Election contest....................................................................... 32 Environmental Law...................................................................... 15 ERISA.................................................................................. 12 Exchange Act........................................................................... 2 Exchange Agent......................................................................... 5 FCC.................................................................................... 11 Final Regulatory Order................................................................. 32 Fully diluted basis.................................................................... 10 GAAP................................................................................... 12 Governmental Entity.................................................................... 11 HSR Act................................................................................ 11 Indemnified Party...................................................................... 30 Interest Payment Event................................................................. 32 IRS.................................................................................... 12 Junior Preferred....................................................................... 11 Material Adverse Effect................................................................ 11 Materials of Environmental Concern..................................................... 15 MC..................................................................................... 1 MC Benefit Plans....................................................................... 19 MC Employee Agreements................................................................. 19 MC ERISA Affiliate..................................................................... 19
iv 51
PAGE ---- MC Fairness Opinion.................................................................... 3 MC Financial Advisor................................................................... 3 MC Financial Statements................................................................ 19 MC Licenses............................................................................ 18 MC Material Agreements................................................................. 18 MC Options............................................................................. 17 MC Pending Transactions................................................................ 17 MC SEC Documents....................................................................... 18 MC Shares.............................................................................. 3 MC Voting Agreement.................................................................... 1 Meeting................................................................................ 25 Merger................................................................................. 1 Merger Agreement....................................................................... A-1 Merger Consideration................................................................... 5 Merger Documents....................................................................... 4 Minimum Condition...................................................................... 2 Notes.................................................................................. 7 Offer.................................................................................. 1,2 Offer Documents........................................................................ 2 Offer Price............................................................................ 2 Offer to Purchase...................................................................... 2 Parent Pending Transactions............................................................ 17 Participant............................................................................ 32 Proposal............................................................................... 25 Proxy Statement........................................................................ 15 Registration Statement................................................................. 15 Regulatory Filings..................................................................... 27 Repurchase Event....................................................................... 31 Repurchase Period...................................................................... 32 Repurchase Shares...................................................................... 32 Rights................................................................................. 1 Rights Plan............................................................................ 1 SAS 49................................................................................. 26 Schedule 14D-1......................................................................... 2 Schedule 14D-9......................................................................... 3 SEC.................................................................................... 2 Securities Act......................................................................... 11 Shareholders' Agreement................................................................ 1 Shares................................................................................. 1 Solicitation........................................................................... 32 State Authority........................................................................ 11 Subsidiary............................................................................. 9 Surviving Corporation.................................................................. 4 Tax Return............................................................................. 14 Taxes.................................................................................. 14 TBCA................................................................................... 1 TIPA................................................................................... 1 VCRs................................................................................... 5 Voting Debt............................................................................ 10 Voting Stock........................................................................... 32
v 52 AGREEMENT AND PLAN OF MERGER AGREEMENT AND PLAN OF MERGER, dated as of May 16, 1996, between METROCALL, INC., a Delaware corporation ("MC"), and A+ NETWORK, Inc., a Tennessee corporation ("AN"). WHEREAS, the Boards of Directors of MC and AN have approved, and deemed it advisable and in the best interests of their respective stockholders to consummate, a combination of their respective businesses upon the terms and subject to the conditions set forth herein; WHEREAS, it is intended that the business combination be accomplished by MC commencing a cash tender offer (the "Offer") for certain issued and outstanding shares of common stock of AN, $.01 par value (the "Shares"), together with the related share purchase rights (the "Rights") issued pursuant to the Rights Agreement dated February 16, 1995 by and between AN and First Union National Bank of North Carolina, as Rights Agent (the "Rights Plan"), to be followed by a merger of AN with and into MC (the "Merger"); WHEREAS, to satisfy a condition to MC entering into this Agreement and incurring the obligations set forth herein, concurrently with the execution and delivery of this Agreement, certain shareholders of AN have entered into a Shareholders' Option and Sale Agreement (the "Shareholders' Agreement") with MC pursuant to which such shareholders have agreed, on the terms and subject to the conditions thereof, to sell certain of their Shares to MC, to vote certain of their Shares and to grant MC an option to purchase certain of such Shares; WHEREAS, to satisfy a condition of AN's entering into this Agreement and incurring the obligations set forth herein, concurrently with the execution and delivery of this Agreement, certain stockholders of MC have entered into a voting agreement (the "MC Voting Agreement") granting AN a proxy with respect to the voting of their MC Shares (as defined below); WHEREAS, the Board of Directors of AN has (i) adopted this Agreement pursuant to Section 48-21-104(a) of the Tennessee Business Corporation Act (the "TBCA"), resolved to submit this Agreement for approval by the holders of the Shares pursuant to Section 48-21-104(b) of the TBCA, and resolved to recommend acceptance of the Offer by the holders of the Shares, (ii) duly approved the business combination contemplated by this Agreement, the Shareholders' Agreement and the MC Voting Agreement in accordance with the provisions of Section 48-103-205 of the Tennessee Business Combination Act (the "Combination Act"), (iii) caused the transactions contemplated hereby not to be a "take over offer" as defined in Section 48-103-102(10)(B)(v) of the Tennessee Investor Protection Act ("TIPA"), and (iv) determined that MC will not be deemed an "Acquiring Person" for the purposes of the Rights Plan. WHEREAS, the Board of Directors of MC has (i) adopted this Agreement, resolved to submit this Agreement for approval by the stockholders of MC pursuant to Section 252 of the Delaware General Corporation Law ("DGCL"), and resolved to recommend that all stockholders of MC approve and adopt this Agreement and the Merger, and (ii) duly approved the business combination contemplated by this Agreement, the Shareholders' Agreement and the MC Voting Agreement so as to render inapplicable thereto the provisions of Section 203 of the DGCL; and WHEREAS, for United States federal income tax purposes, it is intended that the Merger provided for herein shall qualify as a reorganization under Section 368(a) of the Internal Revenue Code of 1986, as amended, and the rules and regulations promulgated thereunder (the "Code"), and this Agreement is intended to be and is adopted as a plan of reorganization within the meaning of Section 368 of the Code; NOW, THEREFORE, in consideration of the foregoing and the respective representations, warranties, covenants and agreements set forth herein, the parties hereto agree as follows: ARTICLE I THE OFFER AND MERGER SECTION 1.1 The Offer. (a) As promptly as practicable (but in no event later than five business days after the public announcement of the execution of this Agreement), MC shall commence (within the meaning 1 53 of Rule 14d-2 under the Securities Exchange Act of 1934, as amended (the Exchange Act)), an offer (the Offer) to purchase for cash 2,140,526 Shares, together with the Rights, at a price of $21.10 per Share, net to the seller in cash (such price, or such higher price per Share as may be paid in the Offer, being referred to herein as the "Offer Price" (provided that MC shall not be required to increase the Offer Price)), subject to there being validly tendered in accordance with the terms of the Offer and not withdrawn prior to the expiration of the Offer 2,140,526 Shares and related Rights (the "Minimum Condition") and to the other conditions set forth in Annex A hereto. Except as otherwise provided herein, MC shall, on the terms and subject to the prior satisfaction or waiver of the conditions of the Offer, accept for payment and pay for Shares tendered as soon as such actions are permitted under applicable law. The Offer shall be made by means of an offer to purchase (the "Offer to Purchase") containing the terms set forth in this Agreement, the Minimum Condition and the other conditions set forth in Annex A hereto. MC shall not amend or waive the Minimum Condition and shall not decrease the Offer Price or decrease the Minimum Condition or amend any other material condition of the Offer in any manner adverse to the holders of the Shares without the prior written consent of AN (such consent to be authorized by the Board of Directors of AN or a duly authorized committee thereof). Notwithstanding the foregoing, (i) if on the expiration date of the Offer (A) there exists an AN Acquisition Proposal (as defined in Section 5.9(a)) involving a tender offer, MC may extend the Offer to a date that is two business days after the date the position of AN with respect to the tender offer is first published or sent pursuant to Rule 14e-2 under the Exchange Act, or (B) there exists an AN Acquisition Proposal other than a tender offer, MC may extend the Offer to a date that is two business days after the first date on which AN's failure to reject such AN Acquisition Proposal would permit MC to terminate this Agreement pursuant to Section 7.1(d)(v) hereof, (ii) in circumstances other than those covered by the preceding clause (i), MC may extend the Offer for such period of time, not to exceed 20 business days in the aggregate, as is reasonably expected to be necessary in order to satisfy the Minimum Condition or the other conditions set forth in Annex A hereto, and (iii) the Offer Price may be increased in good faith and the Offer may be extended to the extent required by law in connection with such increase, in each case without the consent of AN. It is agreed the conditions set forth in Annex A hereto are for the benefit of MC and may be asserted by MC regardless of the circumstances giving rise to any such condition (including any action or inaction by MC not inconsistent with the terms hereof) or, except with respect to the Minimum Condition set forth above, may be waived (but not amended) by MC, in whole or in part at any time and from time to time, in its sole discretion. (b) As soon as practicable on the date the Offer is commenced, MC shall file with the United States Securities and Exchange Commission (the "SEC") a Tender Offer Statement on Schedule 14D-1 with respect to the Offer (together with all amendments and supplements thereto and including the exhibits thereto, the "Schedule 14D-1"). The Schedule 14D-1 will include, as exhibits, the Offer to Purchase and a form of letter of transmittal and summary advertisement (collectively, together with any amendments and supplements thereto, the "Offer Documents"). The Offer Documents will contain (or shall be amended in a timely manner to contain) all information which is required to be included therein in accordance with the Exchange Act and the rules and regulations thereunder and any other applicable law, and shall conform in all material respects with the requirements of the Exchange Act and any other applicable law; provided, however, that no agreement or representation is hereby made or shall be made by MC with respect to information supplied or approved by AN in writing expressly for inclusion in the Offer Documents. MC agrees to take all steps necessary to cause the Offer Documents to be filed with the SEC and to be disseminated to holders of Shares, in each case as and to the extent required by applicable federal securities laws. Each of MC, on the one hand, and AN, on the other hand, agrees to promptly correct any information provided by it for use in the Offer Documents if and to the extent that it shall have become false and misleading in any material respect, and MC further agrees to take all steps necessary to cause the Offer Documents as so corrected to be filed with the SEC and to be disseminated to holders of Shares, in each case as and to the extent required by applicable federal securities laws. AN and its counsel shall be given the opportunity to review the Schedule 14D-1 and any amendments thereto before any of them are filed with the SEC. In addition, MC agrees to provide to AN and its counsel, in written form and promptly after receipt, any comments or other communications that MC or its counsel may receive from time to time from the SEC or its staff with respect to the Offer Documents. 2 54 (c) MC hereby approves of and consents to the Offer and represents and warrants that the Board of Directors of MC, at a meeting duly called and held, has, with the affirmative vote of at least a majority of the members of the Board of Directors of MC, (i) determined that this Agreement, the MC Voting Agreement, and the transactions contemplated hereby (which shall include the Offer, the Merger, and the Shareholders' Agreement) are fair to and in the best interests of the holders of shares of MC's common stock, $.01 par value (the "MC Shares"), (ii) adopted this Agreement and resolved to submit this Agreement for approval by the stockholders of MC pursuant to Section 252 of the DGCL, and (iii) approved this Agreement and the transactions contemplated hereby, such determination and approval constituting approval hereof for purposes of Section 203 of the DGCL. (d) MC has received the written opinion of Wheat, First Securities, Inc. (the "MC Financial Advisor"), dated on or before the date of this Agreement, to the effect that, as of such date, the consideration to be paid (i) to the holders of Shares pursuant to the Offer, and (ii) to the holders of Shares pursuant to the Merger, taken together, is fair to the holders of MC Shares from a financial point of view (the "MC Fairness Opinion"). MC has delivered to AN a copy of the MC Fairness Opinion, together with MC Financial Advisor's written consent to the inclusion of or reference to the MC Fairness Opinion (in a form and substance satisfactory to MC Financial Advisor) in the Offer Documents, the Schedule 14D-9 and the Registration Statement (as defined below). SECTION 1.2 AN Actions. (a) AN hereby approves of and consents to the Offer and represents and warrants that the Board of Directors of AN, at a meeting duly called and held, has, with the affirmative vote of at least a majority of the members of the Board of Directors of AN, (i) determined that this Agreement and the transactions contemplated hereby (which shall include the Offer, the Merger and the Shareholders' Agreement) are fair to and in the best interests of the holders of Shares, (ii) approved this Agreement and the transactions contemplated hereby, such determination and approval constituting approval thereof for purposes of Section 48-103-205 of the Combination Act and such that MC is not an "Acquiring Person" under the Rights Plan, (iii) adopted this Agreement pursuant to Section 48-21-104(a) of the TBCA and resolved to submit the Agreement for approval by the holders of the Shares pursuant to Section 28-21-104(b), and (iv) resolved to recommend that the shareholders of AN who desire to receive cash for their Shares (or a portion thereof) accept the Offer and tender their Shares thereunder to MC and that all shareholders of AN approve and adopt this Agreement and the Merger, which recommendation shall comply with Section 48-103-102(10)(B) of TIPA; provided, that such recommendations may be withdrawn, modified or amended upon a determination of the Board of Directors made in accordance with Section 5.9(f). (b) Concurrently with the commencement of the Offer, AN shall file with the SEC a Solicitation/ Recommendation Statement on Schedule 14D-9 (together with all amendments and supplements thereto and including the exhibits thereto, the "Schedule 14D-9") which shall, subject to a determination of the Board of Directors made in accordance with Section 5.9(f), contain the recommendation referred to in clause (iii) of Section 1.2(a) hereof. The Schedule 14D-9 will contain (or be amended in a timely manner to contain) all information which is required to be included therein in accordance with the Exchange Act and the rules and regulations thereunder and any other applicable law, and shall conform in all material respects with the requirements of the Exchange Act and any other applicable law; provided, however, that no agreement or representation is hereby made or shall be made by AN with respect to information supplied or approved by MC in writing expressly for inclusion in the Schedule 14D-9. AN further agrees to take all steps necessary to cause the Schedule 14D-9 to be filed with the SEC and to be disseminated to holders of Shares, in each case as and to the extent required by applicable federal securities laws. Each of AN, on the one hand, and MC, on the other hand, agrees to promptly correct any information such party has previously provided for use in the Schedule 14D-9, if and to the extent that such information shall have become false and misleading in any material respect, and AN further agrees to take all steps necessary to cause the Schedule 14D-9 (as so corrected) to be filed with the SEC and to be disseminated to holders of Shares, in each case as and to the extent required by applicable federal securities laws. MC and its counsel shall be given the opportunity to review the Schedule 14D-9 and any amendments thereto before any of them are filed with the SEC. In addition, AN agrees to provide MC and its counsel, promptly after receipt and in written form, with any 3 55 comments or other communications that AN or its counsel may receive from time to time from the SEC or its staff with respect to the Schedule 14D-9. (c) In connection with the Offer, AN will promptly furnish or cause to be furnished to MC mailing labels containing the names and addresses of the record holders of the Shares as of a recent date and of those persons becoming record holders subsequent to such date and, to the extent known, a list of the beneficial owners of the Shares as of a recent date, together with copies of all security positions listings and all other information in AN's possession or control regarding the beneficial owners of the Shares, and shall furnish MC with such information and assistance as MC or its agents may reasonably request in communicating the Offer to the shareholders of AN. From and after the date of this Agreement, all such information concerning AN's record and, to the extent known, beneficial holders shall be made available to MC. Except for such steps as are necessary to disseminate the Offer Documents or consummate the Merger, MC shall hold in confidence the information contained in any of such labels and lists and the additional information referred to in the preceding sentence, will use such information only in connection with the Offer and the Merger, and, if this Agreement is terminated, will deliver or cause to be delivered to AN all copies of such information then in its possession or the possession of its agents or representatives. (d) AN has received the written opinion of Prudential Securities Incorporated (the "AN Financial Advisor"), dated on or before the date of this Agreement, to the effect that, as of such date, the consideration to be received by holders of Shares (other than MC and its affiliates) pursuant to the Offer and Merger, taken together, is fair to such holders from a financial point of view (the "AN Fairness Opinion"). AN has delivered to MC a copy of the AN Fairness Opinion, together with AN Financial Advisor's written consent to the inclusion of or reference to the AN Fairness Opinion (in a form and substance satisfactory to AN Financial Advisor) in the Offer Documents, the Schedule 14D-9 and the Registration Statement. SECTION 1.3 The Merger. Upon the terms and subject to the conditions set forth in Article VI hereof, and in accordance with the DGCL and the TBCA, AN shall be merged with and into MC. The closing (the "Closing") of the Merger shall take place as promptly as practicable but in no event later than the date that is two business days after satisfaction or waiver of the conditions set forth in Article VI (other than those relating to documents to be delivered at the Closing). The Closing will be held at such time and at such place as the parties hereto may agree. The date on which the Closing occurs is hereinafter referred to as the "Closing Date." Following the Merger, the separate corporate existence of AN will cease, and MC shall continue as the surviving corporation (the "Surviving Corporation") and shall succeed to and assume all of the rights and obligations of AN. SECTION 1.4 Effective Time. Upon the Closing, the parties hereto shall cause the Merger to be consummated by filing with the Secretary of State of the State of Delaware and the Secretary of State of the State of Tennessee articles of merger, certificates of merger or other appropriate documents (in any such case, the "Merger Documents") in such form as is required by, and executed in accordance with, this Agreement and the relevant provisions of the TBCA and the DGCL (the date and time of the later of such filings being referred to herein as the "Effective Time"). The Merger shall have the effects set forth in Section 48-21-108 of the TBCA and the Section 252 of DGCL. SECTION 1.5 Certificate of Incorporation and By-Laws. The Certificate of Incorporation and By-Laws of MC, as in effect immediately prior to the Effective Time, shall be the Certificate of Incorporation and By-Laws of the Surviving Corporation. SECTION 1.6 Directors and Officers of Surviving Corporation. (a) The directors of MC immediately prior to the Effective Time shall be the directors of the Surviving Corporation at the Effective Time. (b) The officers of MC shall be the officers of the Surviving Corporation and shall hold their office from the Effective Time until they resign or their earlier death or removal. 4 56 ARTICLE II CONVERSION OF SHARES; EXCHANGE PROCEDURES SECTION 2.1 Conversion of Shares. (a) Each Share, together with the related Rights, issued and outstanding immediately prior to the Effective Time (other than Shares held by MC or any Subsidiary (as defined in Section 3.1) of MC) shall, by virtue of the Merger and without any action on the part of the holder thereof, be converted into the right to receive (i) such number of duly authorized, validly issued, fully paid and nonassessable MC Shares equal to the Conversion Ratio (as defined in Section 2.2), and (ii) a number of rights to receive amounts to be determined in accordance with, and which rights are evidenced by, Variable Common Rights having the terms described in Annex C hereto ("VCRs") in an amount equal to the number of MC Shares to be received pursuant to clause (i); plus (iii) cash, if any, for fractional MC Shares and VCRs pursuant to Section 2.3(f) hereof (collectively, the "Merger Consideration"). (b) Each Share (i) held in the treasury of AN or any Subsidiary of AN and (ii) held by MC or any Subsidiary of MC immediately prior to the Effective Time shall, by virtue of the Merger and without any action on the part of the holder thereof, be cancelled and retired and cease to exist and no Merger Consideration shall be issued in respect thereof. SECTION 2.2 Certain Definitions. "Average MC Share Price" shall mean the average of the last reported bid price per MC Share on the Nasdaq National Market for the 50 consecutive trading days ending on the trading day that is five trading days prior to the Closing Date, provided that the Average MC Share Price shall not exceed $21.88 or be less than $17.90. "Conversion Ratio" shall mean the number determined by dividing $21.10 by the Average MC Share Price and rounding the result to the nearest 1/100,000 of a share. In the event that, between the date of this Agreement and the Effective Time, the number of issued and outstanding Shares or MC Shares shall have been changed into a different number of shares or a different class of shares as a result of a stock split, reverse stock split, stock dividend, spinoff, extraordinary dividend, recapitalization, reclassification or other similar transaction with a record date within such period, the Conversion Ratio shall be appropriately adjusted. The Conversion Ratio shall also be adjusted by multiplying such Ratio at the Effective Time by a fraction, (a) the numerator of which is the sum of (i) Scheduled Shares (as defined below) plus (ii) any Shares with respect to which MC consents to the issuance pursuant to Section 5.1(a) ("Total Permitted Shares"), and (b) the denominator of which is the sum of (i) all Shares issued and outstanding at the Effective Time plus (ii) all Shares that would be issuable by AN pursuant to or in connection with pending acquisition or AN Options, provided, that no adjustment shall be made if the resulting fraction is equal to 1.00 or more. SECTION 2.3 Exchange of Certificates. (a) Prior to the Effective Time, AN and MC shall appoint First Union National Bank of North Carolina (or any other commercial bank or trust company, which shall be reasonably acceptable to AN and MC) to act as exchange agent (the "Exchange Agent") to effect the exchange of certificates representing the Shares as set forth in Section 2.1 hereof (collectively, the "AN Certificates") for the Merger Consideration. The Surviving Corporation shall make available, or shall cause to be made available, to the Exchange Agent for the benefit of the holders of Shares for exchange in accordance with this Article II, certificates representing MC Shares and VCRs issuable pursuant to Section 2.1 and funds in amounts necessary to make any cash payments pursuant to Section 2.3(f). (b) Promptly after the Effective Time, the Surviving Corporation shall cause the Exchange Agent to mail to each person who was, at the Effective Time, a holder of record of a AN Certificate (i) a letter of transmittal which shall specify that delivery shall be effected, and risk of loss and title to an AN Certificate shall pass, upon (and only upon) proper delivery to, and receipt of such AN Certificate by, the Exchange Agent, and which shall be in such form and have such other provisions as the Surviving Corporation may reasonably specify, and (ii) instructions for use in effecting the surrender of such AN Certificate in exchange for a certificate representing MC Shares such holder is entitled to pursuant to this Article II. Upon surrender of an AN Certificate, together with such letter of transmittal duly completed and validly executed in 5 57 accordance with the instructions thereto, and such other documents as may be required pursuant to such instructions, the holder of such AN Certificate shall be entitled to receive in exchange therefor, after the Effective Time, (i) a certificate representing that number of MC Shares to which such holder of Shares shall have become entitled pursuant to the provisions of this Article II, (ii) a certificate representing that number of VCRs to which such holder of Shares shall have become entitled pursuant to the provisions of this Article II, and (iii) if applicable, a check representing the amount of cash to which such holder of Shares shall have become entitled pursuant to the provisions of Section 2.3(f), and the AN Certificate so surrendered shall forthwith be canceled. All payments in respect of Shares which are made in accordance with the terms hereof shall be deemed to have been made in full satisfaction of all rights pertaining to such Shares. (c) No dividends or other distributions declared with respect to Shares and payable to the holders of record thereof after the Effective Time shall be paid to the holder of any unsurrendered AN Certificate until the holder thereof shall surrender such AN Certificate in accordance with Section 2.3(b) hereof. Subject to the effect, if any, of applicable law, after the subsequent surrender and exchange of an AN Certificate, the record holder thereof shall be entitled to receive any such dividends or other distributions, without any interest thereon, which theretofore have become payable with respect to MC Shares, into which the Shares represented by such AN Certificate have been converted. (d) If any portion of the Merger Consideration (whether a certificate representing MC Shares, a certificate representing VCRs or a check representing cash payment pursuant to Section 2.3(f)) is to be issued or paid in a name other than that in which the AN Certificate surrendered in exchange therefor is registered, it shall be a condition to the issuance thereof that the AN Certificate so surrendered shall be properly endorsed (or accompanied by an appropriate instrument of transfer) and otherwise in proper form for transfer, and that the person requesting such exchange shall pay to the Exchange Agent in advance any transfer or other taxes required by reason of the issuance of a certificate representing MC Shares, a certificate representing VCRs or a check representing the cash payment pursuant to Section 2.3(f) in any name other than that of the registered holder of the AN Certificate surrendered, or required for any other reason, or shall establish to the satisfaction of the Exchange Agent that such tax has been paid or is not payable. (e) On and after the Effective Time: the stock transfer books of AN shall be closed and there shall be no further registration of transfers of the Shares which were outstanding immediately prior to the Effective Time; the AN Certificates representing Shares (and the Rights) shall cease to have any rights with respect to such Shares (or Rights) except as otherwise provided for herein or by applicable law; and the MC Shares and VCRs into which Shares have been converted pursuant to Section 2.1 hereof shall be deemed outstanding (subject to Section 2.3(c)) notwithstanding the failure of the holders thereof to surrender and exchange AN Certificates as specified herein. (f) No certificates or scrip representing fractional MC Shares or VCRs shall be issued upon the surrender for exchange of AN Certificates, no dividend, distribution or other payment with respect to MC Shares or VCRs shall be payable on or with respect to any fractional MC Share or VCR and such fractional MC Share shall not entitle the owner thereof to vote or to any other rights of a shareholder or creditor of AN. In lieu of any such fractional MC Share or fractional VCR, the Surviving Corporation shall pay to each shareholder of AN who otherwise would be entitled to receive a fractional MC Share and a fractional VCR an amount in cash determined by (i) dividing $21.10 by the Conversion Ratio and (ii) multiplying the result by the fractional MC Share interest to which such holder would otherwise be entitled. (g) At any time following six (6) months after the Effective Time, the Surviving Corporation may terminate its agreement with the Exchange Agent, and thereafter holders of AN Certificates shall be entitled to look to the Surviving Corporation (subject to abandoned property, escheat or other similar laws) only as general creditors thereof with respect to the consideration payable upon due surrender of their AN Certificates pursuant to the provisions of this Article II. Notwithstanding the foregoing, neither the Surviving Corporation nor the Exchange Agent shall be liable to any holder of a AN Certificate for consideration delivered to a public official pursuant to applicable abandoned property, escheat or similar laws. SECTION 2.4 AN Option Plans. (a) Each outstanding option to purchase Shares (each, a "AN Option") granted pursuant to AN's 1987 Employee Stock Incentive Plan, 1992 Employee Stock Incentive 6 58 Plan, 1992 Non-Qualified Stock Option Plan or the Employee Stock Purchase Plan (collectively, the "AN Option Plans"), or to Dan Hiller which are described in Schedule 3.2, and which have not vested prior to the Effective Time, shall become fully exercisable and vested as of the Effective Time. (b) Effective as of the Effective Time, at the option of the holder thereof, either (i) each AN Option then outstanding and not exercised shall be converted automatically into an option to purchase such number of MC Shares and VCRs equal to the number of Shares subject to such AN Option immediately prior to the Effective Time multiplied by the Conversion Ratio, with the exercise price adjusted accordingly, but otherwise on the same terms and conditions as were applicable under the applicable AN Option Plan and the underlying stock option agreement or (ii) up to a maximum of 40% of the Shares subject to AN Options held by each holder, such percentage to be determined by such holder, shall be cancelled and the holder thereof shall be entitled to receive, with respect to each such Share subject to such AN Option, the Offer Price on the Closing Date net to the holder in cash, less the aggregate unpaid exercise price relating to the exercise of such AN Options, and the remaining AN Options held by such holder shall be converted as described in clause (i) of this sentence. (c) Notwithstanding the foregoing provisions, in the case of any option to which Code Section 421 applies, the option price, the number of shares subject to such option, and the terms and conditions of exercise of such option shall be determined in order to comply with Code Section 424(a). As soon as practicable after the Effective Time, the Surviving Corporation shall deliver to the holders of AN Options appropriate notices setting forth such holders' rights pursuant to AN Option Plans and each underlying stock option agreement. SECTION 2.5 AN Subordinated Notes. After the Effective Time, MC will comply with applicable terms of the Indenture for AN's 11 7/8% Senior Subordinated Notes due 2005 (the "Notes") including, if required, offering to repurchase the Notes or causing them to be assumed by the Surviving Corporation. In the event MC elects to exercise the Scenario I Option (as defined in the Shareholders Agreement), MC shall provide an irrevocable letter of credit (from a bank and containing terms reasonably acceptable to AN) permitting AN to draw sufficient funds for AN to honor the "Change in Control" provisions under the 11 7/8% Senior Subordinated Notes due 2005, dated as of October 25, 1995 (the "Indenture") and to permit the Holders (as defined in the Indenture) to sell such Holder's Notes to AN, in whole or in part, at a purchase price in cash equal to 101% of the principal amount thereof, plus accrued and unpaid interest, if any, to the date of repurchase; provided that MC may substitute for the letter of credit a firm financing commitment satisfactory to AN, in its sole discretion, permitting MC to borrow sufficient funds for AN to honor the obligations set forth above. In such event, MC shall provide AN all funds required to satisfy the "Change in Control" obligations under the Indenture prior to the last date AN is permitted to make payments to the Holders of the Notes to be purchased thereunder. If MC provides such funds to AN, upon the purchase of Notes pursuant to the Change in Control obligations, AN will issue to MC negotiable promissory notes in the respective principal amounts of the funds provided by MC, each of which shall bear interest and otherwise have terms and provisions identical as nearly as possible to the Notes so purchased, including the terms and provisions of the Indenture under which such Notes were issued. SECTION 2.6 Cash Election Merger. In the event of, and subject to, the purchase by MC of Shares pursuant to the Mandatory Option in accordance with Section 3.3.3 of the Shareholders' Agreement, then, notwithstanding any other provision of this Agreement to the contrary, each Share, together with the related Rights, issued and outstanding immediately prior to the Effective Time, other than Shares held by MC or any Subsidiary of MC (the "Non-MC Shares"), shall, by virtue of the Merger and without any action on the part of any holder thereof, be converted into the right to receive cash, on the one hand, and MC Shares and VCRs (collectively, the "Alternative Merger Consideration"), on the other, in accordance with the following terms and procedures: (a) Each person who, at the Effective Time, is a record holder of Non-MC Shares shall have the right to submit an Election Form (as defined below) specifying the number of Shares that such person desires to have converted into the right to receive cash equal to $21.10 (a "Cash Election") or the number of MC Shares and VCRs equal, in each case, to the Conversion Ratio (the "Stock Election"). 7 59 (b) As soon as reasonably practicable after the Effective Time, the Exchange Agent shall mail to each holder of record of the Shares immediately prior to the Effective Time (A) a letter of transmittal (which shall specify that delivery shall be effected, and risk of loss and title to the AN Certificates shall pass, only upon delivery of such AN Certificates to the Exchange Agent and shall be in such form and have such other provisions as MC shall specify), (B) instructions for use in effecting the surrender of the AN Certificates in exchange for the Alternative Merger Consideration, and (C) an election form (the "Election Form") providing for such holders to make the Cash Election and/or the Stock Election. (c) Any Cash Election or Stock Election shall have been validly made only if the Exchange Agent shall have received by 5:00 p.m. New York, New York time on a date (the "Election Deadline") to be mutually agreed upon by MC and AN prior to the Effective Time, an Election Form properly completed and executed (with the signature or signatures thereof guaranteed to the extent required by the Election Form) by such holder accompanied by such holder's AN Certificates, or by an appropriate guarantee of delivery of such AN Certificates. Any holder of Shares who has made an election by submitting an Election Form to the Exchange Agent may at any time prior to the Election Deadline change such holder's election by submitting a revised Election Form, properly completed and signed, that is received by the Exchange Act prior to the Election Deadline. In the event that any holder of Shares shall not have submitted an Election Form or if the Election Form is not in proper form, such holder will be deemed to have elected to have made a Cash Election for 40% of such holder's Shares, and a Stock Election for 60% of such holder's Shares. Promptly following the Election Deadline, the Exchange Agent shall examine the Election Forms and determine the aggregate number of Shares that have made, or are deemed to have made, the Cash Election (the "Requested Cash Amount") and the aggregate number of Shares that have made the Stock Election (the "Requested Stock Amount"). (d) In the event that the Requested Cash Amount exceeds 40% of the aggregate Non-MC Shares ("Cash Cap"): (i) each holder who submitted or is deemed to have submitted a Cash Election shall have the right to receive (i) $21.10 per Share for that number of Shares, or fractions thereof, equal to the number specified or deemed to be specified in the Cash Election, multiplied times a fraction, the numerator of which is the Cash Cap and the denominator of which is the Requested Cash Amount; and (ii) with respect to all other Shares, including Shares not converted into cash pursuant to clause (i) and Shares as to which the holder has submitted or is deemed to have submitted a Stock Election, the holder shall have the right to receive for each such share (A) a number of MC Shares equal to the Conversion Ratio, (B) a number of VCRs equal to the number of MC Shares to be received pursuant to clause (A), plus (C) cash, if any, for fractional MC Shares and VCRs pursuant to Section 2.3(f). (e) In the event that the Requested Stock Amount exceeds 60% of the aggregate Non-MC Shares ("Stock Cap"): (i) each holder who submitted or is deemed to have submitted a Stock Election shall have the right to receive for each Share subject to a Stock Election (A) that number of MC Shares equal in each case, to the Conversion Ratio, multiplied by a fraction, the numerator of which is the Stock Cap and the denominator of which is the Requested Stock Amount, (B) a number of VCRs equal to the number of MC Shares to be received pursuant to clause (A), plus (C) cash for fractional shares calculated pursuant to Section 2.3(f); and (ii) with respect to all other Shares, including Shares not converted into MC Shares and VCRs pursuant to clause (i) and Shares as to which the holder has submitted or is deemed to have submitted a Cash Election, or fractions thereof, the holder shall have the right to receive $21.10 in cash per Share. (f) Promptly after the Effective Time, (i) MC shall deposit (or cause to be deposited) with the Exchange Agent, for the benefit of the holders of the Shares, for exchange in accordance with this Section 2.6, cash in the amount sufficient to pay the aggregate cash portion of the Alternative Merger Consideration, and (ii) MC shall deposit (or cause to be deposited) with the Exchange Agent, for the benefit of the holders of the Shares, certificates representing the MC Shares and VCRs for exchange in accordance with this Section 2.6. 8 60 (g) Except as expressly provided herein, the conversion of Shares and exchange for Alternative Merger Consideration, including without limitation the treatment of unexercised AN Options, shall be governed by the provisions of this Article II. ARTICLE III REPRESENTATIONS AND WARRANTIES OF AN AN represents and warrants to MC as follows: SECTION 3.1 Organization. (a) Except as set forth on Schedule 3.1, each of AN and its Subsidiaries is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation and has all requisite corporate power and authority and all necessary governmental approvals to own, lease and operate its properties and to carry on its business as now being conducted, except where the failure to be so organized, existing and in good standing or to have such power, authority, and governmental approvals would not have a Material Adverse Effect on AN and its Subsidiaries taken as a whole. As used in this Agreement, the word "Subsidiary" means, with respect to any party, any corporation or other organization, whether incorporated or unincorporated, of which at least a majority of the securities or other interests having by their terms ordinary voting power to elect a majority of the Board of Directors or others performing similar functions with respect to such corporation or other organization is directly or indirectly owned or controlled by such party or by any one or more of its Subsidiaries, or by such party and one or more of its Subsidiaries. As used in this Agreement, any reference to "Material Adverse Effect" on or with respect to any entity (or group of entities taken as a whole) means any event, change or effect that is materially adverse to the consolidated financial condition, businesses, results of operations or cash flows of such entity (or, if used with respect thereto, of such group of entities taken as a whole). AN and each of its Subsidiaries is duly qualified or licensed to do business and in good standing in each jurisdiction in which the property owned, leased or operated by it or the nature of the business conducted by it makes such qualification or licensing necessary, except where the failure to be so duly qualified or licensed and in good standing would not, individually or in the aggregate, have a Material Adverse Effect on AN and its Subsidiaries, taken as a whole, or prevent AN from consummating any of the transactions contemplated hereby. (b) AN has heretofore made available to MC a complete and correct copy of the Charter and By-Laws or other organizational documents of AN and the organizational documents of each of its Subsidiaries, as currently in effect. Each such document is in full force and effect and no other organizational documents are applicable to or binding upon AN or any Subsidiary. (c) Schedule 3.1 identifies all the Subsidiaries of AN. SECTION 3.2 Capitalization. (a) The authorized capital stock of AN consists of 30,000,000 shares of common stock and 1,500,000 shares of preferred stock, par value $.01 per share, of which 500,000 shares have been reserved and designated as Series A Junior Participating Preferred Stock ("Junior Preferred"). Schedule 3.2 sets forth (i) the number of issued and outstanding Shares as of the date hereof; (ii) the number of Shares that would be issuable by AN upon the exercise of all unexpired AN Options granted pursuant to AN Option Plans, including the name of each holder of AN Options, the number of AN Options held by such holder, and the date of grant, date of vesting, and exercise price for all such AN Options of AN; (iii) all Shares that would be issuable by AN pursuant to or in connection with each of the acquisition agreements or transactions identified in Schedule 3.2 (the "AN Pending Transactions"); and (iv) all other Shares issuable to any person pursuant to any existing options, warrants, calls, preemptive (or similar) rights, subscriptions or other rights, agreements, arrangements or commitments of any character, except pursuant to the Rights (collectively, the "Scheduled Shares"). As of the date hereof, no shares of preferred stock, including any Junior Preferred, are issued and outstanding or held in the treasury of AN, and no Shares are held in the treasury of AN. AN has taken all necessary corporate and other action to authorize and reserve and to permit it to issue shares of AN's capital stock which may be issued pursuant to AN Options. The Shares subject to the Shareholders' Agreement, together with the Shares acquired by MC in the Offer (assuming the Minimum Condition is not waived or reduced) do, and at all times prior to the earlier of exercise or expiration of the 9 61 options granted pursuant to the Shareholders' Agreement will, represent at least a majority of the Shares on a fully diluted basis. For purposes of this Agreement, "fully diluted basis" shall mean, at any time, the number of Shares that would be outstanding assuming the exercise of all outstanding options and other rights to acquire Shares (other than pursuant to the Rights) or other securities convertible into Shares (including any Shares to be issued pursuant to any AN Pending Transaction), and the conversion of all securities convertible into Shares. All the outstanding shares of AN's capital stock are, and all shares which may be issued pursuant to the exercise of AN Options, when issued in accordance with the respective terms thereof will be, duly authorized, validly issued, fully paid and non-assessable and free of any preemptive (or similar) rights. There are no bonds, debentures, notes or other indebtedness having general voting rights (or convertible into securities having such rights) ("Voting Debt") of AN or any of its Subsidiaries issued and outstanding. Except as set forth in Schedule 3.2 and for the Rights, as of the date hereof, (i) there are no shares of capital stock of AN authorized, issued or outstanding, (ii) there are no existing options, warrants, calls, preemptive (or similar) rights, subscriptions or other rights, agreements, arrangements or commitments of any character, relating to the issued or unissued capital stock of AN or any of its Subsidiaries, obligating AN or any of its Subsidiaries to issue, transfer or sell or cause to be issued, transferred or sold any shares of capital stock or Voting Debt of, or other equity interest in, AN or any of its Subsidiaries or securities convertible into or exchangeable for such shares or equity interest or obligations of AN or any of its Subsidiaries, and (iii) other than as contemplated herein, there are no outstanding contractual obligations of AN or any of its Subsidiaries to repurchase, redeem or otherwise acquire any Shares, or capital stock of AN or any Subsidiary or affiliate of AN. (b) All of the outstanding shares of capital stock of each of AN's Subsidiaries are beneficially owned by AN, directly or indirectly, free and clear of all security interests, liens, claims, pledges, agreements, limitations on voting rights, charges or other encumbrances of any nature whatsoever, other than liens in favor of First National Bank of Chicago. (c) There are no voting trusts or other agreements or understandings to which AN or any of its Subsidiaries is a party with respect to the voting of the capital stock of AN or any of its Subsidiaries. Other than as contemplated herein, none of AN or its Subsidiaries is required to redeem, repurchase or otherwise acquire shares of capital stock of AN, or any of its Subsidiaries, respectively, as a result of the transactions contemplated by this Agreement. SECTION 3.3 Authorization; Validity of Agreement; AN Action. (a) AN has full corporate power and authority to execute and deliver this Agreement and the MC Voting Agreement and to consummate the transactions contemplated hereby and thereby. The execution, delivery and performance by AN of this Agreement and the MC Voting Agreement, and the consummation by it of the transactions contemplated hereby and thereby have been duly authorized by the Board of Directors of AN and no other corporate action on the part of AN is necessary to authorize the execution and delivery by AN of this Agreement and the MC Voting Agreement and the consummation by it of the transactions contemplated hereby and thereby (other than, with respect to the Merger, the approval of this Agreement by the affirmative vote of the holders of a majority of the outstanding Shares). This Agreement and the MC Voting Agreement have been duly executed and delivered by AN and (assuming due and valid authorization, execution and delivery hereof by the other parties hereto and thereto) are valid and binding obligations of AN enforceable against AN in accordance with their terms, except that (i) such enforcement may be subject to applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws, now or hereafter in effect, affecting creditors' rights generally, and (ii) the remedy of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought. (b) The Board of Directors of AN also has approved the transactions contemplated by this Agreement, the MC Voting Agreement and the Shareholders' Agreement so as to render inapplicable thereto the provisions of Section 48-103-206 of the Combination Act and to cause such transactions to fail to meet the definition of "takeover offer" as defined in Section 46-103-102(10)(B)(v) of TIPA, and so that MC and the stockholder parties to the MC Voting Agreement will not be deemed an "Acquiring Person" for purposes of the Rights. 10 62 SECTION 3.4 Consents and Approvals; No Violations; Licenses. (a) Neither the execution, delivery or performance of this Agreement or the MC Voting Agreement by AN nor the consummation by AN of the transactions contemplated hereby or thereby nor compliance by AN with any of the provisions hereof or thereof will (i) conflict with or result in any breach of any provision of the Charter or By-Laws or other organizational documents of AN or of any of its Subsidiaries, (ii) require on the part of AN any filing with, or permit, authorization, consent or approval of, any court, arbitral tribunal, administrative agency or commission or other governmental or other regulatory authority or agency (a "Governmental Entity") except for (A) filings, permits, authorizations, consents and approvals as may be required under, and other applicable requirements of, the Exchange Act, the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"), the Federal Communication Commission ("FCC"), the Communications Act of 1934, as amended (the "Communications Act"), state public utility or public service laws, the Securities Act of 1933, as amended (the "Securities Act"), the DGCL, the TBCA, state or foreign laws relating to takeovers, state securities or blue sky laws, and the laws of other states in which AN is qualified to do or is doing business, or (B) where the failure to obtain such permits, authorizations, consents or approvals or to make such filings, individually or in the aggregate, would not have a Material Adverse Effect on AN and its Subsidiaries, taken as a whole, or prevent AN from consummating the transactions contemplated hereby, (iii) except as disclosed on Schedule 3.4(a), result in a violation or breach of, or constitute (with or without due notice or lapse of time or both) a default (or give rise to any right of termination, cancellation or acceleration) under, any of the terms, conditions or provisions of any note, bond, mortgage, indenture, lease, license, contract, agreement or other instrument or obligation to which AN or any of its Subsidiaries is a party or by which any of them or any of their properties or assets may be bound and which has been included as an exhibit to AN's Annual Report on Form 10-K for the fiscal year ended December 31, 1995 (the "AN Material Agreements") or (iv) violate any order, writ, injunction, decree, statute, rule or regulation applicable to AN, any of its Subsidiaries or any of their properties or assets, excluding from the foregoing clauses (iii) and (iv) such violations, breaches or defaults which would not, individually or in the aggregate, have a Material Adverse Effect on AN and its Subsidiaries, taken as a whole, or prevent AN from consummating the transactions contemplated hereby. (b) AN or one of its Subsidiaries holds all licenses, permits, certificates, franchises, ordinances, registrations, or other rights, applications and authorizations filed with, granted or issued by, or entered by any Governmental Entity, including without limitation, the FCC, or any state or local regulatory authorities or any state or local public service commission or public utility commission asserting jurisdiction over the radio facilities used in AN's business (each, a "State Authority"), that are required for the conduct of their businesses as now being conducted, except for those the absence of which would not individually or in the aggregate have a Material Adverse Effect on AN and its Subsidiaries taken as a whole (collectively, "AN Licenses") and, provided, that no representation is made with respect to such matters on behalf of any third-parties who are part of the "A+ Network". The AN Licenses are valid, in full force and effect, and the terms of said AN Licenses are not subject to any restrictions or conditions that materially limit or would materially limit the operations of the business of AN or any of its Subsidiaries as presently conducted, other than restrictions or conditions generally applicable to licenses of that type. The AN Licenses granted, issued or entered by the FCC are subject to the Communications Act. There are no proceedings pending or, to the best knowledge of AN, complaints or petitions by others, or threatened proceedings, before the FCC or any other Governmental Entity relating to the business or operations of AN or any of its Subsidiaries or The AN Licenses, and there are no facts or conditions that reasonably could be expected to constitute grounds for the FCC to revoke, terminate, suspend, deny, annul, or impose conditions on any renewal of any AN Licenses, that would, individually or in the aggregate, have a Material Adverse Effect on AN and its Subsidiaries, taken as a whole, or prevent AN from consummating the transactions contemplated hereby or to impose any fines, forfeitures or other penalties on AN or its Subsidiaries that would, individually or in the aggregate, have a Material Adverse Effect on AN and its Subsidiaries, taken as a whole. (c) Schedule 3.4(c) contains a true and complete list of each FCC permit and FCC license issued in the name of AN, or any of its Subsidiaries as of May 9, 1996. Schedule 3.4(c) also contains a true and complete list of all licenses, certificates, consents, permits, approvals and authorizations pending before or issued by any State Authority (the "AN State Certificates"). 11 63 SECTION 3.5 SEC Reports and Financial Statements. AN and its Subsidiaries have filed with the SEC all forms, reports, schedules, statements, and other documents required to be filed by them with the SEC (as such documents have been amended since the time of their filing, collectively, the "AN SEC Documents"), and have filed all exhibits required to be filed with AN SEC Documents. As of their respective dates or, if amended, as of the date of the last such amendment, AN SEC Documents, including, without limitation, any financial statements or schedules included therein, complied in all material respects with the applicable requirements of the Securities Act and the Exchange Act, and did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. None of AN's Subsidiaries is required to file any forms, reports or other documents with the SEC pursuant to Section 12 or 15 of the Exchange Act. The financial statements of AN included in AN's Annual Report on Form 10-K for the fiscal year ended December 31, 1995 (including the related notes thereto) and for the quarter ended March 31, 1996, copies of which have been provided to MC (together, the "AN Financial Statements"), have been prepared from, and are in accordance with, the books and records of AN and its consolidated Subsidiaries, comply in all material respects with applicable accounting requirements and with the published rules and regulations of the SEC with respect thereto, have been prepared in accordance with United States generally accepted accounting principles ("GAAP") applied on a consistent basis throughout the periods involved (except as may be indicated in the notes thereto and subject, in the case of unaudited interim financial statements, to normal year-end adjustments), and fairly present the consolidated financial position and the consolidated results of operations and cash flows of AN and its consolidated Subsidiaries as at the dates thereof or for the periods presented therein. SECTION 3.6 No Undisclosed Liabilities. Except (i) as disclosed in AN SEC Documents, (ii) as set forth in Schedule 3.6, (iii) AN Pending Transactions, and (iv) for liabilities incurred in the ordinary course of business and consistent with past practice, and liabilities incurred in connection with the consummation of the transactions contemplated hereby (none of which, individually or in the aggregate, is reasonably likely to have a Material Adverse Effect on AN and its Subsidiaries, taken as a whole), since December 31, 1995, neither AN nor any of its Subsidiaries has incurred any liabilities or obligations of any nature (whether accrued, absolute, contingent or otherwise) which would be required by GAAP to be reflected on a consolidated balance sheet of AN and its Subsidiaries (including the notes thereto), and, which individually or in the aggregate, is reasonably likely to have a Material Adverse Effect on AN and its Subsidiaries, taken as a whole. SECTION 3.7 Absence of Certain Changes. Except as contemplated by this Agreement, for AN Pending Transactions, or as disclosed in the AN SEC Documents or in Schedule 3.7 hereto, since December 31, 1995, (i) AN and its Subsidiaries have conducted their respective businesses only in the ordinary course of business and consistent with past practice, (ii) there has not been any change in the business, properties, assets, liabilities, financial condition, cash flows, operations, licenses, franchises or results of operations of AN or its Subsidiaries which has had a Material Adverse Effect on AN and its Subsidiaries, taken as a whole, and (iii) there has not been any action taken by AN or its Subsidiaries of a type described in clauses (ii) through (xvii) of Section 5.1(a). SECTION 3.8 Employee Benefit Plans; ERISA; Labor. (a) Schedule 3.8 hereto sets forth (i) a list of all employee benefit plans (including but not limited to plans described in section 3(3) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA")), maintained by AN, any of its Subsidiaries or any trade or business, whether or not incorporated (an "AN ERISA Affiliate"), which together with AN would be deemed a "single employer" within the meaning of section 4001(b)(1) of ERISA ("AN Benefit Plans") and (ii) all employment, retention, and severance agreements with employees of AN and its Subsidiaries ("AN Employee Agreements"). True and complete copies of all current AN Benefit Plans and Employee Agreements have been provided to MC by AN. (b) With respect to each AN Benefit Plan: (i) if intended to qualify under section 401(a) or 401(k) of the Code, such plan has received a determination letter from the Internal Revenue Service ("IRS") stating that it so qualifies and that its trust is exempt from taxation under section 501(a) of the Code, no such determination letter has been revoked and no such revocation has been threatened, nothing has occurred that could reasonably be expected to cause the relevant AN Benefit Plan to lose such qualification or exemption; 12 64 (ii) such plan has been administered in all material respects in accordance with its terms and applicable law, including state and federal securities laws; (iii) no breaches of fiduciary duty by AN, or, to AN's knowledge, by any other person, have occurred that might reasonably be expected to give rise to material liability on the part of AN or any AN ERISA Affiliate; (iv) no disputes are pending, or, to the knowledge of AN, threatened that might reasonably be expected to give rise to material liability on the part of AN or any AN ERISA Affiliate; (v) no prohibited transaction (within the meaning of Section 406 of ERISA) has occurred that might reasonably be expected to give rise to material liability on the part of AN or any AN ERISA Affiliate; (vi) all contributions required to be made to such plan as of the date hereof (taking into account any extensions for the making of such contributions) have been made in full; (vii) to AN's knowledge, no AN Benefit Plans are presently under audit or examination (nor has notice been received of a potential audit or examination) by the IRS, Department of Labor, or any other governmental agency or entity, and no matters are pending with respect to any AN Benefit Plan under the IRS's Voluntary Compliance Resolution program, its Closing Agreement Program, or other similar programs; and (viii) all monies withheld from employee paychecks with respect to Benefit Plans have been transferred to the appropriate plan in accordance with the terms of such plan. (c) No AN Benefit Plan is a "multiemployer pension plan," as defined in section 3(37) of ERISA, nor is any AN Benefit Plan a plan described in section 4063(a) of ERISA. No AN Benefit Plan is or has been subject to Title IV of ERISA. (d) No liability under Title IV of ERISA has been incurred by AN or any AN ERISA Affiliate (whether direct, indirect, actual, or contingent, and including, without limitation, withdrawal liability to a multiemployer plan), and no condition exists that presents a material risk to AN or any AN ERISA Affiliate of incurring a material liability under such Title. No AN Benefit Plan has incurred an accumulated funding deficiency, as defined in section 302 of ERISA or section 312 of the Code, whether or not waived. (e) With respect to each AN Benefit Plan that is a "welfare plan" (as defined in section 3(1) of ERISA), no such plan provides medical or death benefits with respect to current or former employees of AN or any of its Subsidiaries beyond their termination of employment (other than to the extent required by applicable law). All group health plans of AN and AN ERISA Affiliates have been operated in material compliance with the requirements of Section 4980B (and its predecessor) and 5000 of the Code, and AN and AN ERISA Affiliates have provided to individuals entitled thereto all required notices and coverage pursuant to Section 4980B, except to the extent that failure to provide such notice or coverage is not reasonably likely to result, individually or in the aggregate, in a Material Adverse Effect on AN and its Subsidiaries, taken as a whole. (f) No AN Benefit Plan, plan documentation or agreement, summary plan description or other written communication distributed generally to employees of AN or its Subsidiaries by its terms prohibits the amendment or termination of any such AN Benefit Plan. (g) As of the date hereof, except for AN Employee Agreements and AN Option Plans, AN and its Subsidiaries are not parties to any (i) agreement with any director, executive officer or other key employee of AN or its Subsidiaries (A) the benefits of which are contingent, or the terms of which are materially altered, upon the occurrence of a transaction involving AN or its Subsidiaries of the nature of any of the transactions contemplated by this Agreement, (B) providing any term of employment or compensation guarantee or (C) providing severance benefits or other benefits after the termination of employment of such director, executive officer or key employee; (ii) agreement, plan or arrangement under which any person may receive payments from AN or its Subsidiaries that may be subject to the tax imposed by Section 4999 of the Code or included in the determination of such person's "parachute payment" under Section 280G of the Code; and (iii) agreement or plan binding AN or its Subsidiaries, including without limitation any stock option plan, stock appreciation right plan, restricted stock plan, stock purchase plan, severance benefit plan or employee benefit plan, any of the benefits of which will be increased, or the vesting of the benefits of which will be accelerated, by the occurrence of any of the transactions contemplated by this Agreement or the value of any of the benefits of which will be calculated on the basis of any of the transactions contemplated by this Agreement. 13 65 (h) As of the date hereof, no collective bargaining agreement is binding and in force against AN or its Subsidiaries or is currently under negotiation, and no current employees of AN or its Subsidiaries are represented by any labor union. As of the date hereof, to AN's knowledge, no labor representation effort exists with respect to AN or its Subsidiaries. SECTION 3.9 Litigation. Schedule 3.9 hereto sets forth each suit, action or proceeding pending (as to which AN has received notice), or, to the knowledge of AN, threatened against AN, any of its Subsidiaries, or any of their properties or assets on the date hereof. Except as set forth on Schedule 3.9, none of the foregoing, individually or in the aggregate, is reasonably likely to have a Material Adverse Effect on AN and its Subsidiaries, taken as a whole, if resolved adversely to AN or its Subsidiaries. As of the date hereof, neither AN nor any of its Subsidiaries, nor any of their respective properties, is subject to any order, writ, judgment, injunction, decree, determination or award having, or which would have, a Material Adverse Effect on AN and its Subsidiaries, taken as a whole, or which would prevent AN from consummating the transactions contemplated hereby. SECTION 3.10 No Default; Compliance with Applicable Laws. Neither AN nor any of its Subsidiaries is in default or violation in any material respect of any term, condition or provision of (i) its respective Charter or By-laws or other organizational documents, (ii) any AN Material Agreement or (iii) any federal, state, local or foreign statute, law, ordinance, rule, regulation, judgment, decree, order, concession, grant, franchise, permit or license or other governmental authorization or approval applicable to AN or any of its Subsidiaries or by which they or their respective assets may be bound (other than matters addressed in Sections 3.4, 3.8, 3.9, 3.11, and 3.12), excluding from the foregoing clauses (ii) and (iii), defaults or violations which are not reasonably likely to have, individually or in the aggregate, a Material Adverse Effect on AN and its Subsidiaries, taken as a whole, or prevent AN from consummating the transactions contemplated hereby. SECTION 3.11 Taxes. Except as set forth on Schedule 3.11: (a) AN and its Subsidiaries have (i) duly and timely filed (or there has been filed on their behalf) with the appropriate governmental authorities all Tax Returns (as hereinafter defined) required to be filed by them on or prior to the date hereof, other than those Tax Returns for which extensions for filing have been obtained in a timely manner, and such Tax Returns are true, correct and complete in all material respects, and (ii) duly paid in full all Taxes (as hereinafter defined) shown to be due on such Tax Returns or have provided adequate reserves in their financial statements for any Taxes that have not been paid. There are no liens on any of the assets of AN or any of its Subsidiaries that arose in connection with any delinquency in paying any tax. (b) As of the date hereof, there are no ongoing federal, state, local or foreign audits or examinations of any Tax Return of AN or its Subsidiaries. (c) As of the date hereof, there are no outstanding requests, agreements, consents or waivers to extend the statutory period of limitations applicable to the assessment of any Taxes or deficiencies against AN or any of its Subsidiaries (excluding extensions for filings that have been timely obtained), and no power of attorney granted by either AN or any of its Subsidiaries with respect to any Taxes is currently in force. (d) Neither AN nor any of its Subsidiaries is a party to any agreement providing for the allocation or sharing of Taxes. (e) "Taxes" shall mean any and all taxes, charges, fees, levies or other assessments, including, without limitation, income, gross receipts, excise, real or personal property, sales, withholding, social security, occupation, use, service, service use, license, net worth, payroll, franchise, transfer and recording taxes, fees and charges, imposed by the Internal Revenue Service or any taxing authority (whether domestic or foreign including, without limitation, any state, county, local or foreign government or any subdivision or taxing agency thereof (including a United States possession)), whether computed on a separate, consolidated, unitary, combined or any other basis; and such term shall include any interest whether paid or received, fines, penalties or additional amounts attributable to, or imposed upon, or with respect to, any such taxes, charges, fees, levies or other assessments. "Tax Return" shall mean any report, 14 66 return, document, declaration or other information or filing required to be supplied to any taxing authority or jurisdiction (foreign or domestic) with respect to Taxes. SECTION 3.12 Environmental Matters. (a) AN and its Subsidiaries have complied in all respects with all applicable Environmental Laws (as defined below), except to the extent that any failure to comply is not reasonably likely to have, individually or in the aggregate, a Material Adverse Effect on AN and its Subsidiaries, taken as a whole. There is no pending or, to the knowledge of AN, threatened, civil or criminal litigation, written notice or violation, formal administrative proceeding or investigation, inquiry or information request by any Governmental Entity relating to any Environmental Law involving AN or any of its Subsidiaries or any of their properties. For purposes of this Agreement, "Environmental Law" means any foreign, federal, state or local law, statute, rule or regulation or the common law relating to the environment or occupational health and safety, including without limitation any statute, regulation or order pertaining to (i) treatment, storage, disposal, generation or transportation of industrial, toxic or hazardous substances or solid or hazardous waste; (ii) air, water and noise pollution; (iii) groundwater and soil contamination; (iv) the release or threatened release into the environment of industrial, toxic or hazardous substances, or solid or hazardous waste, including without limitation emissions, discharges, injections, spills, escapes or dumping of pollutants, contaminants or chemicals; (v) the protection of wildlife, marine sanctuaries and wetlands, including without limitation all endangered and threatened species; (vi) storage tanks, vessels and containers; (vii) underground and other storage tanks or vessels, abandoned, disposed or discarded barrels, containers and other closed receptacles; (viii) health and safety of employees and other persons; and (ix) manufacture, processing, use, distribution, treatment, storage, disposal, transportation or handling of pollutants, contaminants, chemicals or industrial, toxic or hazardous substances or oil or petroleum products or solid or hazardous waste. As used above, the terms "release" and "environment" shall have the meaning set forth in the federal Comprehensive Environmental Response, Compensation and Liability Act of 1980 ("CERCLA"). (b) With the exception of releases that are not reasonably likely to have, individually or in the aggregate, a Material Adverse Effect on AN and its Subsidiaries, taken as a whole, there have been no releases of any Materials of Environmental Concern (as defined below) into the environment by AN or any of its Subsidiaries, or, to the knowledge of AN, by any other party at any parcel of real property or any facility formerly or currently owned, operated or controlled by AN or any of its Subsidiaries. For purposes of this Agreement, "Materials of Environmental Concern" means any chemicals, pollutants or contaminants, hazardous substances (as such term is defined under CERCLA), solid wastes and hazardous wastes (as such terms are defined under the federal Resource Conservation and Recovery Act), toxic materials, oil or petroleum and petroleum products, or any other material subject to regulation under any Environmental Law. SECTION 3.13 Insurance. AN and the Subsidiaries maintain adequate insurance with respect to the their respective businesses and are in compliance with all material requirements and provisions thereof. SECTION 3.14 Offer Documents; Proxy Statement; Registration Statement; Other Information. The information with respect to AN, its officers and directors and its Subsidiaries (i) to be contained in the Schedule 14D-9, (ii) supplied in writing by AN for inclusion in the Offer Documents, (iii) to be contained in the definitive joint Proxy Statement to be furnished to the respective shareholders of AN and the stockholders of MC pursuant to Section 5.2 and which will form a part of MC's Registration Statement on Form S-4 (the "Registration Statement") to be filed with the SEC and will constitute a prospectus of MC with respect to the MC Shares to be issued in the Merger (the "Proxy Statement"), and (iv) to be contained in the Registration Statement will not, on the respective dates on which (A) the Schedule 14D-9, the Offer Documents or any amendment or supplement thereto are filed with the SEC (in the case of each respective document), (B) the Proxy Statement is first mailed to shareholders of AN and MC or on the date of the stockholders' meetings referred to in Section 5.2 (in the case of the Proxy Statement), (C) the Registration Statement becomes effective (in the case of the Registration Statement), and (D) in the case of the Proxy Statement and the Registration Statement, as such Proxy Statement or Registration Statement is then amended or supplemented, at the Effective Time, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading, or necessary to correct any statement made by AN in any earlier filing with the SEC or any amendment thereto or any earlier communication made by AN 15 67 (including the Proxy Statement) to shareholders of AN with respect to the Merger. When the Proxy Statement or any amendment or supplement thereto shall be mailed, and at the time of each meeting and at the Effective Time, the Proxy Statement will comply as to form with all applicable laws including the provisions of the Securities Act and the Exchange Act and the rules and regulations promulgated thereunder. If at any time prior to the Effective Time any event with respect to AN, its officers and directors and its Subsidiaries should occur which is or should be described in an amendment of, or a supplement to, the Proxy Statement or the Registration Statement, AN shall promptly so inform MC and such event shall be so described in an amendment or supplement to the Proxy Statement and such information in such amendment or supplement will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, or necessary to correct any statement made by AN in any earlier filing with the SEC of such Proxy Statement, or any amendment or supplement thereto, or any earlier communication to shareholders of AN with respect to the Merger. SECTION 3.15 Transactions with Affiliates. Except as set forth in the AN SEC Documents or on Schedule 3.15, since December 31, 1995, neither AN nor any of its Subsidiaries has entered into any transaction with any current director or officer of AN or any Subsidiary or any transaction which would be subject to proxy statement disclosure under the Exchange Act pursuant to the requirements of Item 404 of Regulation S-K. SECTION 3.16 Brokers. Other than the AN Financial Advisor, no broker, finder or investment banker is entitled to any brokerage, finder's or other fee or commission from AN in connection with the transactions contemplated by this Agreement. AN has informed MC of the compensation to be paid by AN to the AN Financial Advisor. ARTICLE IV REPRESENTATIONS AND WARRANTIES OF MC MC represents and warrants to AN as follows: SECTION 4.1 Organization. (a) Each of MC and its Subsidiaries is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation and has all requisite corporate power and authority and all necessary governmental approvals to own, lease and operate its properties and to carry on its business as now being conducted, except where the failure to be so organized, existing and in good standing or to have such power, authority, and governmental approvals would not have a Material Adverse Effect on MC and its Subsidiaries taken as a whole. MC and each of its Subsidiaries is duly qualified or licensed to do business and in good standing in each jurisdiction in which the property owned, leased or operated by it or the nature of the business conducted by it makes such qualification or licensing necessary, except where the failure to be so duly qualified or licensed and in good standing would not, individually or in the aggregate, have a Material Adverse Effect on MC and its Subsidiaries, taken as a whole, or prevent MC from consummating any of the transactions contemplated hereby. (b) MC has heretofore made available to AN a complete and correct copy of the Certificate of Incorporation and By-Laws or other organizational documents of MC and the organizational documents of each of its Subsidiaries, as currently in effect. Each such document is in full force and effect and no other organizational documents are applicable to or binding upon MC or any Subsidiary. (c) Schedule 4.1 identifies all the Subsidiaries of MC. (d) At the time of issuance, (i) the MC Shares and VCRs issued pursuant to the Merger or the Shareholders' Agreement will be duly authorized and validly issued, and the MC Shares will be fully paid and nonassessable and not subject to preemptive (or similar) rights; and (ii) the VCRs will represent unsecured obligations of MC ranking pari passu with all other general obligations of MC. SECTION 4.2 Capitalization. (a) The authorized capital stock of MC consists of 26,000,000 shares of common stock and 1,000,000 shares of preferred stock, par value $.01 per share. Schedule 4.2 sets forth the 16 68 (i) the number of issued and outstanding MC Shares as of the date hereof; (ii) the number of MC Shares that would be issuable by MC upon the exercise of all unexpired options to purchase MC Shares ("MC Options"), and date of vesting thereof, (iii) all MC Shares that would be issuable by MC pursuant to or in connection with each of the acquisition agreements or transactions identified in Schedule 4.2 (the "MC Pending Transactions"); and (iv) all other MC Shares issuable to any person pursuant to any existing options, warrants, calls, preemptive (or similar) rights, subscriptions or other rights, agreements, arrangements or commitments of any character. As of the date hereof, no shares of preferred stock are issued and outstanding or held in the treasury of MC, and no MC Shares are held in the treasury of MC. MC has taken all necessary corporate and other action to authorize and reserve and to permit it to issue MC Shares which may be issued pursuant to MC Options or the transactions contemplated hereby. There is no Voting Debt of MC or any of its Subsidiaries issued and outstanding. Except as set forth in Schedule 4.2, as of the date hereof, (i) there are no shares of capital stock of MC authorized, issued or outstanding, (ii) there are no existing options, warrants, calls, preemptive (or similar) rights, subscriptions or other rights, agreements, arrangements or commitments of any character, relating to the issued or unissued capital stock of MC or any of its Subsidiaries, obligating MC or any of its Subsidiaries to issue, transfer or sell or cause to be issued, transferred or sold any shares of capital stock or Voting Debt of, or other equity interest in, MC or any of its Subsidiaries or securities convertible into or exchangeable for such shares or equity interest or obligations of MC or any of its Subsidiaries, and (iii) there are no outstanding contractual obligations of MC or any of its Subsidiaries to repurchase, redeem or otherwise acquire any MC Shares, or capital stock of MC or any Subsidiary or affiliate of MC. (b) All of the outstanding shares of capital stock of each of MC's Subsidiaries are beneficially owned by MC, directly or indirectly, free and clear of all security interests, liens, claims, pledges, agreements, limitations on voting rights, charges or other encumbrances of any nature whatsoever, other than liens in favor of Toronto Dominion Bank or First National Bank of Boston. (c) Except for (i) the Voting Agreement dated August 31, 1994, as amended, which has been terminated effective at the Effective Time, and (ii) the Brock Voting Agreement dated May 15, 1996, there are no voting trusts or other agreements or understandings to which MC or any of its Subsidiaries is a party with respect to the voting of the capital stock of MC or any of its Subsidiaries. None of MC or its Subsidiaries is required to redeem, repurchase or otherwise acquire shares of capital stock of MC, or any of its Subsidiaries, respectively, as a result of the transactions contemplated by this Agreement. SECTION 4.3 Authorization; Validity of Agreement; MC Action. (a) MC has full corporate power and authority to execute and deliver this Agreement and the Shareholders' Agreement and to consummate the transactions contemplated hereby and thereby. The execution, delivery and performance by MC of this Agreement and the Shareholders' Agreement, and the consummation by it of the transactions contemplated hereby and thereby have been duly authorized by the Board of Directors of MC and no other corporate action on the part of MC is necessary to authorize the execution and delivery by MC of this Agreement and the Shareholders' Agreement and the consummation by it of the transactions contemplated hereby and thereby (other than, with respect to the Merger, the adoption of this Agreement by the affirmative vote of the holders of a majority of the outstanding MC Shares). This Agreement and the Shareholders' Agreement have been duly executed and delivered by MC and (assuming due and valid authorization, execution and delivery hereof by the other parties hereto and thereto) are valid and binding obligations of MC enforceable against MC in accordance with their terms, except that (i) such enforcement may be subject to applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws, now or hereafter in effect, affecting creditors' rights generally, and (ii) the remedy of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought. (b) The Board of Directors of MC also has approved the transactions contemplated by this Agreement, the Shareholders' Agreement and the MC Voting Agreement so as to render inapplicable thereto the provisions of Section 203 of the DGCL. 17 69 SECTION 4.4 Consents and Approvals; No Violations; Licenses. (a) Neither the execution, delivery or performance of this Agreement or the Shareholders' Agreement by MC nor the consummation by MC of the transactions contemplated hereby or thereby nor compliance by MC with any of the provisions hereof or thereof will (i) conflict with or result in any breach of any provision of the Certificate of Incorporation or By-Laws or other organizational documents of MC or of any of its Subsidiaries, (ii) require on the part of MC any filing with, or permit, authorization, consent or approval of, any Governmental Entity except for (A) filings, permits, authorizations, consents and approvals as may be required under, and other applicable requirements of, the Exchange Act, the HSR Act, the FCC, the Communications Act, state public utility or public service laws, the Securities Act, the DGCL, the TBCA, state or foreign laws relating to takeovers, state securities or blue sky laws, and the laws of other states in which MC is qualified to do or is doing business, or (B) where the failure to obtain such permits, authorizations, consents or approvals or to make such filings, individually or in the aggregate, would not have a Material Adverse Effect on MC and its Subsidiaries, taken as a whole, or prevent MC from consummating the transactions contemplated hereby, (iii) except as disclosed on Schedule 4.4, result in a violation or breach of, or constitute (with or without due notice or lapse of time or both) a default (or give rise to any right of termination, cancellation or acceleration) under, any of the terms, conditions or provisions of any note, bond, mortgage, indenture, lease, license, contract, agreement or other instrument or obligation to which MC or any of its Subsidiaries is a party or by which any of them or any of their properties or assets may be bound and which has been included as an exhibit to MC's Annual Report on Form 10-K for the fiscal year ended December 31, 1995 (the "MC Material Agreements") or (iv) violate any order, writ, injunction, decree, statute, rule or regulation applicable to MC, any of its Subsidiaries or any of their properties or assets, excluding from the foregoing clauses (iii) and (iv) such violations, breaches or defaults which would not, individually or in the aggregate, have a Material Adverse Effect on MC and its Subsidiaries, taken as a whole, or prevent MC from consummating the transactions contemplated hereby. (b) MC or one of its Subsidiaries holds all licenses, permits, certificates, franchises, ordinances, registrations, or other rights, applications and authorizations filed with, granted or issued by, or entered by any Governmental Entity, including without limitation, the FCC, or any State Authority, that are required for the conduct of their businesses as now being conducted, except for those the absence of which would not individually or in the aggregate have a Material Adverse Effect on MC and its Subsidiaries, taken as a whole (collectively, "MC Licenses"). The MC Licenses are valid, in full force and effect, and the terms of said MC Licenses are not subject to any restrictions or conditions that materially limit or would materially limit the operations of the business of MC or any of its Subsidiaries as presently conducted, other than restrictions or conditions generally applicable to licenses of that type. The MC Licenses granted, issued or entered by the FCC are subject to the Communications Act. There are no proceedings pending or, to the best knowledge of MC, complaints or petitions by others, or threatened proceedings, before the FCC or any other Governmental Entity relating to the business or operations of MC or any of its Subsidiaries or the MC Licenses, and there are no facts or conditions that reasonably could be expected to constitute grounds for the FCC to revoke, terminate, suspend, deny, annul, or impose conditions on any renewal of any MC Licenses, that would, individually or in the aggregate, have a Material Adverse Effect on MC and its Subsidiaries, taken as a whole, or prevent MC from consummating the transactions contemplated hereby or to impose any fines, forfeitures or other penalties on MC or its Subsidiaries that would, individually or in the aggregate, have a Material Adverse Effect on MC and its Subsidiaries, taken as a whole. SECTION 4.5 SEC Reports and Financial Statements. MC and its Subsidiaries have filed with the SEC all forms, reports, schedules, statements, and other documents required to be filed by them with the SEC (as such documents have been amended since the time of their filing, collectively, the "MC SEC Documents"), and have filed all exhibits required to be filed with MC SEC Documents. As of their respective dates or, if amended, as of the date of the last such amendment, MC SEC Documents, including, without limitation, any financial statements or schedules included therein, complied in all material respects with the applicable requirements of the Securities Act and the Exchange Act, and did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. None of MC's Subsidiaries is required to file any forms, reports or other documents with the SEC pursuant to Section 12 or 15 of the Exchange Act. The financial statements of MC included in MC's Annual Report on Form 10-K for 18 70 the fiscal year ended December 31, 1995 (including the related notes thereto) and for the quarter ended March 31, 1996, copies of which have been furnished to AN (together, the "MC Financial Statements"), have been prepared from, and are in accordance with, the books and records of MC and its consolidated Subsidiaries, comply in all material respects with applicable accounting requirements and with the published rules and regulations of the SEC with respect thereto, have been prepared in accordance with GAAP applied on a consistent basis throughout the periods involved (except as may be indicated in the notes thereto and subject, in the case of unaudited interim financial statements, to normal year-end adjustments), and fairly present the consolidated financial position and the consolidated results of operations and cash flows of MC and its consolidated Subsidiaries as at the dates thereof or for the periods presented therein. SECTION 4.6 No Undisclosed Liabilities. Except (i) as disclosed in MC SEC Documents, (ii) set forth in Schedule 4.6, (iii) MC Pending Transactions, and (iv) for liabilities incurred in the ordinary course of business and consistent with past practice, and liabilities incurred in connection with the consummation of the transactions contemplated hereby (none of which, individually or in the aggregate, is reasonably likely to have a Material Adverse Effect on MC and its Subsidiaries, taken as a whole), since December 31, 1995, neither MC nor any of its Subsidiaries has incurred any liabilities or obligations of any nature (whether accrued, absolute, contingent or otherwise) which would be required by GAAP to be reflected on a consolidated balance sheet of MC and its Subsidiaries (including the notes thereto), and which individually or in which the aggregate, is reasonably likely to have a Material Adverse Effect on MC and its Subsidiaries, taken as a whole. SECTION 4.7 Absence of Certain Changes. Except as contemplated by this Agreement, for MC Pending Transactions, or as disclosed in MC SEC Documents or in Schedule 4.7 hereto, since December 31, 1995, (i) MC and its Subsidiaries have conducted their respective businesses only in the ordinary course of business and consistent with past practice, (ii) there has not been any change in the business, properties, assets, liabilities, financial condition, cash flows, operations, licenses, franchises or results of operations of MC or its Subsidiaries which has had a Material Adverse Effect on MC and its Subsidiaries, taken as a whole, and (iii) there has not been any action taken by MC or its Subsidiaries of a type described in clauses (i) through (ix) of Section 5.1(b). SECTION 4.8 Employee Benefit Plans; ERISA; Labor. (a) Schedule 4.8 hereto sets forth (i) a list of all employee benefit plans (including but not limited to plans described in section 3(3) of ERISA), maintained by MC, any of its Subsidiaries or any trade or business, whether or not incorporated (a "MC ERISA Affiliate"), which together with MC would be deemed a "single employer" within the meaning of section 4001(b)(1) of ERISA ("MC Benefit Plans") and (ii) all employment, retention, and severance agreements with employees of MC and its Subsidiaries ("MC Employee Agreements"). True and complete copies of all current MC Benefit Plans and MC Employee Agreements have been made available to AN. (b) With respect to each MC Benefit Plan: (i) if intended to qualify under section 401(a) or 401(k) of the Code, such plan has received a determination letter from the IRS stating that it so qualifies and that its trust is exempt from taxation under section 501(a) of the Code, no such determination letter has been revoked and no such revocation has been threatened, nothing has occurred that could reasonably be expected to cause the relevant MC Benefit Plan to lose such qualification or exemption; (ii) such plan has been administered in all material respects in accordance with its terms and applicable law, including state and federal securities laws; (iii) no breaches of fiduciary duty by MC, or, to MC's knowledge, by any other person have occurred that might reasonably be expected to give rise to material liability on the part of MC or any MC ERISA Affiliate; (iv) no disputes are pending, or, to the knowledge of MC, threatened that might reasonably be expected to give rise to material liability on the part of MC or any MC ERISA Affiliate; (v) no prohibited transaction (within the meaning of Section 406 of ERISA) has occurred that might reasonably be expected to give rise to material liability on the part of MC or any MC ERISA Affiliate; (vi) all contributions required to be made to such plan as of the date hereof (taking into account any extensions for the making of such contributions) have been made in full; (vii) to MC's knowledge, no MC Benefit Plans are presently under audit or examination (nor has notice been received of a potential audit or examination) by the IRS, Department of Labor, or any other governmental agency or entity, and no matters are pending with respect to any Benefit Plan under the IRS's Voluntary Compliance Resolution program, its Closing Agreement Program, 19 71 or other similar programs; and (viii) all monies withheld with respect to MC Benefit Plans have been transferred to the appropriate plan in accordance with the terms of such plan. (c) No MC Benefit Plan is a "multiemployer pension plan," as defined in section 3(37) of ERISA, nor is any MC Benefit Plan a plan described in section 4063(a) of ERISA. No MC Benefit Plan is or has been subject to Title IV of ERISA. (d) No liability under Title IV of ERISA has been incurred by MC or any MC ERISA Affiliate (whether direct, indirect, actual, or contingent, and including, without limitation, withdrawal liability to a multiemployer plan), and no condition exists that presents a material risk to MC or any MC ERISA Affiliate of incurring a material liability under such Title. No MC Benefit Plan has incurred an accumulated funding deficiency, as defined in section 302 of ERISA or section 312 of the Code, whether or not waived. (e) With respect to each MC Benefit Plan that is a "welfare plan" (as defined in section 3(1) of ERISA), no such plan provides medical or death benefits with respect to current or former employees of MC or any of its Subsidiaries beyond their termination of employment (other than to the extent required by applicable law). All group health plans of MC and MC ERISA Affiliates have been operated in material compliance with the requirements of Section 4980B (and its predecessor) and 5000 of the Code, and MC and MC ERISA Affiliates have provided, or will have provided prior to the Effective Date, to individuals entitled thereto all required notices and coverage pursuant to Section 4980B, except to the extent that failure to provide such notice or coverage is not reasonably likely to result, individually or in the aggregate, in a Material Adverse Effect on MC and its Subsidiaries, taken as a whole. (f) No MC Benefit Plan, plan documentation or agreement, summary plan description or other written communication distributed generally to employees of MC or its Subsidiaries by its terms prohibits the amendment or termination of any such Benefit Plan. (g) As of the date hereof, except for MC Employee Agreements or as described in MC SEC Documents, MC and its Subsidiaries are not parties to any (i) agreement with any director, executive officer or other key employee of MC or its Subsidiaries (A) the benefits of which are contingent, or the terms of which are materially altered, upon the occurrence of a transaction involving MC or its Subsidiaries of the nature of any of the transactions contemplated by this Agreement, (B) providing any term of employment or compensation guarantee or (C) providing severance benefits or other benefits after the termination of employment of such director, executive officer or key employee; (ii) agreement, plan or arrangement under which any person may receive payments from MC or its Subsidiaries that may be subject to the tax imposed by Section 4999 of the Code or included in the determination of such person's "parachute payment" under Section 280G of the Code; and (iii) agreement or plan binding MC or its Subsidiaries, including without limitation any stock option plan, stock appreciation right plan, restricted stock plan, stock purchase plan, severance benefit plan or employee benefit plan, any of the benefits of which will be increased, or the vesting of the benefits of which will be accelerated, by the occurrence of any of the transactions contemplated by this Agreement or the value of any of the benefits of which will be calculated on the basis of any of the transactions contemplated by this Agreement. (h) As of the date hereof, no collective bargaining agreement is binding and in force against MC or its Subsidiaries or is currently under negotiation, and no current employees of MC or its Subsidiaries are represented by any labor union. As of the date hereof, to MC's knowledge, no labor representation effort exists with respect to MC or its Subsidiaries. SECTION 4.9 Litigation. Schedule 4.9 hereto sets forth each suit, action or proceeding pending (as to which MC has received notice), or, to the knowledge of MC, threatened against MC, any of its Subsidiaries, or their properties or assets on the date hereof. Except as set forth on Schedule 4.9 hereto, none of the foregoing, individually or in the aggregate, is reasonably likely to have a Material Adverse Effect on MC and its Subsidiaries, taken as a whole, if resolved adversely to MC or its Subsidiaries. As of the date hereof, neither MC nor any of its Subsidiaries, nor any of their respective properties, is subject to any order, writ, judgment, injunction, decree, determination or award having, or which would have, a Material Adverse Effect on MC 20 72 and its Subsidiaries, taken as a whole, or which would prevent MC from consummating the transactions contemplated hereby. SECTION 4.10 No Default; Compliance with Applicable Laws. Neither MC nor any of its Subsidiaries is in default or violation in any material respect of any term, condition or provision of (i) its respective Certificate of Incorporation or By-laws or other organizational documents, (ii) any MC Material Agreement or (iii) any federal, state, local or foreign statute, law, ordinance, rule, regulation, judgment, decree, order, concession, grant, franchise, permit or license or other governmental authorization or approval applicable to MC or any of its Subsidiaries or by which they or their respective assets may be bound (other than matters addressed in Sections 4.4, 4.8, 4.9, 4.10, 4.11, and 4.12), excluding from the foregoing clauses (ii) and (iii), defaults or violations which are not reasonably likely to have, individually or in the aggregate, a Material Adverse Effect on MC and its Subsidiaries, taken as a whole, or prevent MC from consummating the transactions contemplated hereby. SECTION 4.11 Taxes. Except as set forth on Schedule 4.11: (a) MC and its Subsidiaries have (i) duly and timely filed (or there has been filed on their behalf) with the appropriate governmental authorities all Tax Returns (as hereinafter defined) required to be filed by them on or prior to the date hereof, other than those Tax Returns for which extensions for filing have been obtained in a timely manner, and such Tax Returns are true, correct and complete in all material respects, and (ii) duly paid in full all Taxes (as hereinafter defined) shown to be due on such Tax Returns or have provided adequate reserves in their financial statements for any Taxes that have not been paid. There are no liens on any of the assets of MC or any of its Subsidiaries that arose in connection with any delinquency in paying any Tax. (b) As of the date hereof, there are no ongoing federal, state, local or foreign audits or examinations of any Tax Return of MC or its Subsidiaries. (c) As of the date hereof, there are no outstanding requests, agreements, consents or waivers to extend the statutory period of limitations applicable to the assessment of any Taxes or deficiencies against MC or any of its Subsidiaries (excluding extensions for filings that have been timely obtained), and no power of attorney granted by either MC or any of its Subsidiaries with respect to any Taxes is currently in force. (d) Neither MC nor any of its Subsidiaries is a party to any agreement providing for the allocation or sharing of Taxes. SECTION 4.12 Environmental Matters. (a) MC and its Subsidiaries have complied in all material respects with all applicable Environmental Laws, except to the extent that any failure to comply is not reasonably likely to have, individually or in the aggregate, a Material Adverse Effect on MC and its Subsidiaries, taken as a whole. There is no pending or, to the knowledge of MC, threatened, civil or criminal litigation, written notice or violation, formal administrative proceeding or investigation, inquiry or information request by any Governmental Entity relating to any Environmental Law involving MC or any of its Subsidiaries or any of their properties. (b) With the exception of releases that are not reasonably likely to have, individually or in the aggregate, a Material Adverse Effect on MC and its Subsidiaries, taken as a whole, there have been no releases of any Materials of Environmental Concern into the environment by MC or any of its Subsidiaries, or, to the knowledge of MC, by any other party at any parcel of real property or any facility formerly or currently owned, operated or controlled by MC or any of its Subsidiaries. SECTION 4.13 Insurance. MC and the Subsidiaries maintain adequate insurance with respect to the their respective businesses and are in compliance with all material requirements and provisions thereof. SECTION 4.14 Offer Documents; Proxy Statement; Registration Statement; Other Information. The information with respect to MC, its officers and directors and its Subsidiaries (i) to be contained in the Offer Documents, (ii) to be contained in the Proxy Statement; and (iii) to be contained in the Registration Statement will not, on the respective dates on which (A) the Offer Documents or any amendment or 21 73 supplement thereto are filed with the SEC (in the case of each respective document), (B) the Proxy Statement is first mailed to shareholders of AN and the stockholders of MC or on the date of the stockholders' meetings referred to in Section 5.2 (in the case of the Proxy Statement), (C) the Registration Statement becomes effective (in the case thereof), and (D) in the case of the Proxy Statement and the Registration Statement, as such Proxy Statement or Registration Statement is then amended or supplemented, at the Effective Time, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading, or necessary to correct any statement made by MC in any earlier filing with the SEC of such Registration Statement or any amendment thereto (including the Proxy Statement). When the Registration Statement or any post-effective amendment thereto shall become effective and when the Proxy Statement or any amendment or supplement thereto shall be mailed, and at the time of each meeting and at the Effective Time, the Proxy Statement will comply as to form with all applicable laws including the provisions of the Securities Act and the Exchange Act and the rules and regulations promulgated thereunder. If at any time prior to the Effective Time any event with respect to MC, its officers and directors and its Subsidiaries should occur which is or should be described in an amendment of, or a supplement to, the Proxy Statement or the Registration Statement, MC shall promptly so inform AN and such event shall be so described in an amendment or supplement to the Registration Statements and such information in such amendment or supplement will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, or necessary to correct any statement made by MC in any earlier filing with the SEC of such Registration Statement, or any amendment or supplement thereto, or any earlier communication to stockholders of MC with respect to the Merger. SECTION 4.15 Transactions with Affiliates. Except as set forth in MC SEC Documents or on Schedule 4.15, since December 31, 1995, neither MC nor any of its Subsidiaries has entered into any transaction with any current director or officer of MC or any Subsidiary or any transaction which would be subject to proxy statement disclosure under the Exchange Act pursuant to the requirements of Item 404 of Regulation S-K. SECTION 4.16 Financing. MC has sufficient funds available (through existing credit arrangements or otherwise) to purchase Shares pursuant to the Offer and to pay all fees and expenses related to the transactions contemplated by this Agreement. SECTION 4.17 Share Ownership. As of the date hereof, neither MC nor any of its affiliates beneficially owns any Shares. SECTION 4.18 Brokers. Other than the MC Financial Advisor and Daniels & Associates, L.P., no broker, finder or investment banker is entitled to any brokerage, finder's or other fee or commission from MC in connection with the transactions contemplated by this Agreement. MC has informed AN of the compensation to be paid by MC to the MC Financial Advisor and Daniels & Associates, L.P. ARTICLE V COVENANTS SECTION 5.1 Interim Operations of AN and MC. (a) AN covenants and agrees that, except (w) as contemplated by this Agreement, (x) as set forth in Schedule 5.1(a) or Annex D, (y) as agreed in writing by MC, or (z) as contemplated by the AN Pending Transactions, after the date hereof and prior the Effective Time: (i) the business of AN and its Subsidiaries shall be conducted only in, and AN and its Subsidiaries shall not take any action except in, the ordinary and usual course of business and consistent with past practice, and AN and its Subsidiaries shall use all reasonable efforts, consistent with past practice, to maintain and preserve their business organizations, assets, employees and advantageous business relations; 22 74 (ii) AN will not, directly or indirectly, (A) sell, transfer or pledge or agree to sell, transfer or pledge any Shares, preferred stock or capital stock of any of its Subsidiaries beneficially owned by it, either directly or indirectly; or (B) split, combine or reclassify the outstanding Shares or any outstanding capital stock of any of the Subsidiaries of AN; (iii) neither AN nor any of its Subsidiaries shall: (A) amend its Charter or by-laws; (B) issue, grant, sell, pledge, dispose of or encumber any shares of, or securities convertible into or exchangeable for, or options, warrants, calls, commitments or rights of any kind to acquire, any shares of capital stock of any class of AN or its Subsidiaries or any other ownership interests (including but not limited to stock appreciation rights or phantom stock), other than Shares reserved for issuance on the date hereof pursuant to the exercise of AN Options outstanding on the date hereof and options automatically granted pursuant to the 1992 Non-Qualified Stock Option Plan; (C) with the exception of the existing liens in favor of First National Bank of Chicago, transfer, lease, license, sell, mortgage, pledge, dispose of, or encumber any material assets other than in the ordinary and usual course of business and consistent with past practice; (D) incur any indebtedness other than borrowings under existing agreements or modify the terms of any indebtedness; (E) incur any material liability, other than borrowings permitted by clause (D) above of money under existing agreements or incurrence of other liabilities in the ordinary and usual course of business and consistent with past practice; or (F) redeem, purchase or otherwise acquire directly or indirectly any of its capital stock; (iv) AN will not declare, set aside or pay any dividend or other distribution payable in cash, stock or property with respect to its capital stock; (v) neither AN nor any of its Subsidiaries shall modify, amend or terminate any AN Material Agreements or waive, release or assign any material rights or claims, except in the ordinary course of business and consistent with past practice; (vi) each of AN and its Subsidiaries shall maintain in full force and effect such types and amounts of insurance issued by insurers of recognized responsibility insuring it with respect to its respective business and properties, in such amount and against such losses and risks as is usually carried by persons engaged in the same or similar businesses; (vii) neither AN nor any of its Subsidiaries shall; (A) except for or on behalf of Subsidiaries, assume, guarantee, endorse or otherwise become liable or responsible (whether directly, contingently or otherwise) for the obligations of any other person; (B) make any loans, advances or capital contributions to, or investments in, any other person (other than to Subsidiaries of AN pursuant to AN's written obligations on the date hereof), other than in the ordinary course of business and consistent with past practice; or (C) enter into any commitment or transactions with respect to any of the foregoing (including, but not limited to, any borrowing, capital expenditure or purchase, sale or lease of assets); (viii) neither AN nor any of its Subsidiaries shall change any of the accounting methods used by it unless required by GAAP; (ix) except as permitted by Section 5.1(a)(xi), neither AN nor any of its Subsidiaries will adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of AN or any of its Subsidiaries (other than the Merger); (x) neither AN nor any of its Subsidiaries will take, or agree to take any action that would result in any of the conditions set forth herein or in Annex A not being satisfied, unless the Board of Directors of AN makes a determination in accordance with Section 5.9(f) below; (xi) neither AN nor any of its Subsidiaries will acquire (by merger, consolidation, or acquisition of stock or assets or otherwise) any corporation, partnership or other business organization or division of any such entity; provided, however, that AN may engage in such a transaction if (i) AN notifies MC prior to entering into any such transaction, (ii) the purchase price for each such transaction is payable only in cash and such price does not exceed $5,000,000, and (iii) the purchase price for each such transaction does not exceed eight times annualized EBITDA for the most recent calendar quarter ended. 23 75 (xii) neither AN nor any of its Subsidiaries will increase the compensation or fringe benefits of any of its directors, officers or employees, except for increases in compensation of employees of AN or its Subsidiaries who are not executive officers or directors of AN in the ordinary course of business and consistent with past practice, or grant any severance or termination pay not currently required to be paid under existing severance plans to, or enter into any employment, consulting or severance agreement with, any present or former director, officer or other employee of AN or any of its Subsidiaries, or establish, adopt, enter into or amend or terminate any collective bargaining, bonus, profit sharing, thrift, compensation, stock option, restricted stock, pension, retirement, deferred compensation, termination, severance or other plan, agreement, trust, fund, policy or arrangement for the benefit of any directors, officers or employees, other than employment of non-executive officers in the ordinary course of business and consistent with past practice; (xiii) neither AN nor any of its Subsidiaries will make any material tax election or settle or compromise any material federal, state, local or foreign tax liability except for settlements that would not be material to AN or do not otherwise materially impair the business of AN; (xiv) neither AN nor any of its Subsidiaries will settle or compromise any pending or threatened suit, action or claim, which settlement or compromise is material or which relates to the transactions contemplated hereby; (xv) neither AN nor any of its Subsidiaries will pay, discharge or satisfy any material claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge or satisfaction in the ordinary course of business and consistent with past practice of liabilities (A) reflected or reserved against in the financial statements of AN, (B) incurred in the ordinary course of business and consistent with the past practice or (C) incurred in a manner not otherwise prohibited under this Section 5.1(a); (xvi) AN shall not effect a registration under the Securities Act with respect to Shares held by any person and entity, other than the registration on a Registration Statement on Form S-8 of Shares to be issued pursuant to AN Options and the registration of Shares pursuant to registration rights agreements in effect on the date hereof or pursuant to the Shareholders' Agreement; (xvii) neither AN nor any of its Subsidiaries will modify or amend any AN Pending Transaction in any manner that would increase the consideration payable pursuant to such transaction; and (xviii) neither AN nor any of its Subsidiaries will authorize or enter into an agreement to do any of the foregoing. (b) MC covenants and agrees that except (w) as contemplated by this Agreement or the Shareholders' Agreement, (x) as set forth in Schedule 5.1(b), (y) as agreed in writing by AN, or (z) as contemplated by any MC Pending Transactions, after the date hereof and prior to the Effective Time: (i) MC will not (A) amend its Certificate of Incorporation or By-Laws; or (B) redeem, purchase or otherwise acquire directly or indirectly any of its capital stock, provided, that the Board of Directors of MC may adopt a resolution to amend MC's Certificate of Incorporation to increase the number of authorized MC Shares by 7,500,000, and if the Board of Directors of MC declares that such amendment is advisable, the Board may submit such resolution for a vote of the stockholders at the Meeting, and if such amendment is approved at the Meeting, MC may so amend its Certificate of Incorporation; (ii) MC will not declare, set aside or pay any dividend or other distribution payable in cash, stock or property with respect to its capital stock; (iii) MC will not, directly or indirectly, split, combine or reclassify the outstanding MC Shares; (iv) with the exception of the existing liens in favor of Toronto Dominion Bank and the First National Bank of Boston, neither MC nor any of its Subsidiaries will issue, sell, pledge, dispose of or encumber any shares of, or securities convertible into or exchangeable for, or options, warrants, calls, commitments or rights of any kind to acquire, any shares of capital stock of any class of MC or its 24 76 Subsidiaries, other than (A) issuances of MC Shares reserved for issuance on the date hereof upon exercise of MC Options outstanding on the date hereof, (B) issuances by MC of MC Shares or other securities for the fair market value of such MC Shares or other securities at the time of such issuance, provided, that the issuance of MC Shares pursuant to an acquisition agreement with a third party on terms negotiated on an arms' length basis or the issuance of other securities convertible into MC Shares to an unaffiliated third party on terms negotiated on an arms' length basis shall be deemed for purposes hereof the issuance of MC Shares at the fair market value of such MC Shares, and (C) the granting (and issuance of MC Shares upon exercise) of options pursuant to MC's director and employee stock option plans as in effect on the date hereof, with exercise prices equal to the fair market value of MC Shares on the date of grant. (v) MC will not adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of MC or any of its Subsidiaries; (vi) neither MC nor any of its Subsidiaries will take, or agree to take, any action that would result in any of the conditions set forth herein or in Annex A not being satisfied; (vii) neither MC nor any of its Subsidiaries will consummate any acquisitions (by merger, consolidation, or acquisition of stock or assets or otherwise), other than MC Pending Transactions; provided, that MC may make acquisitions to the extent that they (A) comply with the requirements of Section 5.1(b)(iv)(B), (B) do not involve businesses that would be considered "significant subsidiaries" within the meaning of Rule 1-02(v) of Regulation S-X, and (C) do not result in the issuance of more than 3,000,000 MC Shares in the aggregate; (viii) neither MC nor any of its Subsidiaries shall engage in any business other than that conducted in the telecommunications industry; and (ix) neither MC nor any of its Subsidiaries will authorize or enter into an agreement to do any of the foregoing. SECTION 5.2 Stockholder Approval; Meetings; Etc. (a) Subject to the fiduciary duties of AN's Board of Directors and MC's Board of Directors under applicable law, as the case may be, each of AN and MC will take all action necessary in accordance with applicable law, the rules of Nasdaq, this Agreement and AN's or MC's, as the case may be, Charter and By-Laws to convene a meeting of its stockholders (each, a "Meeting") as promptly as practicable after consummation of the Offer to consider and vote upon a proposal to adopt this Agreement (the "Proposal"). Subject to a determination of the respective Board of Directors of AN and MC made in accordance with Section 5.9(f), each of AN and MC will (i) recommend that their respective stockholders vote in favor of the Proposal and (ii) use their respective best efforts to cause to be solicited proxies from stockholders of AN or MC, as the case may be, to be voted at their Meetings in favor of the Proposal and to take all other actions necessary or advisable to secure the vote or consent of stockholders required to effect the Merger. MC agrees to vote all Shares purchased in the Offer or pursuant to the Shareholders' Agreement in favor of the Proposal. In addition, AN shall present a resolution to be approved by the affirmative vote of the outstanding Shares as required by Section 48-103-503(a) of the Tennessee Greenmail Act in order to exempt the transactions contemplated by Section 5.16 from the provisions thereof. (b) MC shall use its best efforts to cause, immediately prior to the Effective Time, Ray M. Russenberger and Elliott H. Singer to be appointed to the Board of Directors of the Surviving Corporation, to serve in the classes set forth on Annex B. (c) MC agrees to use its reasonable best efforts to take the actions described in Section 3.3.2 and 3.3.3 of the Shareholders' Agreement. SECTION 5.3 Proxy Statement, Registration Statement, Etc. (a) AN and MC shall promptly after consummation of the Offer prepare and file with the SEC under the Exchange Act, and shall use their best efforts to have cleared by the SEC and shall thereafter promptly mail to their stockholders, the Proxy Statement for the Meetings, which shall also constitute the prospectus included in the Registration Statement to be filed by MC pursuant to Section 5.3(b) hereof. The Proxy Statement shall be mailed to stockholders of 25 77 each of AN and MC, as the case may be, at least 20 business days in advance of the date of its Meeting. MC shall furnish AN, and AN shall furnish MC, with all information and shall take such other action as AN or MC, as the case may be, may reasonably request in connection with the Proxy Statement. Subject to a determination of the respective Board of Directors of AN and MC made in accordance with Section 5.9(f), the Proxy Statement shall contain the recommendation of each Board of Directors that stockholders of AN and MC, as the case may be, approve and adopt the Proposal. (b) MC shall promptly after consummation of the Offer prepare and file with the SEC under the Securities Act the Registration Statement with respect to MC Shares and the VCRs to be issued in the Merger and shall use its best efforts to have the Registration Statement declared effective by the SEC as promptly as practicable. MC shall also take any action required to be taken under state blue sky or other securities laws in connection with the issuance of MC Shares and the VCRs in the Merger, including qualification under the Trust Indenture Act with respect to the VCRs. AN shall furnish MC with all information and shall take such other action as MC may reasonably request in connection with any such action. (c) AN and MC shall notify one another of the receipt of the comments of the SEC and of any requests by the SEC for amendments or supplements to the Proxy Statement or the Registration Statement or for additional information, and shall promptly supply one another with copies of all correspondence between any of them (or their representatives) and the SEC (or its staff) with respect thereto. If, at any time prior to either Meeting, any event should occur relating to or affecting AN, MC, or their respective officers or directors, which event should be described in an amendment or supplement to the Proxy Statement or the Registration Statement, the parties shall promptly inform one another and shall cooperate in promptly preparing, filing and clearing with the SEC and, if required by applicable securities laws, mailing to AN's or MC's stockholders, as the case may be, such amendment or supplement. (d) Notwithstanding anything to the contrary in this Agreement, AN shall have no obligation to mail the Proxy Statement to its shareholders unless and until AN shall have received a "comfort letter" from Deloitte and Touche LLP, the independent auditors of MC, in the form, scope and content contemplated by Statement of Auditing Standards No. 49 issued by the American Institute of Certified Public Accountants, Inc. ("SAS 49"), relating to financial statements and other financial data with respect to MC and its consolidated Subsidiaries included or incorporated by reference in the Proxy Statement and such other matters as may be reasonably required by AN, and based upon procedures carried out to a specified date not earlier than five days prior to the date thereof. (e) Notwithstanding anything to the contrary contained in this Agreement, MC shall not mail the Proxy Statement to its stockholders unless and until the Registration Statement has been declared effective under the Securities Act, and MC shall have no obligations to mail the Proxy Statement to its stockholders unless and until MC shall have received a "comfort letter" from Arthur Andersen LLP, the independent auditors of AN, in the form, scope, and content contemplated by SAS 49, relating to the financial statements and other financial data with respect to AN and its consolidated Subsidiaries included or incorporated by reference in the Proxy Statement and such other matters as may be reasonably required by MC, and based upon procedures carried out to a specified date not earlier than five days prior to the date thereof. SECTION 5.4 Compliance with the Securities Act. (a) Prior to the Effective Time, AN shall cause to be delivered to MC a list identifying all persons who are, at the time of the Meeting, considered by AN to be "affiliates" of AN for purposes of Rule 145 under the Securities Act (the "Affiliates"). (b) AN shall use reasonable efforts to cause each person who is identified as an affiliate of AN to deliver to MC on or prior to the Effective Time a written agreement, in such form as may be agreed to by the parties, that such person will not offer to sell, sell or otherwise dispose of any of MC Shares issued to such person in connection with the Merger, except pursuant to an effective registration statement or in compliance with Rule 145 or pursuant to an exemption from the registration requirements of the Securities Act. The Surviving Corporation shall be entitled to place appropriate legends on the certificates evidencing MC Shares to be received by such affiliates pursuant to the terms of this Agreement, and to issue appropriate stop transfer instructions to the transfer agent for MC Shares, to the effect that MC Shares received or to be received by 26 78 such affiliate pursuant to the terms of this Agreement may only be sold, transferred or otherwise conveyed, and the holder thereof may only reduce his interest in or risks relating to such shares pursuant to an effective registration statement under the Securities Act or in accordance with the provisions of paragraph (d) of Rule 145 or pursuant to an exemption provided from registration under the Securities Act. The foregoing restrictions on the transferability of MC Shares shall apply to all purported sales, transfers and other conveyances of the shares received or to be received by such affiliate pursuant to the Merger and to all purported reductions in the interest in or risks relating to such MC Shares. SECTION 5.5 Nasdaq Listing. MC shall use all reasonable efforts to cause MC Shares to be admitted for quotation on the Nasdaq National Market System. SECTION 5.6 Approvals and Consents; Cooperation. (a) Subject to the terms and conditions herein provided, each of the parties hereto agrees to use all reasonable efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary, proper or advisable to consummate and make effective as promptly as practicable the transactions contemplated by the Offer and this Agreement, and to cooperate with each of the other parties hereto in connection with the foregoing, including using all reasonable efforts: (i) to obtain all necessary waivers, consents and approvals from other parties to loan agreements, leases and other contracts; (ii) to obtain all necessary consents, approvals and authorizations as are required to be obtained under any federal, state or foreign laws or regulations; (iii) to lift or rescind any injunction or restraining order or other order adversely affecting the ability of the parties to consummate the transactions contemplated hereby; (iv) to effect all necessary registrations and filings, including, but not limited to, filings under the HSR Act and Communications Act and submissions of information requested by Governmental Entities; and (v) to fulfill all conditions to this Agreement. Each of AN and MC further covenants and agrees that, prior to the exercise by MC of its right to terminate the Offer under paragraphs (c) or (d) of Annex A hereto, each of AN and MC shall use its respective best efforts (which shall not be construed to require the payment of any money to a third party (other than legal counsel) or the divestiture of any business or assets) to prevent, with respect to a threatened or pending preliminary or permanent injunction or the other order, decree or ruling or statute, rule, regulation or executive order specified in such paragraphs, the entry, enactment or promulgation thereof, as the case may be. For purposes of the foregoing, the obligation of MC to use "best efforts" or "reasonable efforts" to obtain waivers, consents and approvals to loan agreements, leases and other contracts shall not include any obligation to agree to a modification of the terms of such documents, except as expressly contemplated hereby or to make any monetary payment in consideration of such waiver, consent or approval. (b) AN and MC shall take all reasonable actions necessary to file as soon as practicable notifications under the HSR Act and to respond as promptly as practicable to any inquiries received from the Federal Trade Commission and the Antitrust Division of the Department of Justice for additional information or documentation and to respond as promptly as practicable to all inquiries and requests received from any State Attorney General or other Governmental Entity in connection with antitrust matters. (c) Within fifteen business days of the date of this Agreement, or as soon thereafter as practicable, MC and AN shall prepare and make all filings (the "Regulatory Filings") required to be made with the FCC pursuant to the Communications Act and with any State Authority as are required to permit the consummation of the Merger and shall thereafter promptly make any additional or supplemental submissions required or requested by the FCC and any such State Authority. With respect to the Regulatory Filings, counsel to AN shall be responsible for preparing, with the advice and consent of counsel to MC, the transferor's portion of the submissions with respect to the AN Licenses, and counsel to MC shall be responsible for preparing, with the advice and consent of counsel to AN, the transferee's portion of such submissions. Counsel to AN shall also be responsible for preparing, with the advice and consent of counsel to MC, any pro forma transfer applications with respect to the AN Licenses that are required to permit the Merger. All filing fees associated with the preparation and filing of Regulatory Filings pursuant to this Section 5.6(c) shall be shared equally by MC and AN. Each party shall bear its own counsel fees in connection with the Regulatory Filings. (d) Notwithstanding any provision of this Agreement or the Shareholders' Agreement to the contrary, MC shall not assume, either directly or indirectly, de jure or de facto control of AN without the prior consent of the FCC and any State Authority of competent jurisdiction. Nothing contained herein shall, without the 27 79 prior consent of the FCC and any State Authority of competent jurisdiction, give MC any control or responsibility for (i) AN's facilities, including without limitation control of use of the facilities; (ii) daily operations; (iii) policy decisions, including preparing and filing applications with the FCC; (iv) employment, supervision and dismissal of personnel; or (v) payment of financing obligations, including expenses arising out of operations. Without the prior consent of the FCC and any State Authority of competent jurisdiction, MC shall not receive any monies and profits derived from the operation of the AN facilities. SECTION 5.7 Access to Information. Upon reasonable notice, each of AN and MC shall (and shall cause each of its Subsidiaries to) afford to the officers, employees, accountants, counsel, financing sources and other representatives of MC or AN, as the case may be, access, during normal business hours during the period prior to the Effective Time, to all its officers, employees, properties, facilities, books, contracts, commitments and records and, during such period, each of AN and MC shall (and shall cause each of its Subsidiaries to) furnish promptly to MC or AN, as the case may be (a) a copy of each report, schedule, registration statement and other document filed or received by it during such period pursuant to the requirements of federal securities laws and (b) all other information concerning its business, properties and personnel as MC or AN, as the case may be, may reasonably request. Each of MC and AN will hold any such information which is nonpublic in confidence in accordance with the provisions of the Confidentiality Agreement between AN and MC, dated on or about November 22, 1995 (the "Confidentiality Agreement"). No investigation pursuant to this Section 5.7 shall affect any representations or warranties of the parties herein or the conditions to the obligations of the parties hereto. Without limiting the foregoing, prior to the earlier of the Effective Time or the termination of the Agreement, each party shall have the right to have no more than two (2) representatives, who shall be directors or members of senior management of such party, attend regular or special meetings of the Board of Directors of the other party; provided, that such representatives may not attend any portion of any meeting concerning this Agreement or the transactions contemplated hereby. Each party will give reasonable notice to the other of such meetings, and the party's representatives may be present by telephone. SECTION 5.8 Employee Benefits and Relocation Matters. (a) MC agrees to use its reasonable best efforts to maintain a southeast/southwest regional operations center in Pensacola, Florida for a period not less than three years from the Effective Time, provided that such operations center may be closed in the event of a consolidation or merger of MC or a sale of substantially all of the assets of MC or of a majority of MC's common stock outstanding after the Effective Time. (b) The parties' agreement with respect to certain employment matters is set forth in Annex D hereto. SECTION 5.9 No Solicitation by AN. (a) AN, its affiliates and their respective officers, directors, employees, representatives and agents shall immediately cease all existing discussions or negotiations, if any, with any parties (other than MC) conducted heretofore with respect to any AN Acquisition Proposal. For purposes of this Agreement, "AN Acquisition Proposal" shall mean any proposal relating to (i) a possible acquisition of AN, whether by way of merger, purchase of all or substantially all of the assets of AN, or any similar transaction, or (ii) a tender offer for more than 5% of the Shares (excluding any AN Pending Transaction or any other transactions permitted by Section 5.1(a)). (b) AN may, directly or indirectly, furnish information and access, in each case only in response to a request for such information or access, to any person made after the date hereof which was not encouraged, solicited or initiated by AN or any of its affiliates or any of their respective officers, directors, employees, representatives, financial advisors or agents after the date hereof, pursuant to appropriate confidentiality agreements, and may participate in discussions and negotiate with such party concerning any AN Acquisition Proposal, but only if (i) such party has submitted a written proposal to the Board of Directors of AN relating to any such transaction involving economic consideration per Share that the Board of Directors of AN reasonably believes is economically superior to the consideration to be paid hereunder and which does not include or contemplate any condition relating to the obtaining of funds for such AN Acquisition Proposal and (ii) the Board of Directors of AN has made a determination in accordance with Section 5.9(f). AN shall notify MC immediately if any written or oral AN Acquisition Proposal is made and shall keep MC promptly 28 80 advised of all written or oral AN Acquisition Proposals, provide a copy of any written AN Acquisition Proposal and provide in writing the terms of all oral AN Acquisition Proposals. (c) Except as set forth in this Section 5.9, neither AN or any of its affiliates, nor any of their respective officers, directors, employees, representatives, financial advisors or agents, shall, directly or indirectly, encourage or solicit submission of any inquiries, proposals or offers by; participate in or initiate any discussions or negotiations with; disclose any information about AN or its Subsidiaries to, or otherwise assist, facilitate or encourage, or enter into any agreement or understanding with any corporation, partnership, person or other entity or group (other than MC, any affiliate or associate of MC or any designees of MC) in connection with any AN Acquisition Proposal; provided that the Board of Directors of AN shall not recommend that the shareholders of AN tender their Shares in connection with any tender offer unless the Board of Directors of AN makes a determination in accordance with Section 5.9(f). (d) AN agrees not to release any third party from, or waive any provisions of, any confidentiality or standstill agreement to which AN is a party, unless the Board of Directors of AN makes a determination in accordance with Section 5.9(f). AN will use all reasonable efforts to have all copies of all nonpublic information it or AN Financial Advisor has distributed to other potential purchasers returned to it as soon as possible after the date hereof. (e) Nothing contained in this Section 5.9 shall prohibit AN or its Board of Directors from taking and disclosing to AN's shareholders a position with respect to a tender or exchange offer by a third party pursuant to Rules 14d-9 and 14e-2 promulgated under the Exchange Act or from making such disclosure to AN's shareholders or otherwise if the Board of Directors makes a determination in accordance with Section 5.9(f). (f) For purposes of this Agreement, any determination of directors made in accordance with this Section 5.9(f) shall mean that directors constituting a majority of all directors then in office of AN shall reasonably determine in good faith, after consultation with and based upon the advice of independent legal counsel, that the taking of action or the failure to take action (or to withdraw or modify a recommendation) would constitute a breach of such directors' fiduciary duties to stockholders of AN under applicable law. SECTION 5.10 No Solicitation by MC. (a) MC, its affiliates and their respective officers, directors, employees, representatives and agents shall immediately cease all existing discussions or negotiations, if any, with any parties (other than AN) conducted heretofore with respect to any MC Acquisition Proposal. For purposes of this Agreement, "MC Acquisition Proposal" shall mean any proposal relating to (i) a possible acquisition of MC, whether by way of merger, purchase of all or substantially all of the assets of MC, or any similar transaction, or (ii) a tender offer for more than 5% of the MC Shares (excluding any MC Pending Transactions or any other transactions permitted by Section 5.1(b)). (b) MC may, directly or indirectly, furnish information and access, in each case only in response to a request for such information or access, to any person made after the date hereof which was not encouraged, solicited or initiated by MC or any of its affiliates or any of their respective officers, directors, employees, representatives, financial advisors or agents after the date hereof, pursuant to appropriate confidentiality agreements, and may participate in discussions and negotiate with such party concerning any MC Acquisition Proposal, but only if the Board of Directors of MC has made a determination in accordance with Section 5.10(f). MC shall notify AN immediately if any written or oral MC Acquisition Proposal is made and shall keep AN promptly advised of all written or oral MC Acquisition Proposals, provide a copy of any written MC Acquisition Proposal and provide in writing the terms of all oral MC Acquisition Proposals. (c) Except as set forth in this Section 5.10, neither MC or any of its affiliates, nor any of their respective officers, directors, employees, representatives, financial advisors or agents, shall, directly or indirectly, encourage or solicit submission of any inquiries proposals, or offers by; participate in or initiate any discussions or negotiations with, or disclose any information about MC or any Subsidiaries to, or otherwise assist, facilitate, or encourage, or enter into any agreement or understanding with, any corporation, partnership, person or other entity or group (other than AN, any affiliate or associate of AN or any designees of AN) in connection with any MC Acquisition Proposal; provided that the Board of Directors of MC shall not 29 81 recommend that the stockholders of MC tender their MC Shares in connection with any tender offer unless the Board of Directors of MC makes a determination in accordance with Section 5.10(f). (d) MC agrees not to release any third party from, or waive any provisions of, any confidentiality or standstill agreement to which MC is a party, unless the Board of Directors of MC makes a determination in accordance with Section 5.10(f). MC will use all reasonable efforts to have all copies of all nonpublic information it or MC Financial Advisor has distributed to other potential companies returned to it as soon as possible after the date hereof. (e) Nothing contained in this Section 5.10 shall prohibit MC or its Board of Directors from taking and disclosing to MC's stockholders a position with respect to a tender or exchange offer by a third party pursuant to Rules 14d-9 and 14e-2 promulgated under the Exchange Act or from making such disclosure to MC's stockholders or otherwise if the Board of Directors makes a determination in accordance with Section 5.10(f). (f) For purposes of this Agreement, any determination of directors made in accordance with this Section 5.10(f) shall mean that directors constituting a majority of all directors then in office shall reasonably determine in good faith, after consultation with and based upon the advice of independent legal counsel, that the taking of action or the failure to take action (or to withdraw or modify a recommendation) would constitute a breach of such directors' fiduciary duties to stockholders of MC under applicable law. SECTION 5.11 Brokers or Finders. Each of MC and AN represents, as to itself, its Subsidiaries and its affiliates, that no agent, broker, investment banker, financial advisor or other firm or person is or will be entitled to any brokers' or finder's fee or any other commission or similar fee in connection with any of the transactions contemplated by this Agreement except the AN Financial Advisor, whose fees and expenses will be paid by AN in accordance with its agreement with such firm, and the MC Financial Advisor and Daniels & Associates L.P., whose fees and expenses will be paid by MC in accordance with MC's agreement with such firms. Each of MC and AN agrees to indemnify and hold the other harmless from and against any and all claims, liabilities or obligations with respect to any other fees, commissions or expenses asserted by any person on the basis of any act or statement alleged to have been made by such party or its affiliates. SECTION 5.12 Publicity. The initial press release with respect to the execution of this Agreement shall be a joint press release acceptable to MC and AN. Thereafter, so long as this Agreement is in effect, neither AN, MC nor any of their respective affiliates shall issue or cause the publication of any press release or other announcement with respect to the Merger, this Agreement or the other transactions contemplated hereby without the prior consultation of the other party, except as may be required by law or by the rules of Nasdaq. SECTION 5.13 Notification of Certain Matters. AN shall give prompt notice to MC and MC shall give prompt notice to AN of (i) the occurrence or non-occurrence of any event the occurrence or non-occurrence of which would cause any representation or warranty contained in this Agreement to be untrue or inaccurate at or prior to the Effective Time and (ii) any failure of AN or MC, as the case may be, to comply with or satisfy any covenant, condition or agreement to be complied with or satisfied by it hereunder, provided, however, that the delivery of any notice pursuant to this Section 5.13 (a) is not required until an executive officer of AN or MC, as the case may be, has actual knowledge of the circumstance requiring such notice and (b) shall not limit or otherwise affect the remedies available hereunder to the party receiving such notice. SECTION 5.14 Directors' and Officers' Insurance and Indemnification. (a) From and after the Effective Time, MC shall, or shall cause the Surviving Corporation, to the fullest extent permitted under applicable law, AN's Charter, By-Laws or indemnification agreements in effect on the date hereof, including provisions relating to advancement of expenses incurred in the defense of any action or suit, to indemnify, defend and hold harmless all persons who are now, or have been at any time prior to the date hereof, or who become prior to the Effective Time, an officer, director, employee or agent of AN or any of its Subsidiaries, or who are or were serving at the request of AN or any of its Subsidiaries as a director, officer, employee or agent of another corporation, partnership, trust, limited liability company or other business enterprise (each, an "Indemnified Party"), against all losses, claims, damages, liabilities, costs and expenses (including attorney's fees and expenses) judgments, fines, losses, and amounts paid in settlement in connection with any actual or threatened action, suit, claim, 30 82 proceeding or investigation (each a "Claim") to the extent that any such Claim is based on, or arises out of, (i) the fact that such person is or was a director, officer, employee or agent of AN or any of its Subsidiaries; or (ii) this Agreement, or any of the transactions contemplated hereby or thereby, in each case to the extent that any such Claim pertains to any matter or fact arising, existing, or occurring prior to or at the Effective Time, regardless of whether such Claim is asserted or claimed prior to, at or after the Effective Time. Without limiting the foregoing, in the event that any Claim is brought against an Indemnified Party (whether arising before or after the Effective Time), the Indemnified Party may retain counsel satisfactory to them, and MC (or prior to the Effective Time, AN) shall advance the fees and expenses of such counsel for the Indemnified Party in accordance with Section 12(a) of Article 12 of the Charter of AN in effect on the date hereof. (b) MC and AN agree that the Surviving Corporation's Certificate of Incorporation shall contain provisions no less favorable with respect to rights to indemnification and limitations on liability provided in AN's Charter and By-Laws as in effect as of the date hereof, for a period of six (6) years from the Effective Time to the extent such rights are consistent with the DGCL; provided, that, in the event any claim or claims are asserted or made within such six (6) year period, all rights to indemnification in respect of any such claim or claims shall continue until disposition of any and all such claims; provided further, that any determination required to be made with respect to whether an Indemnified Party's conduct complies with the standards set forth under applicable law, MC's Certificate of Incorporation or By-Laws or such agreements, as the case may be, shall be made by independent legal counsel selected by MC and reasonably acceptable to the Indemnified Party and; provided further, that nothing in this Section 5.14 shall impair any rights or obligations of any present or former directors or officers of AN. (c) In the event the Surviving Corporation or any of its successors or assigns (i) consolidates with or merges into any other person and shall not be the continuing or surviving corporation or entity of such consolidation or merger, or (ii) transfers or conveys all or substantially all of its properties and assets to any person, then, and in each such case, to the extent necessary to effectuate the purposes of this Section 5.14, proper provision shall be made so that the successors and assigns of the Surviving Corporation shall succeed to the obligations set forth in this Section 5.14 and none of the actions described in clauses (i) or (ii) shall be taken until such provision is made. (d) MC or the Surviving Corporation shall use all reasonable efforts to maintain AN's existing officers' and directors' liability insurance policy ("D&O Insurance") for a period of not less than six (6) years after the Effective Date; provided, (i) that MC may substitute therefor policies of substantially similar coverage and amounts containing terms no less advantageous to such former directors or officers; and (ii) if the existing D&O Insurance expires or is canceled during such period, MC or the Surviving Corporation will use reasonable efforts to obtain substantially similar D&O Insurance to the extent available. SECTION 5.15 Expenses. Except as otherwise provided in the penultimate sentence of Section 5.6(c) and in Section 7.2, whether or not the Merger is consummated, all costs and expenses incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the party incurring such expense, except that the filing fee for the Proxy Statement or Registration Statement, and all expenses incurred in connection with the printing and mailing of the Proxy Statement and prospectus included in the Registration Statement shall be borne one-half by AN and one-half by MC. The payment of costs and expenses by MC or AN shall not reduce any consideration paid in the Merger. Notwithstanding the foregoing, the costs and expenses incurred in connection with the Shareholders' Agreement will be paid in accordance with the terms of such Agreements. SECTION 5.16 Repurchase Option. (a) For the purposes of this Section 5.16: A "Repurchase Event" shall occur automatically if (i) either (A) the Offer has been consummated or (B) a Scenario II Trigger Event (as defined in the Shareholders' Agreement) shall have occurred, (ii) AN is not in material breach of any of its obligations under this Agreement entitling MC to terminate this Agreement, (iii) there has been no AN Termination Fee Event (as hereinafter defined) and (iv) this Agreement has been terminated in accordance with its terms. 31 83 "Interest Payment Event" shall mean, in the case of a Repurchase Event, the occurrence of any of the following (i) a Final Regulatory Order (as hereinafter defined) by the FCC or any State Authority has been entered prohibiting the transfer of the AN Licenses to MC; (ii) the entry of a non-appealable final order by a court of competent jurisdiction prohibiting the consummation of the Merger, or (iii) November 16, 1996 (provided that, if at November 16, 1996 the sole reason the Merger shall not have occurred is the failure to obtain a Final Regulatory Order permitting the consummation of the Merger from the FCC, such date shall be February 16, 1997). "AN Termination Fee Event" shall mean the termination of this Agreement in accordance with its terms solely pursuant to Sections 7.1(d)(iv) or (v). "Regulatory Order" shall mean an action taken or order issued by the FCC with respect to the AN Licenses as to which (i) no request for stay by the FCC of the action or order is pending, no such stay is in effect, and, if any deadline for filing any such request is designated by statute or regulation, it has passed; and (ii) with respect to an action taken or order issued by the FCC granting consent to the Merger, such consent shall be without material adverse conditions, other than conditions that have been agreed to by AN and MC or that are routine conditions with respect to transfers of this nature. A "Final Regulatory Order" shall mean a Regulatory Order as to which (i) no petition for rehearing or reconsideration of the action or order is pending before the FCC and the time for filing any such petition has passed; and (ii) the FCC does not have the action or order under reconsideration on its own motion and the time for such reconsideration has passed. "Repurchase Period" shall mean the period commencing upon the occurrence of the Repurchase Event and ending on the earlier of (i) the first anniversary of a Repurchase Event and (ii) the sale or distribution of all Repurchase Shares. "Repurchase Shares" means all Shares purchased by MC and/or its affiliates pursuant to the Offer, the Shareholders' Agreement or otherwise. "Voting Stock" means the Shares or any other shares of the capital stock of AN having the ordinary power to vote in the election of directors. (b) In the event of a Repurchase Event and during the Repurchase Period, (i) MC shall not (A) acquire any additional Shares or other Voting Stock other than pursuant to any stock dividend, stock split or similar event, (B) solicit proxies with respect to Voting Stock of AN or be a "participant" in an "election contest" or "solicitation" (as such terms are used in Regulation 14A under the Exchange Act) with respect to Voting Stock of AN, (C) deposit any Voting Stock of AN or the Repurchase Shares into a voting trust, (D) propose or advise any other entity to propose any MC Acquisition Proposal, or (E) act in concert with any person for the purpose of holding any Voting Stock of AN; and (ii) the Repurchase Shares may only be voted pro rata with the Shares voted by all other shareholders of AN (excluding MC and its affiliates) with respect to all matters. Notwithstanding the foregoing, (x) MC may sell, transfer or otherwise dispose of any Shares 90 days after the termination of this Agreement if this Agreement is terminated solely pursuant to Section 7.1(d)(v), (y) MC may tender or exchange Repurchase Shares into any tender offer or AN Acquisition Proposal with respect to which the Board of Directors of AN has recommended to AN's shareholders that they accept such tender offer or AN Acquisition Proposal and tender or exchange their Shares pursuant to such tender offer or AN Acquisition Proposal (provided that to the extent the Repurchase Shares are not purchased or exchanged pursuant to such tender offer or AN Acquisition Proposal under this clause (y), such Repurchase Shares shall remain subject to the provisions of this Section 5.16), and (z) MC may pledge the Repurchase Shares pursuant to a bona fide pledge to secure indebtedness of MC or any of its Subsidiaries, provided, that such Repurchase Shares will remain subject to the provisions of this Section 5.16. (c) In the event of an Interest Payment Event, AN shall have the right during the period ending 90 days after the Repurchase Event either to (i) repurchase all the Repurchase Shares or (ii) designate a third party to purchase the Repurchase Shares, which third party shall repurchase such Repurchase Shares, in each case at a price per Share equal to (x) with respect to the Repurchase Shares purchased pursuant to the Offer, the Offer Price plus an interest factor of 10.125% per annum commencing on the date of the consummation of the 32 84 Offer and ending on the date of such purchase of the Repurchase Shares and (y) with respect to the Repurchase Shares purchased pursuant to the Shareholders' Agreement, cash equal to the price paid therefor (such price with respect to consideration consisting of MC Shares to be equal to the Average MC Share Price used in determining the consideration paid therefor) plus an interest factor of 10.125% per annum commencing on the date any such cash was paid and ending on the date of such purchase; provided, that in the event of such an election, the repurchase shall not occur any earlier than six months and one day after the Shares were acquired by MC. (d) In the event of any Repurchase Event which is not an Interest Payment Event, AN shall have the right during the period ending 90 days after the Repurchase Event either to (i) repurchase all the Repurchase Shares or (ii) designate a third party to purchase the Repurchase Shares, which third party shall repurchase such Repurchase Shares, in each case at a price per Share equal to (x) with respect to the Repurchase Shares purchased pursuant to the Offer, the Offer Price and (y) with respect to the Repurchase Shares purchased pursuant to the Shareholders' Agreement, the price paid therefor (such price with respect to consideration consisting of MC Shares to be equal to the Average MC Share Price used in determining the consideration paid therefor). (e) (i) If a Repurchase Event occurs and AN has not elected to purchase any Repurchase Shares pursuant to paragraph (c) or (d), as applicable, or (ii) upon request by MC given within 90 days after this Agreement has been terminated due to an AN Termination Fee Event or solely pursuant to Section 7.1(d)(iii), then AN and MC shall cooperate in good faith to sell all of the Repurchase Shares in an orderly and reasonably widespread distribution, subject to the following: (a) In the event of an underwritten public offering, AN shall be entitled to select the lead underwriter, which shall be reasonably acceptable to MC, and MC shall be entitled to select one or more co-managing underwriters, which shall be reasonably acceptable to AN. (b) All sales shall be made at market prices or, in the case of an underwritten public offering, the price at which such underwriter reasonably determines. MC shall bear all expenses incurred in connection with such sales, including underwriter's discounts, commissions and expenses, except for AN's legal fees, accounting fees and other expenses, which shall be borne in all cases by AN. (f) Notwithstanding the provisions of Section 7.3 hereof, the provisions of this Section 5.16 shall survive any termination of this Agreement. SECTION 5.17 Fair Price Statute. If any "fair price" or "control share acquisition" or "anti-takeover" statute, or other similar statute or regulations or any state "blue sky" statute shall become applicable to the transactions contemplated hereby or by the Shareholders' Agreement, AN and the members of the Board of Directors of AN shall grant such approvals and take such actions as are necessary so that the transactions contemplated hereby and thereby may be consummated as promptly as practicable on the terms contemplated hereby and thereby, and otherwise act to minimize the effects of such statute or regulation on the transactions contemplated hereby or thereby. SECTION 5.18 Further Assurances. Each party hereto shall take all such actions and execute all such documents and instruments that are reasonably requested by the other party to carry out the intent of the parties under this Agreement, and in particular, AN shall take all such actions necessary to obtain the release, or assignment to MC's lenders, of all liens in favor of First National Bank of Chicago prior to the Effective Time, including executing and delivering for filing appropriate UCC-3 statements and other necessary documents for release or assignment of such liens. 33 85 ARTICLE VI CONDITIONS SECTION 6.1 Conditions to Each Party's Obligation To Effect the Merger. The respective obligation of each party to effect the Merger shall be subject to the satisfaction on or prior to the Closing Date of each of the following conditions: (a) Purchase of Shares in Offer. MC shall have purchased Shares pursuant to the Offer or pursuant to the Shareholders' Agreement; (b) Stockholder/Shareholder Approval. This Agreement shall have been approved and adopted by the requisite vote of the holders of capital stock of MC and AN in accordance with the DGCL and TBCA and the respective Certificates of Incorporation/Charters and By-Laws of MC and AN; (c) Statutes; Consents. No statute, rule, order, decree or regulation shall have been enacted or promulgated by any Government Entity preventing the Merger or the consummation of the transactions contemplated hereby, and all orders and approvals from Governmental Entities required for the consummation of the Merger and the transactions contemplated hereby shall have been obtained and shall be in effect at the Effective Time; (d) Injunctions. There shall be no order or injunction of a foreign or United States federal or state court or other governmental authority of competent jurisdiction in effect precluding, restraining, enjoining or prohibiting consummation of the Merger; (e) Regulatory Approval. A Regulatory Order permitting the Merger to be consummated shall have been received from the FCC (or at the election of MC, approval shall have been received from the FCC), and Regulatory Orders permitting the Merger to be consummated shall have been received from any requisite State Authorities; (f) HSR Act. The expiration or early termination of any waiting period under the HSR Act shall have occurred; (g) Registration Statement. The Registration Statement for MC Shares and VCRs, and the Trust Indenture Act qualification for VCRs, shall have been declared effective and no stop order with respect thereto shall be in effect at the Effective Time; and (h) Nasdaq Listing. The MC Shares to be issued in the Merger shall have been admitted for quotation on the Nasdaq National Market System. SECTION 6.2 Conditions to Obligations of AN to Effect the Merger. The obligation of AN to effect the Merger shall be subject to the satisfaction on or prior to the Closing Date of the following additional conditions: (a) MC shall have performed and complied in all material respects with all obligations and agreements required to be performed and complied with by it under this Agreement at or prior to the Effective Time; (b) The representations and warranties of MC contained in this Agreement shall have been true and correct in all material respects at the time when made, and (except for representations made as of a certain date) shall be deemed made again on the Closing Date and shall be true in all material respects as of such date, except for changes specifically permitted by this Agreement; (c) Except for the transactions contemplated by this Agreement, and except for matters which affect generally the economy or the industry in which MC and its Subsidiaries are engaged, as of the Closing Date, there shall not have occurred any change in the business, properties, assets, liabilities, financial conditions, cash flows, operations, licenses, franchises or results of operations of MC or its Subsidiaries which has a Material Adverse Effect on MC and its Subsidiaries, taken as a whole; 34 86 (d) AN shall have received a certificate from MC, signed on behalf of MC by the Chief Executive Officer or Chief Financial Officer of MC, dated the Closing Date, to the effect that the conditions set forth in paragraph (a), (b) and (c) above have been satisfied; and (e) AN shall have received the opinion of Wilmer, Cutler & Pickering, dated the Closing Date and in a form reasonably acceptable to AN, to the effect that MC Shares and VCRs to be issued in the Merger have been duly authorized, and when issued in accordance with this Agreement will be validly issued, and with respect to MC Shares, fully paid and nonassessable and no holder of any MC Shares outstanding as of such date has any preemptive or other rights to subscribe for MC Shares pursuant to the DGCL, the Certificate of Incorporation or pursuant to agreements of MC set forth on a schedule to such opinion, which MC will have certified to such counsel as representing all agreements which contain preemptive right or rights to subscribe for MC Shares. SECTION 6.3 Conditions to Obligations of MC to Effect the Merger. The obligation of MC to effect the Merger shall be subject to the satisfaction on or prior to the Closing Date of the following additional conditions: (a) AN shall have performed or complied in all material respects with all obligations and agreements required to be performed or complied with by it under this Agreement at or prior to the Effective Time; (b) The representations and warranties of AN contained in this Agreement shall have been true and correct in all material respects at the time when made, and (except for representations made as of a certain date) shall be deemed made again on the Closing Date and shall be true in all material respects as of such date, except for changes specifically permitted by this Agreement; (c) Except for the transactions contemplated by this Agreement and the Shareholders' Agreement, and except for matters which affect generally the economy or the industry in which AN and its Subsidiaries are engaged, as of the Closing Date, there shall not have occurred any change in business, properties, assets, liabilities, financial condition, cash flows, operations, licenses, franchises or results of operations of AN or its Subsidiaries which has a material adverse effect on AN and its Subsidiaries taken as a whole; (d) MC shall have received a certificate from AN, signed on behalf of AN by the Chief Executive Officer or Chief Financial Officer of AN, dated the Closing Date, to the effect that the conditions set forth in paragraph (a), (b) and (c) above have been satisfied. ARTICLE VII TERMINATION SECTION 7.1 Termination. Anything herein or elsewhere to the contrary notwithstanding, this Agreement may be terminated and the Merger contemplated herein may be abandoned at any time prior to the Effective Time, whether before or after stockholder approval thereof: (a) By the mutual written consent of MC and AN. (b) By either AN or MC: (i) If any Governmental Entity shall have issued an order, decree or ruling or taken any other action (which order, decree or other action the parties hereto shall use their reasonably efforts to lift), in each case permanently restraining, enjoining or otherwise prohibiting the transactions contemplated by this Agreement and such order, decree, ruling or other action shall have become final and non-appealable; or (ii) If the Merger shall not have occurred by November 15, 1996, provided, that if at November 16, 1996, the sole reason the Merger shall not have occurred is the failure to obtain a Final Regulatory Order permitting the consummation of the Merger from the FCC, MC may extend 35 87 the date in this clause (ii) to February 16, 1997, provided, further, that the foregoing date may be extended for an additional 60 days at MC's option following an event described in Section 3.3.2 or 3.3.3 of the Shareholders' Agreement if necessary to allow time for the Meeting, provided, further, that notwithstanding the foregoing, the right to terminate this Agreement under this Section 7.1(b)(ii) shall not be available to any party whose failure to fulfill any obligation under this Agreement has been the cause of or resulted in the failure of the Merger to occur on or before November 16, 1996 (or February 16, 1997, as the case may be). (c) By AN: (i) if MC shall have terminated the Offer, or the Offer shall have expired, without MC purchasing any Shares pursuant thereto; provided that AN may not terminate this Agreement pursuant to this Section 7.1(c)(i) if AN is in material breach of any of its covenants or agreements in this Agreement; (ii) if, due to an occurrence that, if occurring after the commencement of the Offer, would result in a failure to satisfy any of the conditions set forth in Annex A hereto, MC or any of its affiliates shall have failed to commence the Offer on or prior to five business days following the date of the initial public announcement of the Offer; provided, that AN may not terminate this Agreement pursuant to this Section 7.1(c)(ii) if AN is in material breach of any of its covenants or agreements in this Agreement; (iii) if MC shall have failed to perform and comply in all material respects with all material obligations and agreements required to be performed and complied with by it under this Agreement or the Shareholders' Agreement, which failure to perform shall not have been cured prior to the expiration of thirty (30) days following notice of such failure; (iv) if the Proposal shall not have been approved and adopted by the requisite vote of the holders of capital stock of MC in accordance with the DGCL and the Certificate of Incorporation and By-Laws of MC at a Meeting held for that purpose (including any adjournment thereof); or (v) if the Board of Directors of MC shall have (A) withdrawn or modified or changed in any manner adverse to AN its approval or recommendation of this Agreement, the Offer or the Merger or (B) shall have failed to recommend against a MC Acquisition Proposal involving a tender offer or failed to reject any other MC Acquisition Proposal within ten business days of receipt by the Board of Directors of MC of such proposal or shall have executed an agreement in principle (or similar agreement) or definitive agreement relating to a MC Acquisition Proposal or similar business combination with a person or entity other than AN (or the Board of Directors of MC resolves to do any of the foregoing). (d) By MC: (i) if MC shall have terminated the Offer, or the Offer shall have expired without MC purchasing any Shares thereunder, provided, that MC may not terminate this Agreement pursuant to this Section 7.1(d)(i) if it has failed to purchase Shares in the Offer in violation of the material terms hereof or thereof; (ii) if, due to an occurrence that if occurring after the commencement of the Offer would result in a failure to satisfy any of the conditions set forth in Annex A hereto, MC or any of its affiliates shall have failed to commence the Offer on or prior to five business days following the date of the initial public announcement of the Offer, provided that MC may not terminate this Agreement pursuant to this Section 7.1(d)(ii) if MC is in material breach of any of its covenants or agreements in this Agreement or the Shareholders' Agreement; (iii) if AN or any of its Subsidiaries shall have failed to perform and comply in all material respects with all material obligations and agreements required to be performed and complied with by them under this Agreement which failure to perform shall not have been cured prior to the expiration of thirty (30) days following notice of each failure; 36 88 (iv) if the Proposal shall not have been adopted by the requisite vote of the holders of capital stock of AN in accordance with the TBCA and the Charter and By-Laws of AN at a Meeting held for that purpose (including any adjournment thereof); provided, that all Shares then owned by MC are voted in favor of the Proposal; or (v) if the Board of Directors of AN shall have (A) withdrawn or modified or changed, in any manner adverse to MC, its approval or recommendation of this Agreement, the Offer or the Merger or (B) shall have failed to recommend against an AN Acquisition Proposal involving a tender offer or failed to reject any other AN Acquisition Proposal within ten business days of receipt by the Board of Directors of AN of such proposal or shall have executed an agreement in principle (or similar agreement) or definitive agreement relating to an AN Acquisition Proposal or similar business combination with a person or entity other than MC (or the Board of Directors of AN resolves to do any of the foregoing) and MC shall not have exercised its right to purchase Shares under the Shareholders' Agreement. SECTION 7.2 Termination Fee. (a) If this Agreement is terminated pursuant to Section 7.1(c)(iv) or (c)(v), then MC will immediately pay to AN a termination fee equal to $10,000,000 in cash. (b) If this Agreement is terminated pursuant to Section 7.1(d)(iv) or (d)(v), then AN will immediately pay to MC a termination fee equal to $10,000,000 in cash. (c) The agreement contained in Section 7.2 is an integral part of the transactions contemplated by this Agreement and constitutes liquidated damages in the event of a termination under the Sections specified herein and not a penalty. SECTION 7.3 Effect of Termination. In the event of the termination of this Agreement as provided in Section 7.1, written notice thereof shall forthwith be given to the other party or parties specifying the provision hereof pursuant to which such termination is made, and this Agreement (except for the provisions of Sections 5.15, 5.16 and 7.2, which shall survive such termination) shall forthwith become null and void and, subject to the provisions of Section 7.2, there shall be no liability on the part of MC or AN except for fraud or for material breach of this Agreement. ARTICLE VIII MISCELLANEOUS SECTION 8.1 Amendment and Modification. Subject to applicable law, this Agreement may be amended, modified and supplemented in any and all respects, whether before or after any vote of the shareholders of AN contemplated hereby, by written agreement of the parties hereto, at any time prior to the Closing Date with respect to any of the terms contained herein; provided, however, that after the approval of this Agreement by the shareholders of AN, no such amendment, modification or supplement shall reduce or change the Conversion Ratio. SECTION 8.2 Nonsurvival of Representations and Warranties. None of the representations and warranties in this Agreement or in any schedule, instrument or other document delivered pursuant to this Agreement shall survive the Effective Time. SECTION 8.3 Notices. All notices and other communications hereunder shall be in writing and shall be deemed given if delivered personally, telecopied (which is confirmed) or sent by an overnight courier service, 37 89 such as Federal Express, to the parties at the following addresses (or at such other address for a party as shall be specified by like notice): (a) If to MC to: Metrocall, Inc. 6910 Richmond Highway Alexandria, Virginia 22306 Attention: Vincent D. Kelly Telecopy No.: (703) 768-9625 with a copy (which shall not constitute notice) to: Wilmer, Cutler & Pickering 2445 M Street, N.W. Washington, D.C. 20037 Attention: George P. Stamas and Thomas W. White Telecopy No.: (202) 663-6363 and (b) if to AN, to: A+ Network, Inc. 40 South Palafox Street Pensacola, Florida 32501 Attention: Chuck Emling Telecopy No.: (904) 432-9208 with a copy (which shall not constitute notice) to: Waller Lansden Dortch & Davis 511 Union Street Suite 2100 Nashville, TN 37219 Attention: Ralph W. Davis Telecopy No: (615) 244-6804 SECTION 8.4 Headings. The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. SECTION 8.5 Interpretation. When a reference is made in this Agreement to a Section, such reference shall be to a Section of this Agreement unless otherwise indicated. Whenever the words "include," "includes" or "including" are used in this Agreement they shall be deemed to be followed by the words "without limitation." As used in this Agreement, the term "affiliate(s)" shall have the meaning set forth in Rule 12b-2 of the Exchange Act. SECTION 8.6 Counterparts. This Agreement may be executed in two or more counterparts, all of which have been considered one and the same agreement and shall become effective when two or more counterparts have been signed by each of the parties and delivered to the other parties, it being understood that all parties need not sign the same counterpart. SECTION 8.7 Entire Agreement; Third Party Beneficiaries. This Agreement, the Shareholders' Agreement, the MC Voting Agreement and the Confidentiality Agreement (including the documents and the instruments referred herein and therein): (a) constitute the entire agreement and supersede all prior agreements and understandings, both written and oral, among the parties with respect to the subject matter hereof, and (b) are not intended to confer upon any person other than the parties hereto any rights or remedies hereunder, except that Article II and Section 5.14 shall confer on the third parties contemplated thereby the benefits thereof. 38 90 SECTION 8.8 Governing Law. This Agreement shall be governed and construed in accordance with the laws of the State of Delaware without giving effect to the principles of conflicts of law thereof. SECTION 8.9 Assignment. Neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by any of the parties hereto (whether by operation of law or otherwise) without the prior written consent of the other parties; provided, that MC may assign its rights hereunder to a direct or indirect wholly-owned subsidiary, so long as MC remains liable for its obligations hereunder. Subject to the preceding sentence, this Agreement will be binding upon, inure to the benefit of and be enforceable by the parties and their respective successors and assigns. SECTION 8.10 Further Assurances. The parties agree to execute such further instruments and documents as shall reasonably be necessary to carry out the transactions contemplated by this Agreement, including, without limitation, to file any notices, or to obtain any consents appropriate to carry out the transactions contemplated by this Agreement. [The remainder of this page is intentionally left blank.] 39 91 IN WITNESS WHEREOF, MC and AN have caused this Agreement to be signed by their respective officers thereunto duly authorized as of the date first written above. METROCALL, INC. By: /s/ VINCENT D. KELLY ------------------------------------ Name: Vincent D. Kelly Title: Vice President and Chief Financial Officer A+ NETWORK, INC. By: /s/ CHARLES A. EMLING III ------------------------------------ Name: Charles A. Emling III Title: President and Chief Executive Officer 40 92 ANNEX A CONDITIONS TO THE OFFER The capitalized terms used in this Annex A have the meaning set forth in the attached Agreement, except that the term "Merger Agreement" shall be deemed to refer to the attached Agreement. Notwithstanding any other provisions of the Offer, and in addition to (and not in limitation of) MC's rights to extend and amend the Offer at any time in its sole discretion (subject to the provisions of the Merger Agreement), MC shall not be required to accept for payment or, subject to any applicable rules and regulations of the SEC, including Rule 14e-1(c) under the Exchange Act (relating to the Offer), pay for, and may delay the acceptance for payment of or, subject to the restriction referred above, the payment for, any tendered Shares, and may amend the Offer consistent with the terms of the Merger Agreement or terminate the Offer if (i) any applicable waiting period under the HSR Act has not expired or terminated prior to the expiration of the Offer, (ii) the Minimum Condition has not been satisfied, or (iii) at any time on or after May 16, 1996 and before the time of acceptance of Shares for payment pursuant to the Offer, any of the following events shall occur: (a) the affirmative vote of the holders of more than a majority of the outstanding Shares is required to consummate the Merger or MC is not entitled to vote its Shares, including any Shares acquired pursuant to the Shareholders' Agreement for the Merger; (b) any change shall have occurred in the business, properties, assets, liabilities, capitalization, stockholder's equity, financial condition, cash flows, operations, licenses, franchises or results of operations of AN or its Subsidiaries which has a Material Adverse Effect on AN and its Subsidiaries taken as a whole, except for matters which affect generally the economy or industry in which AN and its Subsidiaries are engaged; (c) (I) there shall have been instituted or pending any, or there is threatened any, action, proceeding, application or counterclaim by any government or governmental authority or agency, or by AN or an affiliate of AN, which (i) challenges or seeks to challenge the acquisition by MC (or any affiliate of MC) of the Shares, restrain or prohibit the making or consummation of the Offer or the Merger, prohibits the performance by MC of the Offer, the Merger, the Shareholders' Agreement or any agreements contemplated thereby, or seeks to obtain any material damages directly or indirectly relating to the transactions contemplated by the Offer, the Merger, or Shareholders' Agreement, (ii) seeks to make the purchase of, or payment for, some or all of the Shares pursuant to the Offer or the Merger or Shareholders' Agreement illegal or results in a material delay in the ability of MC to accept for payment or pay for some or all of the Shares, (iii) seeks to prohibit or limit the ownership or operation by MC (or any affiliate of MC) of all or any material portion of the business or assets of AN and its Subsidiaries or of MC and its affiliates or to compel MC (or any affiliate of MC) to dispose of or to hold separately all or any material portion of the business or assets of MC or any of its affiliates or of AN or any of its Subsidiaries or seeks to impose any material limitation on the ability of MC, or any other affiliate of MC, to conduct AN's or any of its Subsidiary's business or own such assets, (iv) seeks to impose or confirm material limitations on the ability of MC (or any affiliate of MC) to acquire or hold or to exercise full rights of ownership of the Shares, including but not limited to, the right to vote the Shares purchased by them on all matters properly presented to the stockholders of AN, or (v) seeks to require divestiture by MC of any of its Subsidiaries or affiliates of all or any of the Shares, or (II) there shall have been instituted any action, proceeding, application or counterclaim by any person (other than a Governmental Entity or AN, or an affiliate of AN), before any court or governmental regulatory or administrative agency, authority or tribunal, with respect to the matters set forth in subsections (i)-(v) above, which has resulted in the issuance of a temporary restraining order ("TRO"), preliminary injunction or permanent injunction enjoining the Merger, this Agreement or the transactions contemplated hereby if such TRO, preliminary injunction or permanent injunction has not been removed or rescinded within 20 business days after the original expiration date of the Offer; A-1 93 (d) there shall be any action taken, or any statute, rule, regulation shall be enacted, promulgated, entered, enforced or deemed applicable to, or any order shall be entered or enforced with respect to, the Offer, the Merger or the Shareholders' Agreement by any government, governmental authority or court, domestic, foreign or supranational, other than the routine application to the Offer, the Merger or other subsequent business combination of waiting periods under the HSR Act or approval of license transfers under the Communications Act or by state regulatory agencies that is reasonably likely to, directly or indirectly, result in any of the consequences referred to in clauses (i) through (v) of subsection (c)(I) above; (e) the representations and warranties of AN set forth in the Merger Agreement shall not have been true and correct in all material respects on the date of the Merger Agreement or shall not be true and correct as of the date of consummation of the Offer as though made on or as of such date or AN shall have breached or failed to perform or comply with any obligation, agreement or covenant required by the Merger Agreement to be performed or complied with by it except, in such cases, (i) for changes specifically permitted by the Merger Agreement and (ii) those representations and warranties that address matters only as of a particular date which are true and correct as of such date; (f) the Merger Agreement shall have been terminated in accordance with its terms; (g) (i) it shall have been publicly disclosed that any person, entity or "group" (as defined in Section 13(d)(3) of the Exchange Act), other than MC, shall have acquired beneficial ownership (determined pursuant to Rule 13d-3 promulgated under the Exchange Act) of more than 25% of any class or series of capital stock of AN (including the Shares) through the acquisition of stock, formation of a group or otherwise, other than any person or group existing on the date hereof which beneficially owns more than 25% of any class or series of capital stock of AN, or (ii) AN shall have entered into or announced its intention to enter into a definitive agreement or agreement in principle with any person with respect to an AN Acquisition Proposal or similar business combination. (h) AN's Board of Directors shall have withdrawn, or modified or changed in any manner adverse to MC (including by amendment of the Schedule 14D-9) its recommendation of the Offer, the Merger Agreement, or the Merger, or recommended an AN Acquisition Proposal, or shall have resolved to do any of the foregoing; or (i) any party to the Shareholders' Agreement other than MC shall have breached or failed to perform, in each case in any material respect, any of its agreements under such agreement or any of the representations and warranties of any such party set forth in such agreement shall not be true in any material respect, in each case, when made or at any time prior to the consummation of the Offer as if made at and as of such time, or the Shareholders' Agreement shall have been invalidated or terminated with respect to any Shares subject thereto; which in the reasonable judgment of MC, in any such case, and regardless of the circumstances giving rise to such conditions, makes it inadvisable to proceed with the Offer and/or with such acceptance for payment or payments. The foregoing conditions are for the sole benefit of MC and may be asserted by MC regardless of any circumstances giving rise to any condition and may be waived by MC, in whole or in part at any time and from time to time in the sole discretion of MC. The failure by MC (or any affiliate of MC) at any time to exercise any of the foregoing rights will not be deemed a waiver of any right and each right will be deemed an ongoing right which may be asserted at any time and from time to time. A-2 94 ANNEX B DIRECTORS OF THE SURVIVING CORPORATION The following sets forth the membership, by class, of the Board of Directors of the Surviving Corporation. Class of 1997 S. Brock W. Collins F. Martin Class of 1998 E. Singer R. Aprahamian To be determined Class of 1999 H. Brock R. Johnston R. Russenberger B-1 95 ANNEX C PRINCIPAL TERMS OF INDEXED VARIABLE COMMON RIGHTS ("VCRS") ISSUER..................... Metrocall, Inc. ("MC") PAYMENT AT MATURITY........ Following the maturity of a VCR, the holder of such VCR (the "VCR Holder") shall have the right to receive the amount, if any, by which the Target Price exceeds the greater of the Current Market Value and the Minimum Price (each as defined below). The VCRs shall mature on the Maturity Date unless otherwise extended to the Extended Maturity Date (as defined below). FORM OF PAYMENT............ MC, at its option, may pay any amount due under the terms of the VCRs to the VCR Holders in cash or MC Common Stock valued based on the Current Market Value as defined below or common stock equivalents at fair market value (as determined by an independent nationally recognized investment bank). TARGET PRICE............... "Target Price" means (i) at the Maturity Date, $21.10 reduced but not increased by the "Index Factor", as hereinafter defined, and (ii) at the Extended Maturity Date, $25.10 reduced but not increased by the Index Factor. In each case, such Target Prices shall be adjusted upon the occurrence of any event described in the Section entitled "Antidilution" set forth below. CURRENT MARKET VALUE....... "Current Market Value" means with respect to the Maturity Date and the Extended Maturity Date, the median of the averages of the closing bid prices on the Nasdaq NMS (or such other exchange on which such shares are then listed) of shares of MC's Common Stock, par value $.01 per share (the "Common Stock"), during each 20 consecutive trading day period that both begins and ends in the Valuation Period. "Valuation Period" means the 60 trading day period immediately preceding (and including) the Maturity Date or the Extended Maturity Date, as the case may be. MINIMUM PRICE.............. "Minimum Price" means (i) at the Maturity Date, $16.10, and (ii) at the Extended Maturity Date, $18.10. In each case, subject to adjustment upon the occurrence of any event described in the Section entitled "Antidilution" set forth below. INDEX FACTOR............... An Index Factor shall be calculated based upon the ratio of the relevant ending period stock prices for the Comparable Paging Company Index (the Index Factor numerator) and the initial Comparable Paging Company Index (the Index Factor denominator). The Comparable Paging Company Index shall consist of the stocks of ARCH COMMUNICATIONS GROUP, INC., MOBILMEDIA COMMUNICATIONS, INC., AND PRONET, INC., or each's successors. The initial Comparable Paging Company Index shall be the median of the simple arithmetic average of closing bid prices of the index group for the 20 trading days preceding May 14, 1996. The ending period Comparable Company Paging Index shall be the same median of the simple arithmetic average of closing bid prices of the index group as measured in the identical fashion as MC's closing bid prices during the relevant Valuation Periods preceding the Maturity Date, Extended Maturity Date, or Disposition Date, as the case may be. In each case, such adjustments shall be made, as appropriate, for each C-1 96 company's stock prices that is included in the Comparable Paging Company Index, upon the occurrence of any event similar to that described in the "Antidilution" section below. EARLY TERMINATION.......... If the closing bid prices of the Common Stock exceeds (i) $21.10 for any 50 calendar day period prior to the Maturity Date, or (ii) $25.10 for any 50 calendar day period between the Maturity Date and the Extended Maturity Date, then the VCRs shall immediately expire and be of no further force and effect. MATURITY DATE; EXTENSION THEREOF.................. "Maturity Date" means the first anniversary of the effective time (the "Effective Time") of the merger between MC and A+ Network, Inc. ("AN") (the "Merger"); provided, however, that MC, at its option, may extend the Maturity Date to the second anniversary of the Effective Time (the "Extended Maturity Date"). MC shall exercise either such option to extend by publishing notice of such exercise in the Wall Street Journal (Eastern Edition), or if the Wall Street Journal is not then published, such other newspaper with general circulation in the City of New York, New York no later than one business day preceding the Maturity Date, as the case may be. NO INTEREST................ Other than in the case of interest on the Default Amount (as defined below), no interest shall accrue on any amounts payable to the VCR Holders pursuant to the terms of VCRs. DISPOSITION PAYMENT........ Following the consummation of a Disposition (as defined below), MC shall pay to each VCR Holder for each VCR held by such VCR Holder an amount, if any, by which the Discounted Target Price (as defined below) exceeds the greater of (a) the fair market value (as determined by an independent nationally recognized investment banking firm) of the consideration, if any, received by holders of Common Stock for each share of Common Stock held by such holder as a result of such Disposition and (b) the Minimum Price. DISPOSITION EVENT.......... "Disposition" means (a) a merger, consolidation or other business combination involving MC as a result of which no shares of Common Stock shall remain outstanding, (b) a sale, transfer or other disposition, in one or a series of transactions, of all or substantially all of the assets of MC or (c) a reclassification of Common Stock as any other capital stock of MC or any other person. ACCELERATION UPON EVENT OF DEFAULT.................. If an Event of Default (as defined below) occurs and is continuing, either the bank or trust company acting as the trustee (the "Trustee") or VCR Holders holding at least 25% of the outstanding VCRs, by notice to MC (and to the Trustee if given by VCR Holders), may declare the VCRs to be due and payable, and upon any such declaration, the Default Amount shall become due and payable and, thereafter, shall bear interest at an interest rate of 12% per annum until payment is made to the Trustee. "Default Amount" means the amount, if any, by which the Discounted Target Price exceeds the Minimum Price. DISCOUNTED TARGET PRICE.... "Discounted Target Price" means (a) if a Disposition or an Event of Default shall occur prior to the Maturity Date, $21.10 reduced but not increased by the relevant Index Factor, discounted to the Disposition Payment Date (as defined below) or the Default Payment Date (as C-2 97 defined below), as the case may be, at a per annum rate of 8%; or (b) if a Disposition or an Event of Default shall occur after the Maturity Date but prior to the Extended Maturity Date, $25.10 reduced but not increased by the relevant Index Factor discounted to the date of the Disposition Payment Date or Default Payment Date, as the case may be, at a per annum rate of 8%. In each case, the Discounted Target Price and the Minimum Price shall be adjusted upon the occurrence of any event described in the Section entitled "Antidilution" set forth below. "Disposition Payment Date", with respect to a Disposition, means the date established by MC for payment of the amount due on the VCRs in respect of such Disposition, which in no event shall be more than 38 days after the date on which such Disposition was consummated. "Default Payment Date" means the date on which the VCRs become due and payable upon the declaration thereof following an Event of Default. EVENTS OF DEFAULT.......... "Event of Default", with respect to the VCRs, means any of the following which shall have occurred and be continuing; (a) default in the payment of all or any part of the amounts payable in respect of any of the VCRs as and when the same shall become due and payable following the Maturity Date or the Extended Maturity Date, the Disposition Payment Date or otherwise; (b) material default in the performance, or material breach, of any material covenant or warranty of MC,and continuance of such material default or breach for a period of 98 days after written notice has been given to MC by the Trustee or to MC and the Trustee by VCR Holders holding at least 25% of the outstanding VCRs; or (c) certain events of bankruptcy, insolvency, reorganization or other similar events in respect of MC. ANTIDILUTION............... If MC shall in any manner subdivide (by stock split, stock dividend or otherwise) or combine (by reverse stock split or otherwise) the number of outstanding shares of Common Stock, MC shall correspondingly subdivide or combine the VCRs and shall appropriately adjust the Target Price, the Minimum Price and the Discounted Target Price. TRADING.................... None of MC or any of its affiliates shall trade in shares of Common Stock during the period commencing 18 trading days before the Valuation Period and ending on the last day of the Valuation Period, except with respect to employee benefit plans and other incentive compensation arrangements. VCR AGREEMENT.............. The VCRs will be issued pursuant to a VCR Agreement between MC and the Trustee. MC shall use its reasonable best efforts to cause the VCR Agreement to be qualified under the Trust Indenture Act of 1939, as amended. REGISTRATION............... The VCRs will be issued in registered form. NATURE AND RANKING OF VCRS....................... The VCRs are unsecured obligations of MC and will rank equally with all other unsecured obligations of MC. DIVIDENDS.................. If any dividends are paid on the MC Common Stock prior to the Maturity Date or the Extended Maturity Date, as applicable, the holders of the VCRs shall have no right to receive any such dividends. C-3 98 ANNEX D EMPLOYMENT AND EMPLOYEE BENEFITS COVENANTS The capitalized terms used in this Annex D have the meaning set forth in the attached Agreement, except that the term "Merger Agreement" shall be deemed to refer to the attached Agreement. (a) Charles A. Emling, III ("Emling"), AN's executive officers, managers, salespeople, and staff will continue to participate in the AN Benefit Plans and AN Employee Agreements as in effect on the date of the Merger Agreement until the Effective Time. (b) AN will use its best efforts to cause Ray D. Russenberger and Elliot H. Singer to enter into non-compete agreements with MC that will take effect at the Effective Time. (c) MC will review compensation arrangements and bonus plans in its normal budgeting cycle, with the expectation of transitioning current AN employees to the MC compensation arrangements and bonus plans as of the later of the Effective Time and January 1, 1997. (d) Emling will cooperate with the officers of MC and Tom Matthews in identifying employees whose services will not be required by the Surviving Corporation. Employees who are terminated after the date hereof and before the Effective Time will be provided with severance, less any applicable withholding and social security taxes, equal to the lesser of (i) one (1) month's salary (at the level in effect on the date hereof) for each full year employed by AN to a maximum of six months' pay and (ii) the severance payable under the AN Benefit Plans as of the date hereof. (e) AN shall provide all notices, if any, required by the Worker Adjustment and Retraining Notification Act with respect to actions taken before the Effective Time. (f) Certain existing one-year employment contract will be revised in accordance with the employment contract entered into with Emling as of the date hereof (to take effect at the Effective Time). MC currently contemplates that these arrangements will cover Poole, Schultz, Goldstein, and Smith. (g) AN will review the performance of Goldstein and Schultz at their customary anniversary date (summer 96) for both salary increases and bonuses based on 1996 performance. (h) MC agrees to employ all or substantially all of AN employees who are legally on payroll on the Effective Date and to enroll them in the MC Benefit Plans in accordance with the terms of such plans. The employees so hired will be at-will employees of MC. (i) MC is under no obligation to provide or continue any MC Benefit Plan or arrangement or any other plan or arrangement before or after the Effective Time and may amend or terminate any such plan or arrangement in whole or in part, and may modify any provision thereof, including any provision dealing with eligibility, levels or types of benefits, deductibles, or co-payment obligations, or any other right, feature, or characteristic. (j) AN agrees that it will take appropriate steps to ensure that the AN 401(k) plan meets any ERISA requirements applicable with respect to participating in the Tender Offer and the Merger. In particular, AN will take the appropriate steps to ensure that the trustee(s) of the AN 401(k) Plan meet their obligations with respect to the Shares held in that plan. The parties hereto agree that no employee or former employee of AN (or its predecessors) or beneficiary or dependent thereof, whether hired before or after the date hereof, shall have any third-party beneficiary rights under this Annex D. D-1 99 Manually signed facsimile copies of the Letter of Transmittal will be accepted. The Letter of Transmittal and certificates for Shares and any other required documents should be sent or delivered by each shareholder or his broker, dealer, commercial bank, trust company or other nominee to the Depositary at one of its addresses set forth below: The Depositary for the Offer is: THE BANK OF NEW YORK
BY: MAIL BY FACSIMILE TRANSMISSION: BY HAND OR OVERNIGHT COURIER: Tender & Exchange (212) 815-6213 Tender & Exchange Department Department P.O. Box 11248 Confirm by Telephone: 101 Barclay Street Church Street Station (800) 507-9357 Receive and Deliver Window New York, NY 10286-1248 New York, NY 10286
Any questions and requests for assistance or additional copies of the Offer to Purchase and the Letter of Transmittal may be directed to the Information Agent at its addresses and telephone numbers set forth below. Shareholders may also contact their broker, dealer, commercial bank or trust company for assistance concerning the Offer. The Information Agent for the Offer is: [GEORGESON & COMPANY INC. LOGO] WALL STREET PLAZA NEW YORK, NEW YORK 10005 BANKS AND BROKERS CALL COLLECT (212) 440-9800 CALL TOLL-FREE: (800) 223-2064 The Dealer Manager for the Offer is: WHEAT FIRST BUTCHER SINGER Riverfront Plaza 901 East Byrd Street Richmond, Virginia 23219 CALL TOLL-FREE: (800) 826-2804 EX-99.11.A.2 3 LETTER OF TRANSMITTAL 1 LETTER OF TRANSMITTAL TO TENDER SHARES OF COMMON STOCK (TOGETHER WITH THE RELATED SHARE PURCHASE RIGHTS) OF A+ NETWORK, INC. PURSUANT TO THE OFFER TO PURCHASE DATED MAY 21, 1996 BY METROCALL, INC. THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON WEDNESDAY, JUNE 19, 1996, UNLESS THE OFFER IS EXTENDED The Depositary for the Offer is: THE BANK OF NEW YORK
BY MAIL: BY FACSIMILE TRANSMISSION: BY HAND OR OVERNIGHT COURIER: Tender & Exchange Department (212) 815-6213 Tender & Exchange Department P.O. Box 11248 101 Barclay Street Church Street Station Confirm by Telephone Receive and Deliver Window New York, New York 10286-1248 (800) 507-9357 New York, NY 10286
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE, OR TRANSMISSIONS OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER THAN AS SET FORTH ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY. YOU MUST SIGN THIS LETTER OF TRANSMITTAL IN THE APPROPRIATE SPACE PROVIDED THEREFOR AND COMPLETE THE SUBSTITUTE FORM W-9 SET FORTH BELOW. THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED. This letter of transmittal (the "Letter of Transmittal") is to be completed by holders of Shares (as defined below) (the "Shareholders"), either if certificates representing Shares ("Share Certificates") are to be forwarded herewith or, unless an Agent's Message (as defined in the Offer to Purchase) is utilized, if tenders of Shares are to be made by book-entry transfer into the account of The Bank of New York, as Depository (the "Depository"), at The Depository Trust Company ("DTC") or the Philadelphia Depository Trust Company ("PDTC") (each a "Book-Entry Transfer Facility" and, collectively, the "Book-Entry Transfer Facilities") pursuant to the procedures set forth in Section 3 of the Offer to Purchase dated May 22, 1996 (the "Offer to Purchase"). Shareholders who tender Shares by book-entry transfer are referred to herein as "Book-Entry Shareholders". Shareholders whose Share Certificates are not immediately available or who cannot deliver their Share Certificates and all other required documents to the Depositary on or prior to the Expiration Date (as defined in Section 1 of the Offer to Purchase), or who cannot complete the procedures for delivery by book-entry transfer on a timely basis, may tender their Shares according to the guaranteed delivery procedures set forth in Section 3 of the Offer to Purchase. See Instruction 2. DELIVERY OF DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY. 2
- -------------------------------------------------------------------------------------------------------------------------------- DESCRIPTION OF SHARES TENDERED - -------------------------------------------------------------------------------------------------------------------------------- NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) SHARE CERTIFICATE(S) AND SHARE(S) TENDERED (PLEASE FILL IN, IF BLANK, EXACTLY AS (ATTACH ADDITIONAL SIGNED SCHEDULE, IF NECESSARY) NAME(S) APPEAR(S) ON SHARE CERTIFICATE(S)) (SEE INSTRUCTION 3) - -------------------------------------------------------------------------------------------------------------------------------- SHARE TOTAL NUMBER OF NUMBER OF CERTIFICATE SHARES REPRESENTED SHARES NUMBER(S)* BY SHARE TENDERED** CERTIFICATES --------------------------------------------- --------------------------------------------- --------------------------------------------- --------------------------------------------- --------------------------------------------- --------------------------------------------- --------------------------------------------- TOTAL SHARES - ------------------------------------------------------------------------------------------------------------------------------ * Need not be completed by Book-Entry Shareholders. ** Unless otherwise indicated, all Shares represented by Share Certificates delivered to the Depositary will be deemed to have been tendered. See Instruction 4. ------------------------------------------------------------------------------------------------------------------------------
/ / CHECK HERE IF SHARES ARE BEING TENDERED BY BOOK-ENTRY TRANSFER MADE TO AN ACCOUNT MAINTAINED BY THE DEPOSITARY WITH A BOOK-ENTRY TRANSFER FACILITY AND COMPLETE THE FOLLOWING (ONLY PARTICIPANTS IN A BOOK-ENTRY TRANSFER FACILITY MAY DELIVER SHARES BY BOOK-ENTRY TRANSFER): NAME OF TENDERING INSTITUTION: CHECK BOX OF APPLICABLE BOOK-ENTRY TRANSFER FACILITY: / / The Depository Trust Company / / Philadelphia Depository Trust Company Account Number:______________________Transaction Code Number:___________________ / / CHECK HERE IF SHARES ARE BEING TENDERED PURSUANT TO A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE FOLLOWING (PLEASE ENCLOSE A PHOTOCOPY OF SUCH NOTICE OF GUARANTEED DELIVERY): NAME(S) OF REGISTERED HOLDER(S):___________________________________________ WINDOW TICKET NUMBER (IF ANY):_____________________________________________ DATE OF EXECUTION OF NOTICE OF GUARANTEED DELIVERY:________________________ NAME OF INSTITUTION THAT GUARANTEED DELIVERY:______________________________ IF DELIVERED BY BOOK-ENTRY TRANSFER, CHECK BOX OF APPLICABLE BOOK-ENTRY TRANSFER FACILITY: / / The Depository Trust Company / / Philadelphia Depository Trust Company Account Number:______________________Transaction Code Number:___________________ NOTE SIGNATURES MUST BE PROVIDED BELOW PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY LADIES AND GENTLEMEN: The undersigned hereby tenders to Metrocall, Inc., a Delaware corporation (the "Purchaser"), the above-described shares of Common Stock, par value $0.01 per share, together with the related share purchase rights (collectively, the "Shares"), of A+ Network, Inc., a Tennessee corporation (the "Company"), pursuant to the Purchaser's offer to purchase 2,140,526 of the outstanding Shares at a purchase price of $21.10 per Share, net to the seller in cash, without interest thereon, upon the terms and subject to the conditions set forth in the Offer to Purchase and in this Letter of Transmittal (which together constitute the "Offer"), receipt of each of which is hereby acknowledged. The undersigned understands that the Purchaser reserves the right to transfer or assign, in whole or from time to time in part, to one or more of its affiliates, the right to purchase all or any portion of the Shares tendered pursuant to the Offer. 3 Subject to, and effective upon, acceptance for payment of the Shares tendered herewith in accordance with the terms and subject to the conditions of the Offer, including, if the Offer is extended or amended, the terms and conditions of any such extension or amendment, the undersigned hereby sells, assigns and transfers to, or upon the order of, the Purchaser all right, title and interest in and to all of the Shares that are being tendered hereby and any and all dividends, distributions (including additional Shares) or rights declared, paid or issued with respect to the tendered Shares on or after May 16, 1996 (collectively, "Distributions"), and appoints the Depositary the true and lawful agent and attorney-in-fact of the undersigned with respect to such Shares (and any Distributions) with full power of substitution (such power of attorney being deemed to be an irrevocable power coupled with an interest) to (a) deliver such Share Certificates (and any Distributions), or transfer ownership of such Shares (and any Distributions) on the account books maintained by a Book-Entry Transfer Facility, together in any case with appropriate evidences of transfer and authenticity, to, or upon the order of, the Purchaser, upon receipt by the Depositary, as the undersigned's agent, of the purchase price, (b) present such Shares (and any Distributions) for transfer on the books of the Company and (c) receive all benefits and otherwise exercise all rights of beneficial ownership of such Shares (and any Distributions), all in accordance with the terms and subject to the conditions of the Offer. The undersigned hereby irrevocably appoints William L. Collins, III and Vincent D. Kelly, and each of them, or any other designees of the Purchaser, as attorneys-in-fact and proxies of the undersigned, each with full power of substitution, to the full extent of the undersigned's rights with respect to the Shares tendered by the undersigned and accepted for payment and paid for by the Purchaser (and any Distributions). This power of attorney and proxy shall be considered irrevocable and coupled with an interest in the tendered Shares. Such appointment will be effective when, and only to the extent that, the Purchaser accepts such Shares for payment and deposits the purchase price therefore with the Depositary. Upon such payment, all prior powers of attorney and proxies given by the undersigned with respect to such Shares (and any Distributions) will be revoked without further action, and no subsequent powers of attorney or proxies may be given nor any subsequent written consents executed by the undersigned (and, if given or executed, will not be deemed effective). Upon such payment by the Purchaser, the designees of the Purchaser will be empowered to exercise all voting and other rights of the undersigned as they in their sole discretion may deem proper at any annual or special meeting of the Company's stockholders or any adjournment or postponement thereof, by written consent in lieu of any such meeting or otherwise. The Purchaser reserves the right to require that, in order for Shares to be deemed validly tendered, immediately upon the Purchaser's payment for such Shares, the Purchaser must be able to exercise full voting rights with respect to such Shares (and any Distributions), including voting at any meeting of stockholders. The undersigned hereby represents and warrants that (a) the undersigned has full power and authority to tender, sell, assign and transfer the Shares (and any Distributions) tendered hereby and (b) when the Shares are accepted for payment by the Purchaser, the Purchaser will acquire good, marketable and unencumbered title to the Shares (and any Distributions), free and clear of all liens, restrictions, charges and encumbrances, and the same will not be subject to any adverse claim. The undersigned, upon request, will execute and deliver any additional documents deemed by the Depositary or the Purchaser to be necessary or desirable to complete the sale, assignment and transfer of the Shares tendered hereby (and any Distributions). In addition, the undersigned shall promptly remit and transfer to the Depositary for the account of the Purchaser any Distribution in respect of the Shares tendered hereby, accompanied by appropriate documentation of transfer, and pending such remittance or appropriate assurance thereof, the Purchaser will be, subject to applicable law, entitled to all rights and privileges as owner of any such Distribution and may withhold the entire purchase price of Shares tendered hereby or deduct from the purchase price the amount of value thereof, as determined by the Purchaser in its sole discretion. All authority herein conferred or agreed to be conferred shall not be affected by, and shall survive, the death or incapacity of the undersigned and any obligation of the undersigned hereunder shall be binding upon the heirs, personal representatives, successors and assigns of the undersigned. Except as otherwise provided in Section 4 of the Offer to Purchase, tenders of Shares made pursuant to the Offer are irrevocable, except that Shares tendered pursuant to the Offer may be withdrawn at any time prior to the Expiration Date (as defined in the Offer to Purchase) and, unless theretofore accepted for payment as provided in the Offer to Purchase, may also be withdrawn after July 20, 1996. See Section 4 of the Offer to Purchase. The undersigned understands that tenders of Shares pursuant to any of the procedures described in Section 3 of the Offer to Purchase and in the Instructions hereto will constitute a binding agreement between the undersigned and the Purchaser upon the terms and subject to the conditions set forth in the Offer, including the undersigned's representation that the undersigned owns the Shares being tendered. The undersigned understands that if more than 2,140,526 Shares are validly tendered prior to the expiration of the Offer and not validly withdrawn in accordance with Section 4 of the Offer to Purchase, Shares so tendered and not validly withdrawn shall be accepted for payment on a pro rata basis according to the number of Shares validly tendered and not withdrawn by the Expiration Date (with appropriate adjustments to avoid the purchase of fractional Shares). The Depositary shall promptly remit to tendering shareholders shares not accepted for payment (following appropriate adjustments to avoid the purchase of fractional shares). 4 The undersigned understands that, under certain circumstances set forth in the Offer to Purchase, the Purchaser may terminate or amend the Offer or may not be required to accept for payment any of the Shares tendered herewith or may accept for payment, pro rata with shares tendered by other stockholders, fewer than all of the Shares tendered herewith. Unless otherwise indicated herein under "Special Payment Instructions," please issue the check for the purchase price and/or issue or return any Share Certificate(s) for Shares not tendered or not accepted for payment in the name(s) of the registered holder(s) appearing under "Description of Shares Tendered." Similarly, unless otherwise indicated herein under "Special Delivery Instructions," please mail the check for the purchase price and/or return any Share Certificate(s) for Shares not tendered or not accepted for payment (and accompanying documents, as appropriate) to the address of the registered holder(s) appearing under "Description of Shares Tendered." In the event that both "Special Delivery Instructions" and "Special Payment Instructions" are completed, please issue the check for the purchase price and/or return any Share Certificate(s) to, the person(s) so indicated. Unless otherwise indicated herein under "Special Payment Instructions," please credit any Shares tendered herewith by book-entry transfer that are not accepted for payment by crediting the account at the Book-Entry Transfer Facility designated above. The undersigned recognizes that the Purchaser has no obligation, pursuant to the "Special Payment Instructions" to transfer any Shares from the name(s) of the registered holder(s) thereof if the Purchaser does not accept for payment any of the Shares tendered hereby. SPECIAL PAYMENT INSTRUCTIONS (SEE INSTRUCTIONS 1, 5, 6 AND 7) To be completed ONLY if Share Certificate(s) for Shares not tendered or not accepted for payment and/ or the check for the purchase price of Shares accepted for payment are to be issued in the name of someone other than the undersigned or if Shares tendered by book-entry transfer which are not accepted for payment are to be returned by credit to any account maintained at a Book-Entry Transfer Facility other than the account indicated above. Issue: / / check / / certificates to: Name............................................................................ (PLEASE PRINT) Address......................................................................... ................................................................................ ................................................................................ (INCLUDE ZIP CODE) ................................................................................ TAX IDENTIFICATION OR SOCIAL SECURITY NUMBER (SEE SUBSTITUTE FORM W-9 ON THE REVERSE SIDE) Credit Shares tendered by book-entry transfer that are not accepted for payment to (check one): / / DTC / / PDTC ................................................................................ (DTC OR PDTC ACCOUNT NO.) SPECIAL DELIVERY INSTRUCTIONS (SEE INSTRUCTIONS 1, 5, 6 AND 7) To be completed ONLY if Share Certificates(s) for Shares not tendered or not accepted for payment and/ or the check for the purchase price of Shares accepted for payment are to be sent to someone other than the undersigned or to the undersigned at an address other than that shown above. Mail: / / check / / certificates to: Name............................................................................ (PLEASE PRINT) Address......................................................................... ................................................................................ ................................................................................ (INCLUDE ZIP CODE) ................................................................................ TAX IDENTIFICATION OR SOCIAL SECURITY NUMBER 5 - -------------------------------------------------------------------------------- IMPORTANT SIGN HERE AND COMPLETE SUBSTITUTE FORM W-9 ON REVERSE SIGN X............................................................. SIGN HERE HERE X............................................................. SIGNATURE(S) OF HOLDER(S) Dated:.....................,1996 (Must be signed by the registered holder(s) exactly as name(s) appears(s) on Share Certificate(s) or on a security position listing or by person(s) authorized to become registered holder(s) by certificates and documents transmitted herewith. If signature is by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity, please provide the following information. See Instruction 5.) Name(s):...................................................... .............................................................. (PLEASE PRINT) Capacity (full title):........................................ (SEE INSTRUCTION 5) Address:...................................................... .............................................................. (INCLUDE ZIP CODE) Area Code and Telephone Number:............................... Tax Identification or Social Security No.:.................... GUARANTEE OF SIGNATURE(S) (SEE INSTRUCTIONS 1 AND 5) Authorized Signature:......................................... Name:......................................................... .............................................................. (PLEASE PRINT) Name of Firm:................................................. Address:...................................................... .............................................................. (INCLUDE ZIP CODE) Area Code and Telephone Number:............................... Dated:.....................,1996 - -------------------------------------------------------------------------------- 6 INSTRUCTIONS FORM PART OF THE TERMS AND CONDITIONS OF THE OFFER 1. GUARANTEE OF SIGNATURES. No signature guarantee is required on this Letter of Transmittal (a) if this Letter of Transmittal is signed by the registered holder(s) of Shares (which term, for purposes of this document, shall include any participant in a Book-Entry Transfer Facility whose name appears on a security position listing as the owner of Share(s)) tendered herewith, unless such holder(s) has completed either the box entitled "Special Payment Instructions" or the box entitled "Special Delivery Instructions" above, or (b) if such Share(s) are tendered for the account of a firm which is a bank, broker, dealer, credit union, savings association or other entity which is a member in good standing of the Securities Transfer Agents Medallion Program, the Stock Exchanges' Medallion Program or the New York Stock Exchange, Inc. Medallion Signature Program (each of the foregoing being referred to as an "Eligible Institution"). In all other cases, all signatures on this Letter of Transmittal must be guaranteed by an Eligible Institution. See Instruction 5. 2. REQUIREMENTS OF TENDER. This Letter of Transmittal is to be completed by shareholders either if Share Certificates are to be forwarded herewith or, unless an Agent's Message is utilized, if tenders of Shares are to be made by book-entry transfer pursuant to the procedures set forth in Section 3 of the Offer to Purchase. In order for Shares to be validly tendered pursuant to the Offer, this Letter of Transmittal (or a facsimile hereof), properly completed and duly executed, together with any required signature guarantees, or an Agent's Message in connection with a book-entry delivery of Shares and any other documents required by this Letter of Transmittal, must be received by the Depositary at one of its addresses set forth on the back cover of the Offer to Purchase on or prior to the Expiration Date and either (i) Share Certificates representing tendered Shares must be received by the Depositary at such address or such Shares must be tendered by book-entry transfer and a timely confirmation of such book-entry transfer (a "Book-Entry Confirmation") must be received by the Depositary, in each case on or prior to the Expiration Date, or (ii) the guaranteed delivery procedures described in the following sentence must be complied with. Shareholders whose Share Certificates are not immediately available or who cannot deliver their Share Certificates and all other required documents to reach the Depositary on or prior to the Expiration Date or who cannot complete the procedure for delivery by book-entry transfer on a timely basis may tender their Shares by properly completing and duly executing a Notice of Guaranteed Delivery pursuant to the guaranteed delivery procedures set forth in Section 3 of the Offer to Purchase. Pursuant to such procedure: (i) such tender must be made by or through an Eligible Institution; (ii) a properly completed and duly executed Notice of Guaranteed Delivery, substantially in the form made available by the Purchaser, must be received by the Depositary on or prior to the Expiration Date; and (iii) the Share Certificates (or a Book-Entry Confirmation) representing all tendered Shares, in proper form for transfer, in each case together with this Letter of Transmittal (or a facsimile hereof), properly completed and duly executed, with any required signature guarantees (or, in the case of a book-entry delivery, an Agent's Message) and any other documents required by this Letter of Transmittal, must be received by the Depositary within three Nasdaq National Market ("NNM") trading days after the date of execution of such Notice of Guaranteed Delivery. THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, SHARE CERTIFICATES AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER FACILITY, IS AT THE OPTION AND SOLE RISK OF THE TENDERING SHAREHOLDER AND THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY. No alternative, conditional or contingent tenders will be accepted and no fractional Shares will be purchased. All tendering shareholders, by execution of this Letter of Transmittal (or a facsimile hereof), waive any right to receive any notice of the acceptance of their Shares for payment. 3. INADEQUATE SPACE. If the space provided herein is inadequate, the certificate numbers and/or the number of Shares and any other required information should be listed on a separate signed schedule attached hereto and referenced in the Description of Shares Tendered. 4. PARTIAL TENDERS. (Not Applicable to Book-Entry Shareholders.) If fewer than all the Shares evidenced by any Share Certificate submitted are to be tendered, fill in the number of Shares which are to be tendered in the box entitled "Number of Shares Tendered." In such cases, new Share Certificate(s) for the Shares that were evidenced by your old Share Certificate(s), but were not tendered by you, will be sent to you, unless otherwise provided in the appropriate box on this Letter of Transmittal, as soon as practicable after the expiration or termination of the Offer. All Shares represented by Share Certificates delivered to the Depositary will be deemed to have been tendered unless otherwise indicated. 5. SIGNATURES ON LETTER OF TRANSMITTAL, STOCK POWERS AND ENDORSEMENTS. If this Letter of Transmittal is signed by the registered holder(s) of the Shares tendered hereby, the signature(s) must correspond with the name(s) as written on the face of the Share Certificate(s) without alteration, enlargement or any change whatsoever. If any of the Shares tendered hereby are owned of record by two or more joint owners, all such owners must sign this Letter of Transmittal. 7 If any of the tendered Shares tendered hereby are owned of record by two or more joint owners, all such owners must sign this Letter of Transmittal. If any of the tendered Shares are registered in different names on several Share Certificates, it will be necessary to complete, sign and submit as many separate Letters of Transmittal as there are different registrations of Share Certificates. If this Letter of Transmittal or any Share Certificates or stock powers are signed by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity, such persons should so indicate when signing, and proper evidence satisfactory to the Purchaser of their authority to act must be submitted. If this Letter of Transmittal is signed by the registered holder(s) of the Shares listed and transmitted hereby, no endorsements of Share Certificates or separate stock powers are required unless payment is to be made to, or Share Certificates for Shares not tendered or not purchased are to be issued in the name of, a person other than the registered holder(s), in which case signatures on such Share Certificates or stock powers must be guaranteed by an Eligible Institution. If this Letter of Transmittal is signed by a person other than the registered holder(s) of the Share Certificate(s) listed, the Share Certificate(s) must be endorsed or accompanied by appropriate stock powers, in either case signed exactly as the name(s) of the registered holder(s) appear on the Share Certificate(s). Signature(s) on such Share Certificates or stock powers must be guaranteed by an Eligible Institution. 6. STOCK TRANSFER TAXES. Except as set forth in this Instruction 6, the Purchaser will pay or cause to be paid any stock transfer taxes with respect to the transfer and sale of Shares to it or its order pursuant to the Offer. If, however, payment of the purchase price is to be made to, or if Share Certificate(s) for Shares not tendered or not accepted for payment are to be registered in the name of any person other than the person(s) signing this Letter of Transmittal, then the amount of stock transfer taxes (whether imposed on the registered holder(s) or such person) payable on account of the transfer to such person will be deducted from the purchase price unless satisfactory evidence of the payment of such taxes, or an exemption therefrom, is submitted. EXCEPT AS SET FORTH IN THIS INSTRUCTION 6, IT WILL NOT BE NECESSARY FOR TRANSFER TAX STAMPS TO BE AFFIXED TO THE SHARE CERTIFICATE(S) LISTED IN THIS LETTER OF TRANSMITTAL. 7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check is to be issued in the name of, and/or Share Certificate(s) for Shares not tendered or not accepted for payment are to be issued or returned to, a person other than the signer of this Letter of Transmittal, or if a check and/or such Share Certificate(s) are to be returned to a person other than the signer of this Letter of Transmittal or to an address of the signer other than that shown in this Letter of Transmittal, the appropriate boxes on this Letter of Transmittal must be completed. Book-Entry Shareholders may request that Shares not accepted for payment be credited to such account maintained at a Book-Entry Transfer Facility as such Book-Entry Shareholder may designate under "Special Payment Instructions." If no such instructions are given, such Shares not accepted for payment will be returned by crediting the account at the Book-Entry Transfer Facility designated above. 8. WAIVER OF CONDITIONS. Subject to the terms of the Merger Agreement (as defined in the Offer to Purchase), the conditions of the Offer may be waived by the Purchaser, in whole or in part, at any time and from time to time in its sole discretion. 9. 31% BACKUP WITHHOLDING; SUBSTITUTE FORM W-9. Under U.S. federal income tax law, a shareholder whose tendered Shares are accepted for payment is required to provide the Depositary with such shareholder's correct taxpayer identification number ("TIN") on Substitute Form W-9 below. If the Depositary is not provided with the correct TIN (e.g., social security number or employer identification number), the Internal Revenue Service may subject the stockholder or other payee to penalties. In addition, payments that are made to such shareholder or other payee with respect to Shares purchased pursuant to the Offer may be subject to 31% backup withholding. FAILURE TO PROVIDE THE INFORMATION REQUIRED ON THE SUBSTITUTE FORM W-9 MAY SUBJECT THE TENDERING SHAREHOLDER TO THE 31% FEDERAL INCOME TAX BACKUP WITHHOLDING REQUIREMENT WITH RESPECT TO SHARES PURCHASED PURSUANT TO THE OFFER. Certain shareholders are not subject to these backup withholding and reporting requirements. In order for a foreign individual to qualify as an exempt recipient, the shareholder must submit a Form W-8, signed under penalties of perjury, attesting to that individual's exempt status. A Form W-8 can be obtained from the Depositary. See the enclosed "Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9" for more instructions. IF BACKUP WITHHOLDING APPLIES, THE DEPOSITARY IS REQUIRED TO WITHHOLD 31% OF ANY PAYMENTS MADE TO THE SHAREHOLDER OR OTHER PAYEE. BACKUP WITHHOLDING IS NOT AN ADDITIONAL TAX. RATHER, THE TAX LIABILITY OF PERSONS SUBJECT TO BACKUP WITHHOLDING WILL BE REDUCED BY THE AMOUNT OF TAX WITHHELD. IF WITHHOLDING RESULTS IN AN OVERPAYMENT OF TAXES, A REFUND MAY BE OBTAINED FROM THE INTERNAL REVENUE SERVICE. 8 The box in Part 4 of the Substitute Form W-9 may be checked if the tendering shareholder has not been issued a TIN and has applied for a TIN or intends to apply for a TIN in the near future. If the box in Part 4 is checked, the shareholder or other payee must also complete the Certificate of Awaiting Taxpayer Identification Number below in order to avoid backup withholding. If the box in Part 4 is checked and the Certificate of Awaiting Taxpayer Identification Number is completed, but the Depositary is not provided with the TIN within 60 days, the Depositary will withhold 31% of all payments made thereafter until such time as a properly certified TIN is provided to the Depositary. The shareholder is required to give the Depositary the TIN of the record owner of the Shares or of the last transferee appearing on the transfers attached to, or endorsed on, the Shares. If the Shares are in more than one name or are not in the name of the actual owner, consult the enclosed "Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9" for additional guidance on which number to report. 10. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions and requests for assistance may be directed to the Dealer Manager or the Information Agent at their respective addresses and telephone numbers set forth below. Additional copies of the Offer to Purchase, this Letter of Transmittal and all other tender offer materials may be obtained from the Information Agent or from brokers, dealers, commercial banks or trust companies at the Purchaser's expense. 11. LOST, DESTROYED OR STOLEN CERTIFICATES. If any Share Certificate(s) has been lost, destroyed or stolen, the shareholder should promptly notify the Depositary. The shareholder will then be instructed as to the steps that must be taken in order to replace the Share Certificate(s). This Letter of Transmittal and related documents cannot be processed until the procedures for replacing lost or destroyed Share Certificates have been followed. IMPORTANT: THIS LETTER OF TRANSMITTAL (OR A FACSIMILE HEREOF) OR, IF APPROPRIATE, AN AGENT'S MESSAGE, TOGETHER WITH SHARE CERTIFICATES OR CONFIRMATION OF BOOK-ENTRY TRANSFER AND ALL OTHER REQUIRED DOCUMENTS, OR THE NOTICE OF GUARANTEED DELIVERY, MUST BE RECEIVED BY THE DEPOSITARY ON OR PRIOR TO THE EXPIRATION DATE. PAYER'S NAME: THE BANK OF NEW YORK - --------------------------------------------------------------------------------------------------------------------------------- SUBSTITUTE PART 1 -- PLEASE PROVIDE YOUR TIN IN THE BOX AT Social Security number or FORM W-9 RIGHT AND CERTIFY BY SIGNING AND DATING BELOW Employer Identification Number ------------------------------------ (If awaiting TIN, write "Applied For" and check Part 4) ----------------------------------------------------------------------------------------
Department of the Treasury PART 2 -- Shareholders who are exempt from backup withholding should review the Internal Revenue Service enclosed Guidelines for Certification of Taxpayer on Substitute Form W-9 and complete as instructed therein. PART 3 -- Certification -- Under penalties of perjury, I certify that: (1) The number shown on this form is my correct Taxpayer Identification Number (or I am waiting for a number to be issued to me) and (2) I am not subject to backup withholding because: (a) I am exempt from backup withholding, or (b) I have not been notified by the Internal Revenue Service (the "IRS") that I am subject to backup withholding as a result of a failure to report all interest or dividends, or (c) the IRS has notified me that I am no longer subject to Payer's Request for backup withholding. Payer's Request for Taxpayer CERTIFICATION INSTRUCTIONS -- You must cross out Item (2) above if you have been Identification Number ("TIN") notified by the IRS that you are currently subject to backup withholding because of under-reporting interest or dividends on your tax return. However, if after being notified by the IRS that you were subject to backup withholding you received another notification from the IRS that you are no longer subject to backup withholding, do not cross out such Item (2). --------------------------------------------------------------------------------------- SIGN HERE SIGNATURE ______________________________________________ PART 4 -- Awaiting TIN / / DATE ,_____________________________________________ 1996 - ------------------------------------------------------------------------------------------------------------------------------
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS 9 YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN PART 4 OF SUBSTITUTE FROM W-9 CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER I certify under penalties of perjury that a Taxpayer Identification Number has not been issued to me, and either (1) I have mailed or delivered an application to receive a Taxpayer Identification Number to the appropriate Internal Revenue Service Center or Social Security Administration Office, or (2) I intend to mail or deliver an application in the near future. I understand that if I do not provide a Taxpayer Identification Number within sixty (60) days, 31% of all reportable payments made to me thereafter will be withheld until I provide a Taxpayer Identification Number. Signature Dated , 1996
The Information Agent for the Offer is: (GEORGESON & COMPANY, INC LOGO) WALL STREET PLAZA NEW YORK, NEW YORK 10005 BANKS AND BROKERS CALL COLLECT (212) 440-9800 CALL TOLL-FREE: (800) 223-2064 The Dealer Manager for the Offer is: WHEAT FIRST BUTCHER SINGER Riverfront Plaza 901 East Byrd Street Richmond, Virginia 23219 CALL TOLL-FREE: (800) 826-2804 EX-99.11.A.3 4 NOTICE OF GUARANTEED DELIVERY 1 NOTICE OF GUARANTEED DELIVERY FOR TENDER OF SHARES OF COMMON STOCK OF A+ NETWORK, INC. As set forth in Section 3 of the Offer to Purchase defined below, this Notice of Guaranteed Delivery or one substantially equivalent hereto must be used to tender shares of Common Stock, par value $0.01 per share, together with the related share purchase rights (collectively, the "Shares"), of A+ Network, Inc., a Tennessee corporation (the "Company"), pursuant to the Offer (as defined below) if certificates for Shares are not immediately available or the certificates for Shares and all other required documents cannot be delivered to the Depositary on or prior to the Expiration Date (as defined in the Offer), or if the procedures for delivery by book-entry transfer cannot be completed on a timely basis. This instrument may be delivered by hand or transmitted by facsimile transmission or mail to the Depositary. The Depositary for the Offer is: THE BANK OF NEW YORK
BY MAIL: BY FACSIMILE TRANSMISSION: BY HAND OR OVERNIGHT COURIER: Tender & Exchange Department (212) 815-6213 Tender & Exchange Department P.O. Box 11248 101 Barclay Street Church Street Station Confirm by Telephone Receive and Deliver Window New York, New York 10286-1248 (800) 507-9357 New York, NY 10286
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR TRANSMISSIONS OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. This Notice of Guaranteed Delivery is not to be used to guarantee signatures. If a signature on a Letter of Transmittal is required to be guaranteed by an Eligible Institution under the instructions thereto, such signature guarantee must appear in the applicable space provided in the signature box in the Letter of Transmittal. LADIES AND GENTLEMEN: The undersigned hereby tenders to Metrocall, Inc., a Delaware corporation, upon the terms and subject to the conditions set forth in the Offer to Purchase dated May 22, 1996 (the "Offer to Purchase") and in the related Letter of Transmittal (which together constitute the "Offer"), receipt of each of which is hereby acknowledged, the number of Shares indicated below pursuant to the guaranteed delivery procedures set forth in Section 3 of the Offer to Purchase. Signature(s) Name(s) of Record Holders Please Type or Print Number of Shares Share Certificate No(s). (If available) Dated , 1996 Address(es) Zip Code Area Code and Tel. No.(s) (Check one box if Shares will be tendered by book-entry transfer) / / The Depository Trust Company / / Philadelphia Depository Trust Company Account Number THE GUARANTEE ON THE REVERSE SIDE MUST BE COMPLETED 2 THE GUARANTEE SET FORTH BELOW MUST BE COMPLETED GUARANTEE (Not to be used for signature guarantee) The undersigned, a firm which is a bank, broker, dealer, credit union, savings association or other entity which is a member in good standing of the Securities Transfer Agents Medallion Program, the Stock Exchanges' Medallion Program or the New York Stock Exchange, Inc. Medallion Signature Program, hereby (a) represents that the above named person(s) "own(s)" the Shares tendered hereby within the meaning of Rule 14e-4 promulgated under the Securities Exchange Act of 1934, as amended ("Rule 14e-4"), (b) represents that such tender of Shares complies with Rule 14e-4, and (c) guarantees to either deliver to the Depositary the certificates representing all the Shares tendered hereby, in proper form for transfer, or deliver such Shares pursuant to the procedure for book-entry transfer into the Depositary's account at The Depository Trust Company or the Philadelphia Depository Trust Company, in either case together with a properly completed and duly executed Letter of Transmittal (or a facsimile thereof), with any required signature guarantees or an Agent's Message (as defined in the Offer to Purchase) in the case of a book-entry transfer, and with any other required documents, all within three Nasdaq National Market trading days after the date hereof. _______________________________________________ __________________________________________ Name of Firm Authorized Signature _______________________________________________ Name______________________________________ Address Please Type or Print _______________________________________________ Title_____________________________________ Zip Code Area Code and Tel. No._________________________ Dated_____________________________ , 1996
NOTE: DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE. CERTIFICATES SHOULD ONLY BE SENT TOGETHER WITH YOUR LETTER OF TRANSMITTAL. EX-99.11.A.4 5 LETTER FROM BROKER/DEALER/COMMERCIAL BANKS, ETC. 1 OFFER TO PURCHASE FOR CASH 2,140,526 SHARES (TOGETHER WITH THE RELATED SHARE PURCHASE RIGHTS) OF COMMON STOCK OF A+ NETWORK, INC. AT $21.10 NET PER SHARE BY METROCALL, INC. THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12.00 MIDNIGHT, NEW YORK CITY TIME, ON WEDNESDAY, JUNE 19, 1996, UNLESS THE OFFER IS EXTENDED. To Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees: We have been appointed by Metrocall, Inc., a Delaware corporation (the "Purchaser"), to act as Dealer Manager in connection with the Purchaser's offer to purchase 2,140,526 outstanding shares of Common Stock, par value $0.01 per share, together with the related share purchase rights (collectively, the "Shares"), of A+ Network, Inc., a Tennessee corporation (the "Company"), at a purchase price of $21.10 per Share, net to the seller in cash, without interest thereon, upon the terms and subject to the conditions set forth in the Offer to Purchase, dated May 22, 1996 (the "Offer to Purchase") and in the related Letter of Transmittal (which together constitute the "Offer") enclosed herewith. The Offer is conditioned upon, among other things, there being validly tendered and not withdrawn prior to the expiration of the Offer at least 2,140,526 Shares. The Offer is also subject to certain other terms and conditions contained in the Offer to Purchase. The Offer is not conditioned upon the Purchaser obtaining financing or upon receipt of Federal Communications Commission approval. Please furnish copies of the enclosed materials to those of your clients for whose accounts you hold Shares registered in your name or in the name of your nominee. Enclosed herewith for your information and forwarding to your clients are copies of the following documents. 1. The Offer to Purchase, dated May 22, 1996. 2. The green Letter of Transmittal to tender Shares (for your use and for the information of your clients). Facsimile copies of the Letter of Transmittal may be used to tender Shares. 3. A letter to the stockholders of the Company from the President and Chief Executive Officer of the Company, together with the Solicitation/Recommendation Statement on Schedule 14D-9. 4. The yellow Notice of Guaranteed Delivery for Shares (to be used to accept the Offer if Share Certificates are not immediately available or if such Share Certificates and all other required documents cannot be delivered to The Bank of New York (the "Depositary") on or prior to the Expiration Date or if the procedures for book-entry transfer cannot be completed on a timely basis). 5. A gray printed form of letter which may be sent to your clients for whose accounts you hold Shares registered in your name or in the name of your nominee, with space provided for obtaining such client's instructions with regard to the Offer. 6. Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9. 7. A return envelope addressed to the Depositary. YOUR PROMPT ACTION IS REQUESTED. WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE. PLEASE NOTE THAT THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON WEDNESDAY, JUNE 19, 1996, UNLESS THE OFFER IS EXTENDED. In order for Shares to be validly tendered pursuant to the Offer, (i) a duly executed and properly completed Letter of Transmittal (or a facsimile thereof) together with any required signature guarantees, or an Agent's Message (as defined 2 in the Offer to Purchase) in connection with a book-entry delivery of Shares, and other documents required by the Letter of Transmittal must be received by the Depositary on or prior to the Expiration Date, and (ii) either certificates representing tendered Shares or a Book-Entry Confirmation (as described in the Offer to Purchase) must be received by the Depositary, all in accordance with the instructions set forth in the Letter of Transmittal and the Offer to Purchase. If a stockholder desires to tender Shares pursuant to the Offer and such stockholder's Share Certificates are not immediately available, or such stockholder cannot deliver the Share Certificates and all other required documents to reach the Depositary on or prior to the Expiration Date, or such stockholder cannot complete the procedure for delivery by book-entry transfer on a timely basis, such Shares may nevertheless be tendered by following the guaranteed delivery procedures specified in Section 3 of the Offer to Purchase. The Purchaser will not pay any fees or commission to any broker, dealer or any other person for soliciting tenders of Shares pursuant to the Offer (other than to the Dealer Manager and Georgeson & Company Inc. ("the "Information Agent"), as described in the Offer to Purchase). The Purchaser will, however, upon request, reimburse you for customary mailing and handling expenses incurred by you in forwarding any of the enclosed materials to your clients. The Purchaser will pay or cause to be paid any stock transfer taxes payable on the transfer and sale of Shares to the Purchaser pursuant to the Offer, except as otherwise provided in Instruction 6 of the Letter of Transmittal. Any inquiries you may have with respect to the Offer should be addressed to the Information Agent or to the Dealer Manager, at their respective addresses and telephone numbers set forth on the back cover of the Offer to Purchase. Additional copies of the enclosed material may be obtained from the Information Agent. Very truly yours, WHEAT FIRST BUTCHER SINGER NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR ANY OTHER PERSON THE AGENT OF THE PURCHASER, THE DEALER MANAGER, THE COMPANY, THE DEPOSITARY OR THE INFORMATION AGENT, OR ANY AFFILIATE OF ANY OF THEM, OR AUTHORIZE YOU OR ANY OTHER PERSON TO MAKE ANY STATEMENT OR USE ANY DOCUMENT ON BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE ENCLOSED DOCUMENTS AND THE STATEMENTS CONTAINED THEREIN. EX-99.11.A.5 6 LETTER TO CLIENTS 1 OFFER TO PURCHASE FOR CASH 2,140,526 SHARES (TOGETHER WITH THE RELATED SHARE PURCHASE RIGHTS) OF COMMON STOCK OF A+ NETWORK, INC. AT $21.10 NET PER SHARE BY METROCALL, INC. THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON WEDNESDAY, JUNE 19, 1996, UNLESS THE OFFER IS EXTENDED. To Our Clients: Enclosed for your consideration is an Offer to Purchase dated May 22, 1996 (the "Offer to Purchase") and the related Letter of Transmittal (which together constitute the "Offer") relating to an offer by Metrocall, Inc., a Delaware corporation (the "Purchaser"), to purchase 2,140,526 outstanding shares of Common Stock, par value $0.01 per share, together with the related share purchase rights (collectively, the "Shares"), of A+ Network, Inc., a Tennessee corporation (the "Company"), at a purchase price of $21.10 per Share, net to the seller in cash, without interest thereon, upon the terms and subject to the conditions set forth in the Offer. WE ARE THE HOLDER OF RECORD OF SHARES HELD BY US FOR YOUR ACCOUNT. A TENDER OF SUCH SHARES CAN BE MADE ONLY BY US AS THE HOLDER OF RECORD AND PURSUANT TO YOUR INSTRUCTIONS. THE LETTER OF TRANSMITTAL IS FURNISHED TO YOU FOR YOUR INFORMATION ONLY AND CANNOT BE USED BY YOU TO TENDER SHARES HELD BY US FOR YOUR ACCOUNT. We request instructions as to whether you wish to have us tender on your behalf any or all of such Shares held by us for your account, pursuant to the terms and subject to the conditions set forth in the Offer. Your attention is directed to the following: 1. The tender price is $21.10 per Share, net to the seller in cash, without interest thereon, upon the terms and subject to the conditions set forth in the Offer. 2. The Offer is made for 2,140,526 Shares. If more than 2,140,526 Shares are validly tendered on or prior to the Expiration Date and not properly withdrawn, the Purchaser will, upon the terms and subject to the conditions of the Offer, purchase 2,140,526 Shares on a pro rata basis (with adjustments to avoid purchases of fractional Shares). 3. The Offer and withdrawal rights will expire at 12:00 midnight, New York City time, on Wednesday, June 19, 1996, unless the Offer is extended. 4. The Offer is conditioned upon, among other things, there being validly tendered and not withdrawn prior to the expiration of the Offer at least 2,140,526 Shares. The Offer is also subject to certain other terms and conditions contained in the Offer to Purchase. The Offer is not conditioned upon the Purchaser obtaining financing or upon receipt of Federal Communications Commission approval. 5. Tendering stockholders will not be obligated to pay brokerage fees or commissions or, except as set forth in Instruction 6 of the Letter of Transmittal, stock transfer taxes on the transfer and sale of Shares pursuant to the Offer. 6. In all cases, payment for Shares tendered and accepted for payment pursuant to the Offer will be made only after timely receipt by The Bank of New York (the "Depositary") of (i) Share Certificates or timely confirmation of a book-entry transfer of such Shares into the Depositary's account at The Depository Trust Company or the Philadelphia Depository Trust Company (each, a "Book-Entry Transfer Facility") pursuant to the procedures set forth in Section 3 of the Offer to Purchase, (ii) the Letter of Transmittal (or a facsimile thereof), properly completed and duly executed, with any required signature guarantees, or an Agent's Message (as defined in the Offer to Purchase), and (iii) any other documents required by the Letter of Transmittal. Accordingly, payment might not be made to all tendering stockholders at the same time and will depend upon when Share Certificates are received by 2 the Depositary or confirmations of book-entry transfer of such Shares are received into the Depositary's account at a Book-Entry Transfer Facility. The Offer is being made by the Offer to Purchase and the related Letter of Transmittal and is being made to all holders of Shares. The Purchaser is not aware of any state where the making of the Offer is prohibited by administrative or judicial action pursuant to any valid state statute. If the Purchaser becomes aware of any valid state statute prohibiting the making of the Offer or the acceptance of Shares pursuant thereto, the Purchaser will make a good faith effort to comply with any such state statute or seek to have such statute declared inapplicable to the Offer. If, after such good faith effort, the Purchaser cannot comply with such state statute, the Offer will not be made to nor will tenders be accepted from or on behalf of the holders of Shares in such state. In any jurisdiction where the securities, blue sky or other laws require the Offer to be made by a licensed broker or dealer, the Offer shall be deemed to be made on behalf of the Purchaser by the Dealer Manager (as defined) or one or more registered brokers or dealers that are licensed under the laws of such jurisdiction. If you wish to have us tender any or all of the Shares held by us for your account, please instruct us by completing, executing and returning to us the instruction form contained in this letter. If you authorize a tender of your Shares, all such Shares will be tendered unless otherwise specified in such instruction form. YOUR INSTRUCTIONS SHOULD BE FORWARDED TO US IN AMPLE TIME TO PERMIT US TO SUBMIT ON YOUR BEHALF PRIOR TO THE EXPIRATION OF THE OFFER. INSTRUCTIONS WITH RESPECT TO THE OFFER TO PURCHASE FOR CASH 2,140,526 SHARES OF COMMON STOCK OF A+ NETWORK, INC. The undersigned acknowledge(s) receipt of your letter enclosing the Offer to Purchase dated May 22, 1996 (the "Offer to Purchase") and the related Letter of Transmittal pursuant to an offer by Metrocall, Inc., a Delaware corporation, to purchase 2,140,526 outstanding shares of Common Stock, par value $0.01 per share, together with the related share purchase rights (collectively, the "Shares"), of A+ Network, Inc., a Tennessee corporation. This will instruct you to tender the number of Shares indicated below (or, if no number is indicated below, all Shares) which are held by you for the account of the undersigned, upon the terms and subject to the conditions set forth in the Offer to Purchase and in the related Letter of Transmittal furnished to the undersigned. Number of Shares to be Tendered*: ________________________ Shares Dated: ________________________ , 1996 SIGN HERE Signature(s):________________________________________________________________ Please print name(s):________________________________________________________ Address(es):_________________________________________________________________ Area Code and Telephone Number(s):___________________________________________ Tax Identification or Social Security Number(s):_____________________________ - --------------- *Unless otherwise indicated, it will be assumed that all of the Shares held by us for your account are to be tendered. EX-99.11.A.6 7 GUIDLINES FOR FORM W-9 1 GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 IRS INSTRUCTIONS (SECTION REFERENCES ARE TO THE INTERNAL REVENUE CODE.) PURPOSE OF FORM. -- A person who is required to file an information return with the Internal Revenue Service (the IRS) must obtain your correct taxpayer identification number (TIN) to report income paid to you, real estate transactions, mortgage interest you paid, the acquisition or abandonment of secured property, or contributions you made to an individual retirement account (IRA). Use Form W-9 to furnish your correct TIN to the requester (the person asking you to furnish your TIN), and, when applicable, (1) to certify that the TIN you are furnishing is correct (or that you are waiting for a number to be issued), (2) to certify that you are not subject to backup withholding, and (3) to claim exemption from backup withholding if you are an exempt payee. Furnishing your correct TIN and making the appropriate certifications will prevent certain payments from being subject to backup withholding. NOTE: IF A REQUESTER GIVES YOU A FORM OTHER THAN A W-9 TO REQUEST YOUR TIN, YOU MUST USE THE REQUESTER'S FORM. HOW TO OBTAIN A TIN. -- If you do not have a TIN, apply for one immediately. To apply, get FORM SS-5, Application for a Social Security Card (SSN) (for individuals), from your local office of the Social Security Administration, or FORM 22-4, Application for Employer Identification Number (EIN) (for businesses and all other entities), from your local IRS office. To complete Form W-9, If you do not have a TIN, write "Applied for" in the space for the TIN in Part 1, sign and date the form, and give it to the requester. Generally, you will then have 60 days to obtain a TIN and furnish it to the requester. If the requester does not receive your TIN within 60 days, backup withholding, if applicable, will begin and continue until you furnish your TIN to the requester. For reportable interest or dividend payments, the payer must exercise one of the following options concerning backup withholding during this 60-day period. Under option (1), a payer must backup withhold on any withdrawals you make from your account after 7 business days after the requester receives this form back from you. Under option (2), the payer must backup withhold on any reportable interest or dividend payments made to your account, regardless of whether you make any withdrawals. The backup withholding under option (2) must begin no later than 7 business days after the requester receives this form back. Under option (2), the payer is required to refund the amounts withheld if your certified TIN is received within the 60-day period and you were not subject to backup withholding during the period. NOTE: WRITING "APPLIED FOR" ON THE FORM MEANS THAT YOU HAVE ALREADY APPLIED FOR A TIN OR THAT YOU INTEND TO APPLY FOR ONE IN THE NEAR FUTURE. As soon as you receive your TIN, complete another Form W-9, include your TIN, sign and date this form, and give it to the requester. WHAT IS BACKUP WITHHOLDING? -- Persons making certain payments to you after 1992 are required to withhold and pay to the IRS 31% of such payments under certain conditions. This is called "backup withholding." Payments that could be subject to backup withholding include interest, dividends, broker and barter exchange transactions, rents, royalties, nonemployee compensation, and certain payments from fishing boat operators, but do not include real estate transactions. If you give the requester your correct TIN, make the appropriate certifications, and report all your taxable interest and dividends on your tax return, your payments will not be subject to backup withholding. Payments you receive will be subject to backup withholding if: (1) You do not furnish your TIN to the requester, or (2) The IRS notifies the requester that you furnished an incorrect TIN, or (3) You are notified by the IRS that you are subject to backup withholding because you failed to report all your interest and dividends on your tax return for reportable interest and dividends only), or (4) You fail to certify to the requester that you are not subject to backup withholding under (3) above (for reportable interest and dividend accounts opened after 1983 only), or (5) You fail to certify your TIN. This applies only to reportable interest, dividend, broker, or barter exchange accounts opened after 1983, or broker accounts considered inactive in 1983. Except as explained in (5) above, other reportable payments are subject to backup withholding only if (1) or (2) above applies. Certain payees and payments are exempt from backup withholding and information reporting. See PAYEES AND PAYMENTS EXEMPT FROM BACKUP WITHHOLDING, below, and EXEMPT PAYEES AND PAYMENTS under SPECIFIC INSTRUCTIONS, on page 2, if you are an exempt payee. PAYEES AND PAYMENTS EXEMPT FROM BACKUP WITHHOLDING. -- The following is a list of payees exempt from backup withholding and for which no information reporting is required. For interest and dividends all listed payees are exempt except item (9). For broker transactions, payees listed in (1) through (13) and a person registered under the investment Advisers Act of 1940 who regularly acts as a broker are exempt. Payments subject to reporting under sections 6041 and 6041A are generally exempt from backup withholding only if made to payees described in items (1) through (7), except that a corporation that provides medical and health care services or bills and collects payments for such services is not exempt from backup withholding or information reporting. Only payees described in items (2) through (6) are exempt from backup withholding for barter exchange transactions, patronage dividends, and payments by certain fishing boat operators. (1) A corporation. (2) An organization exempt from tax under section 501(a), or an IRA, or a custodial account under section 403(b)(7). (3) The United States or any of its agencies or instrumentalities. (4) A state, the District of Columbia, a possession of the United States, or any of their political subdivisions or instrumentalities. (5) A foreign government or any of its political subdivisions, agencies, or instrumentalities. (6) An international organization or any of its agencies or instrumentalities. (7) A foreign central bank of issue. (8) A dealer in securities or commodities required to register in the U.S. or a possession of the U.S. (9) A futures commission merchant registered with the Commodity Futures Trading Commission. (10) A real estate investment trust. (11) An entity registered at all times during the tax year under the Investment Company Act of 1940. (12) A common trust fund operated by a bank under section 584(a). (13) A financial institution. (14) A middleman known in the investment community as a nominee or listed in the most recent publication of the American Society of Corporation Secretaries, Inc., Nominee List. (15) A trust exempt from tax under section 664 or described in section 4947. Payments of dividends and patronage dividends generally not subject to backup withholding also include the following: - Payments to nonresident aliens subject to withholding under section 1441. - Payments to partnerships not engaged in trade or business in the U.S. and that have at least one nonresident partner. - Payments of patronage dividends not paid in money. - Payments made by certain foreign organizations. Payments of interest generally not subject to backup withholding include the following: - Payments of interest on obligations issued by individuals. NOTE: YOU MAY BE SUBJECT TO BACKUP WITHHOLDING IF THIS INTEREST IS $600 OR MORE AND IS PAID IN THE COURSE OF THE PAYER'S TRADE OR BUSINESS AND YOU HAVE NOT PROVIDED YOUR CORRECT TIN TO THE PAYER. - Payments of tax-exempt (including exempt-interest dividends under section 852). - Payments described in section 6049(b)(5) to nonresident aliens. - Payments on tax-free covenant bonds under section 1451. - Payments made by certain foreign organizations. - Mortgage interest paid by you 2 GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 PAGE 2 Payments that are not subject to information reporting are also not subject to backup withholding. For details, see sections 6041, 5041(a), 6042, 6044, 6045, 6049, 6050A, and 6050N, and their regulations. PENALTIES FAILURE TO FURNISH TIN. -- If you fail to furnish your correct TIN to a requester, you are subject to a penalty of $50 for each such failure unless your failure is due to reasonable cause and not to willful neglect. CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING. -- If you make a false statement with no reasonable basis that results in no backup withholding, you are subject to a $500 penalty. CRIMINAL PENALTY FOR FALSIFYING INFORMATION. -- Willfully falsifying certifications or affirmations may subject you to criminal penalties including fines and/or imprisonment. MISUSE OF TINS. -- If the requestor discloses or uses TINs in violation of federal law, the requestor may be subject to civil and criminal penalties. SPECIFIC INSTRUCTIONS NAME. -- If you are an individual, you must generally provide the name shown on your social security card. However, if you have changed your last name, for instance, due to marriage, without informing the Social Security Administration of the name change, please enter your first name, the last name shown on your social security card and your new last name. If you are sole proprietor, you must furnish your individual name and either your SSN or EIN. You may also enter your business name or "doing business as" name on the business name line. Enter your name(s) as shown on your social security card and/or as it was used to apply for your EIN on Form SS-4. SIGNING THE CERTIFICATION. -- (1) INTEREST, DIVIDEND, AND BARTER EXCHANGE ACCOUNTS OPENED BEFORE 1984 AND BROKER ACCOUNTS CONSIDERED ACTIVE DURING 1983. -- You are required to furnish your correct TIN, but you are not required to sign the certification. (2) INTEREST, DIVIDEND, BROKER AND BARTER EXCHANGE ACCOUNTS OPENED AFTER 1983 AND BROKER ACCOUNTS CONSIDERED INACTIVE DURING 1983. -- You must sign the certification or backup withholding will apply. If you are subject to backup withholding and you are merely providing your correct TIN to the requester, you must cross out item (2) in the certification before signing the form. (3) REAL ESTATE TRANSACTIONS. -- You must sign the certification. You may cross out item (2) of the certification. (4) OTHER PAYMENTS. -- You are required to furnish your correct TIN, but you are not required to sign the certification unless you have been notified of an incorrect TIN. Other payments include payments made in the course of the requester's trade or business for rents, royalties, goods (other than bills for merchandise), medical and health care services, payments to a nonemployee for services (including attorney and accounting fees), and payments to certain fishing boat crew members. (5) MORTGAGE INTEREST PAID BY YOU, ACQUISITION OR ABANDONMENT OF SECURED PROPERTY, OR IRA CONTRIBUTIONS. -- You are required to furnish your correct TIN, but you are not required to sign the certification. (6) EXEMPT PAYEES AND PAYMENTS. -- If you are exempt from backup withholding, you should complete this form to avoid possible erroneous backup withholding. Enter your correct TIN in Part 1, write "EXEMPT" in the block in Part II, sign and date the form. If you are a nonresident alien or foreign entity not subject to backup withholding, give the requester a completed FORM W-8, Certificate of Foreign Status. (7) TIN "APPLIED FOR". -- Follow the instructions under HOW TO OBTAIN A TIN, on page 1, check the box in Part II of the Substitute Form W-9 and sign and date the form. SIGNATURE. -- For a joint account, only the person whose TIN is shown in Part I should sign the form. PRIVACY ACT NOTICE. -- Section 6109 requires you to furnish your correct TIN to persons who must file information returns with the IRS to report interest, dividends, and certain other income paid to you, mortgage interest you paid, the acquisition or abandonment of secured property, or contributions you made to an IRA. The IRS uses the numbers for identification purposes and to help verify the accuracy of your tax return. You must provide your TIN whether or not you are required to file a tax return. Payers must generally withhold 31% of taxable interest, dividends, and certain other payments to a payee who does not furnish a TIN to a payer. Certain penalties may also apply. WHAT NAME AND NUMBER TO GIVE THE REQUESTER
- ------------------------------------------------------------ ------------------------------------------------------------ GIVE THE NAME AND GIVE THE NAME AND FOR THIS TYPE OF ACCOUNT: SOCIAL SECURITY FOR THIS TYPE OF ACCOUNT: EMPLOYER IDENTIFICATION NUMBER OF: NUMBER OF: - ------------------------------------------------------------ ------------------------------------------------------------ 1. Individual The individual 6. Sole proprietorship The owner (3) 2. Two or more individuals (joint The actual owner of the 7. A valid trust, estate or Legal entity (4) account) account or, if combined funds, pension trust the first individual on the account (1) 8. Corporate The corporation 3. Custodian account of a minor The minor (2) 9. Association, club, religious, The organization (Uniform Gift to Minors Act) charitable, educational, or other tax-exempt organization 4. a. The usual revocable savings The grantor-trustee (1) trust (grantor is also 10. Partnership The partnership trustee) 11. A broker or registered nominee The broker or nominee b. So-called trust account that The actual owner (1) is not a legal or valid trust 12. Account with the Department of The public entity under state law Agriculture in the name of a public entity (such as a state 5. Sole proprietorship The owner (3) or local government, school district, or prison) that receives agricultural program payments - ------------------------------------------------------------ ------------------------------------------------------------
(1) List first and circle the name of the person whose number you furnish. (2) Circle the minor's name and furnish the minor's social security number. (3) Show the individual's name. You may also enter your business name. You may use your SSN or EIN. (4) List first and circle the name of the legal trust, estate, or pension trust. (Do not furnish the TIN of the personal representative or trustee unless the legal entity itself is not designated in the account title). NOTE: IF NO NAME IS CIRCLED WHEN THERE IS MORE THAN ONE NAME, THE NUMBER WILL BE CONSIDERED TO BE THAT OF THE FIRST NAME LISTED. EX-99.11.A.7 8 SUMMARY ADVERTISEMENT 1 This announcement is neither an offer to purchase nor a solicitation of an offer to sell Shares (as defined below). The Offer is made solely by the Offer to Purchase (as defined below) and the related Letter of Transmittal, and is being made to all holders of Shares. Purchaser (as defined below) is not aware of any state where the making of the Offer is prohibited by administrative or judicial action pursuant to any valid state statute. If Purchaser becomes aware of any valid state statute prohibiting the making of the Offer or the acceptance of Shares pursuant thereto, Purchaser will make a good faith effort to comply with such state statute. If, after such good faith effort, Purchaser cannot comply with such state statute, the Offer will not be made to (nor will tenders be accepted from or on behalf of) the holders of Shares in such state. In any jurisdiction where the securities, blue sky or other laws require the Offer to be made by a licensed broker or dealer, the Offer shall be deemed to be made on behalf of Purchaser by one or more registered brokers or dealers licensed under the laws of such jurisdiction. NOTICE OF OFFER TO PURCHASE FOR CASH 2,140,526 SHARES OF COMMON STOCK (TOGETHER WITH THE RELATED SHARE PURCHASE RIGHTS) OF A+ NETWORK, INC. AT $21.10 NET PER SHARE BY METROCALL, INC. Metrocall, Inc., a Delaware corporation ("Purchaser") is offering to purchase 2,140,526 shares of Common Stock, par value $.01 per share, together with the related share purchase rights issued pursuant to the Rights Agreement dated February 16, 1995 by and between the Company (as defined below) and First Union National Bank of North Carolina, as Rights Agent (the "Rights" and, together with shares of Common Stock, the "Shares"), of A+ Network, Inc., a Tennessee corporation (the "Company"), at a price of $21.10 per Share, net to the seller in cash, upon the terms and subject to the conditions set forth in the Offer to Purchase, dated May 22, 1996 (the "Offer to Purchase"), and in the related Letter of Transmittal (which together constitute the "Offer"). Following the Offer, Purchaser intends to effect the Merger described below. THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON WEDNESDAY, JUNE 19, 1996, (THE "EXPIRATION DATE") UNLESS THE OFFER IS EXTENDED. The Offer is conditioned upon, among other things, there being validly tendered and not withdrawn prior to the expiration of the Offer 2,140,526 Shares. The Offer is also conditioned upon, among other things, the expiration or termination of the applicable antitrust waiting period. If more than 2,140,526 Shares are validly tendered on or prior to the Expiration Date and not properly withdrawn, the Purchaser will, upon the terms and subject to the conditions of the Offer, purchase 2,140,526 Shares on a pro rata basis (with adjustments to avoid purchases of fractional Shares) based on the number of Shares validly tendered on or prior to the Expiration Date and not properly withdrawn. In the event that proration of tendered Shares is required, because of the time required to determine the precise number of 2 Shares validly tendered and not properly withdrawn, the Purchaser does not expect to be able to announce the final results of proration or to pay for any Shares until approximately seven Nasdaq National Market trading days after the Expiration Date. Preliminary results of such proration will be announced by press release as promptly as practicable after the Expiration Date. Holders of Shares may obtain such preliminary information from the Information Agent or the Dealer Manager and may be able to obtain such information from their brokers. The Offer is being made pursuant to an Agreement and Plan of Merger, dated as of May 16, 1996 (the "Merger Agreement"), among the Purchaser and the Company. The Merger Agreement provides that, among other things, as soon as practicable after the satisfaction of the conditions set forth in the Merger Agreement and in accordance with relevant provisions of the General Corporation Law of the State of Delaware (the "Delaware Law") and the Tennessee Business Corporation Act (the "Tennessee Law"), the Company will be merged with and into the Purchaser (the "Merger"). Following consummation of the Merger, the Purchaser will continue as the surviving corporation (the "Surviving Corporation"). At the effective time of the Merger (the "Effective Time"), each Share issued and outstanding immediately prior to the Effective Time (other than Shares held in the treasury of the Company, or owned by Purchaser) will be cancelled and converted automatically into the right to receive (i) the number of shares of common stock, $.01 par value, of the Purchaser (the "Purchaser Shares") equal to the Conversion Ratio (determined on the basis described below), (ii) the same number of Variable Common Rights (the "VCRs" and, together with the Shares, the "Purchaser Securities"), plus (iii) cash in respect of fractional Purchaser Securities, if any. The Conversion Ratio shall be determined by dividing $21.10 by the average of the last bid price for the Purchaser Shares on the Nasdaq National Market for the 50 consecutive trading days ending on the trading day which is five days prior to the Closing Date ("Average Purchaser Share Price"), except that if the Average Purchaser Share Price is greater than $21.88 or less than $17.90, then the Conversion Ratio shall be .96435 or 1.17877, respectively. Each VCR will entitle the holder to receive the amount, not to exceed $5.00 per VCR (unless increased as described below), by which the market value of Purchaser Shares determined as of the first anniversary of the Effective Time (the "Maturity Date"), is less than the "Target Price" of $21.10 per share, adjusted downward, but not upward, based on changes in an index composed of average closing bid prices of three other companies in the paging industry. If the Purchaser extends the Maturity Date by one year (the "Extended Maturity Date"), the Target Price will increase to $25.10, adjusted as previously described, and the maximum amount which the holder may receive will be $7.00 per VCR. The market value of the Purchaser Shares for this purpose will be the median of the averages of the last bid price for the Purchaser Shares on each trading day during each twenty trading day period within the 60 trading days prior to the Maturity Date. In addition, if the last bid price of the Purchaser Shares exceeds $21.10 for any consecutive 50-day period after the Effective Time and before the relevant Maturity Date or, if the Maturity Date is extended, $25.10 for any 50-day period after the Maturity Date and before the Extended Maturity Date, then the right to receive any payments under the VCR will terminate. Any amounts payable under the VCRs will be in cash or Purchaser Shares or common stock equivalents, as determined by the Purchaser. The terms of the VCRs are described in Annex C to the Merger Agreement. THE BOARD OF DIRECTORS OF THE COMPANY HAS DETERMINED THAT EACH OF THE OFFER AND THE MERGER IS FAIR TO, AND IN THE BEST INTERESTS OF, THE SHAREHOLDERS OF THE COMPANY, AND RECOMMENDS ACCEPTANCE OF THE OFFER BY SHAREHOLDERS WHO WISH TO RECEIVE CASH FOR A PORTION OF THEIR SHARES. Simultaneously with entering into the Merger Agreement, the Purchaser and certain shareholders of the Company, who together own 53.9% of the currently outstanding shares, entered into a Shareholders' Option and Sale Agreement dated as of May 16, 1996 (the "Shareholders' Agreement"), pursuant to which such shareholders of the Company agreed to sell 2,210,217 Shares, representing 40% of the Shares held by these shareholders, to Purchaser for a purchase price per Share equal to the price per Share payable in the Offer. These Shareholders also agreed to vote all of their shares in favor of the Merger. These shareholders also granted the Purchaser options to purchase Shares, subject to certain conditions, in certain circumstances, as described in more detail in the Offer to Purchase. 3 For purposes of the Offer, Purchaser will be deemed to have accepted for payment (and thereby purchased) Shares validly tendered and not properly withdrawn as, if and when Purchaser gives oral or written notice to The Bank of New York (the "Depositary") of Purchaser's acceptance for payment of such Shares pursuant to the Offer. Upon the terms and subject to the conditions of the Offer, payment for Shares accepted for payment pursuant to the Offer will be made by deposit of the purchase price therefor with the Depositary, which will act as agent for tendering stockholders for the purpose of receiving payments from Purchaser and transmitting such payments to tendering stockholders whose Shares have been accepted for payment. Under no circumstances will interest on the purchase price for Shares be paid, regardless of any delay in making such payment. In all cases, payment for Shares tendered and accepted for payment pursuant to the Offer will be made only after timely receipt by the Depositary of (i) the certificates evidencing such Shares (the "Share Certificates") or timely confirmation of a book-entry transfer of such Shares into the Depositary's account at one of the Book-Entry Transfer Facilities (as defined in "Section 2. Acceptance for Payment and Payment for Shares" of the Offer to Purchase) pursuant to the procedure set forth in "Section 3. Procedures for Accepting the Offer and Tendering Shares" of the Offer to Purchase, (ii) the Letter of Transmittal (or a facsimile thereof), properly completed and duly executed, with any required signature guarantees and (iii) any other documents required under the Letter of Transmittal. Purchaser expressly reserves the right, in its sole discretion (but subject to the terms and conditions of the Merger Agreement, which limit the Purchaser's right to extend), at any time and from time to time, to extend for any reason the period of time during which the Offer is open, including the occurrence of any condition specified in "Section 13. Certain Conditions of the Offer" of the Offer to Purchase, by giving oral or written notice of such extension to the Depositary. Any such extension will be followed as promptly as practicable by public announcement thereof, such announcement to be made no later than 9:00 a.m., New York City time, on the next business day after the previously scheduled expiration date of the Offer. During any such extension, all Shares previously tendered and not withdrawn will remain subject to the Offer, subject to the rights of tendering stockholders to withdraw their Shares. Tenders of Shares made pursuant to the Offer are irrevocable except that such Shares may be withdrawn at any time prior to 12:00 Midnight, New York City time, on June 19, 1996 (or the latest time and date at which the Offer, if extended by Purchaser, shall expire) and, unless theretofore accepted for payment by Purchaser pursuant to the Offer, may also be withdrawn at any time after July 20, 1996. For the withdrawal to be effective, a written, telegraphic, telex or facsimile transmission notice of withdrawal must be timely received by the Depositary at one of its addresses set forth on the back cover page of the Offer to Purchase. Any such notice of withdrawal must specify the name of the person who tendered the Shares to be withdrawn, the number of Shares to be withdrawn and the name of the registered holder of such Shares, if different from that of the person who tendered such Shares. If Share Certificates evidencing Shares to be withdrawn have been delivered or otherwise identified to the Depositary, then, prior to the physical release of such Share Certificates, the serial numbers shown on such Share Certificates must be submitted to the Depositary, and the signature(s) on the notice of withdrawal must be guaranteed by an Eligible Institution (as defined in "Section 3. Procedures for Accepting the Offer and Tendering Shares" of the Offer to Purchase), unless such Shares have been tendered for the account of an Eligible Institution. If Shares have been tendered pursuant to the procedure for book-entry transfer as set forth in "Section 3. Procedures for Accepting the Offer and Tendering Shares" of the Offer to Purchase, any notice of withdrawal must specify the name and number of the account at the Book-Entry Transfer Facility to be credited with the withdrawn Shares. All questions as to the form and validity (including the time of receipt) of any notice of withdrawal will be determined by Purchaser, in its sole discretion, whose determination will be final and binding. The information required to be disclosed by Rule 14d-6(e)(1)(vii) of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended, is contained in the Offer to Purchase and is incorporated herein by reference. The Company has provided Purchaser with the Company's shareholder list and security position listings for the purpose of disseminating the Offer to holders of Shares. The Offer to Purchase and the related Letter of Transmittal will be mailed to record holders of Shares whose names appear on the Company's stockholder list and will be furnished to brokers, dealers, commercial banks, trust companies and similar persons whose 4 names, or the names of whose nominees, appear on the stockholder list or, if applicable, who are listed as participants in a clearing agency's security position listing for subsequent transmittal to beneficial owners of Shares. THE OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN IMPORTANT INFORMATION WHICH SHOULD BE READ BEFORE ANY DECISION IS MADE WITH RESPECT TO THE OFFER. Questions and requests for assistance or for additional copies of the Offer to Purchase and the related Letter of Transmittal and other tender offer materials may be directed to the Information Agent as set forth below, and copies will be furnished promptly at Purchaser's expense. No fees or commissions will be paid to brokers, dealers or other persons (other than the Information Agent) for soliciting tenders of Shares pursuant to the Offer. The Information Agent for the Offer is: [GEORGESON & COMPANY INC. LOGO] WALL STREET PLAZA NEW YORK, NEW YORK 10005 BANKS AND BROKERS CALL COLLECT (212) 440-9800 CALL TOLL-FREE: (800) 223-2064 The Dealer Manager for the Offer is: WHEAT FIRST BUTCHER SINGER Riverfront Plaza 901 East Byrd Street Richmond, Virginia 23219 CALL TOLL-FREE: (800) 826-2804 May 22, 1996 EX-99.11.A.8 9 PRESS RELEASE 1 FOR IMMEDIATE RELEASE Contact: Vincent D. Kelly May 16, 1996 Chief Financial Officer Metrocall (202) 663-6873 Elliott H. Singer Chairman of the Board A+ Network (615) 385-4500 Paul J. Liberty VP, Investor/Public Relations Metrocall (703) 660-6677, ext. 6260 METROCALL AND A+ NETWORK ANNOUNCE DEFINITIVE MERGER AGREEMENT May 16, 1996, Alexandria, VA and Nashville, TN. Metrocall, Inc. (MCLL - Nasdaq NMS) and A+ Network, Inc. (ACOM - Nasdaq NMS) jointly announced today that they have entered into a definitive merger agreement, whereby A+ Network would merge into Metrocall in a two-step transaction. Metrocall will commence a tender offer to purchase approximately 2.1 million A+ Network shares at $21.00 per share, which combined with the direct purchase of approximately 2.2 million shares from certain A+ Network shareholders will result in Metrocall owning approximately 40% of the outstanding A+ Network shares upon completion of the tender offer. At the time of the merger, each A+ Network shareholder will receive shares of Metrocall common stock having a value of $21.10, subject to certain adjustments based on the future trading price of Metrocall common stock. A+ Network shareholders will also receive variable common rights ("VCRs") designed to provide additional consideration to A+ Network shareholders if Metrocall's stock trades below certain targets over the next year. 2 The tender offer is expected to be completed in June 1996, and the subsequent merger is expected to be completed during the fourth quarter of 1996. The merger is subject to customary state and federal regulatory approvals and the respective shareholder approvals of Metrocall and A+ Network. Major shareholders from each of Metrocall and A+ Network have agreed to vote their shares for the merger. Two members of the A+ Network board of directors, Elliott H. Singer and Ray D. Russenberger, will join a newly constituted Metrocall board of directors upon the completion of the merger. Charles (Chuck) A. Emling, III, President and CEO of A+ Network, will become the President of a newly-formed southeastern region. This transaction, the sixth acquisition announced by Metrocall this year, will make Metrocall the fourth largest paging company in the United States with pro forma units in service approaching 2.5 million. Metrocall expects to finance the tender offer and stock purchases through its existing cash on hand and borrowings under its bank credit facilities. The 11 7/8% senior subordinated debentures of A+ Network will be assumed by Metrocall upon the completion of the merger. A+ Network operates in the states of Florida, Georgia, Alabama, North Carolina, South Carolina, Mississippi, Louisiana, Texas, Tennessee, and Virginia. Currently, A+ Network has over 596,000 paging units in service and is expected to exceed 675,000 units in service at the time of closing. In addition, A+ Network is a founding investor in PCS Development Corp., a holder and developer of a nationwide Narrowband PCS license throughout the U.S. A+ Network was recently formed through the merger of privately-held Network USA with A+ Communications. -2- 3 William L. Collins, III, Chief Executive Officer and President of Metrocall, commented, "This is an outstanding strategic opportunity for Metrocall and we are extremely pleased about completing Phase II of our stated three phase strategy this far ahead of schedule. A+ Network is strategically well-positioned with a dominant position in the southeastern United States, has an enviable track record of outstanding internal growth and improving operating performance. Our firms share a similar philosophy of providing high quality services cost-effectively. A+ Network is an extremely strong competitor in the core region in which it operates, and affords us the addition of a national affiliate distribution network to load our own nationwide paging network, both for the resale of local services as well as our enhanced regional and nationwide coverage products. The addition of A+ Network is a significant step in accomplishing our goal of achieving national scale and scope as an integral component of our growth strategy." Elliott H. Singer, Chairman of A+ Network, said "we are extremely excited about the opportunity to combine our resources with Metrocall to exploit the dynamic market opportunities in wireless communications. The scale of our combined operations will better position us to exploit strategic distribution relationships and in narrowband PCS services and other emerging digital wireless technologies." Metrocall's financial advisors are Wheat First Butcher & Singer and Daniels & Associates. The financial advisor to A+ Network in the merger is Prudential Securities Incorporated. -3- 4 Assuming completion of the A+ Network merger and other announced acquisitions, Metrocall will be the nation's fourth largest wireless messaging company, and would serve nearly 2-5 million subscribers. * * * -4- EX-99.11.C.1 10 AGREEMENT AND PLAN OF MERGER 1 ANNEX A - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- AGREEMENT AND PLAN OF MERGER BETWEEN METROCALL, INC. AND A+ NETWORK, INC. MAY 16, 1996 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 2 TABLE OF CONTENTS
PAGE ---- ARTICLE I THE OFFER AND MERGER SECTION 1.1 The Offer................................................................ 1 SECTION 1.2 AN Actions............................................................... 3 SECTION 1.3 The Merger............................................................... 4 SECTION 1.4 Effective Time........................................................... 4 SECTION 1.5 Certificate of Incorporation and By-Laws................................. 4 SECTION 1.6 Directors and Officers of Surviving Corporation.......................... 4 ARTICLE II CONVERSION OF SHARES; EXCHANGE PROCEDURES SECTION 2.1 Conversion of Shares..................................................... 5 SECTION 2.2 Certain Definitions...................................................... 5 SECTION 2.3 Exchange of Certificates................................................. 5 SECTION 2.4 AN Option Plans.......................................................... 6 SECTION 2.5 AN Subordinated Notes.................................................... 7 SECTION 2.6 Cash Election Merger..................................................... 7 ARTICLE III REPRESENTATIONS AND WARRANTIES OF AN SECTION 3.1 Organization............................................................. 9 SECTION 3.2 Capitalization........................................................... 9 SECTION 3.3 Authorization; Validity of Agreement; AN Action.......................... 10 SECTION 3.4 Consents and Approvals; No Violations; Licenses.......................... 11 SECTION 3.5 SEC Reports and Financial Statements..................................... 12 SECTION 3.6 No Undisclosed Liabilities............................................... 12 SECTION 3.7 Absence of Certain Changes............................................... 12 SECTION 3.8 Employee Benefit Plans; ERISA; Labor..................................... 12 SECTION 3.9 Litigation............................................................... 14 SECTION 3.10 No Default; Compliance with Applicable Laws.............................. 14 SECTION 3.11 Taxes.................................................................... 14 SECTION 3.12 Environmental Matters.................................................... 15 SECTION 3.13 Insurance................................................................ 15 SECTION 3.14 Offer Documents; Proxy Statement; Registration Statement; Other Information............................................................ 15 SECTION 3.15 Transactions with Affiliates............................................. 16 SECTION 3.16 Brokers.................................................................. 16 ARTICLE IV REPRESENTATIONS AND WARRANTIES OF MC SECTION 4.1 Organization............................................................. 16 SECTION 4.2 Capitalization........................................................... 16 SECTION 4.3 Authorization; Validity of Agreement; MC Action.......................... 17 SECTION 4.4 Consents and Approvals; No Violations; Licenses.......................... 18 SECTION 4.5 SEC Reports and Financial Statements..................................... 18 SECTION 4.6 No Undisclosed Liabilities............................................... 19 SECTION 4.7 Absence of Certain Changes............................................... 19
i 3
PAGE ---- SECTION 4.8 Employee Benefit Plans; ERISA; Labor..................................... 19 SECTION 4.9 Litigation............................................................... 20 SECTION 4.10 No Default; Compliance with Applicable Laws.............................. 21 SECTION 4.11 Taxes.................................................................... 21 SECTION 4.12 Environmental Matters.................................................... 21 SECTION 4.13 Insurance................................................................ 21 SECTION 4.14 Offer Documents; Proxy Statement; Registration Statement; Other Information............................................................ 21 SECTION 4.15 Transactions with Affiliates............................................. 22 SECTION 4.16 Financing................................................................ 22 SECTION 4.17 Share Ownership.......................................................... 22 SECTION 4.18 Brokers.................................................................. 22 ARTICLE V COVENANTS SECTION 5.1 Interim Operations of AN and MC.......................................... 22 SECTION 5.2 Stockholder Approval; Meetings; Etc...................................... 25 SECTION 5.3 Proxy Statement, Registration Statement, Etc............................. 25 SECTION 5.4 Compliance with the Securities Act....................................... 26 SECTION 5.5 Nasdaq Listing........................................................... 27 SECTION 5.6 Approvals and Consents; Cooperation...................................... 27 SECTION 5.7 Access to Information.................................................... 28 SECTION 5.8 Employee Benefits and Relocation Matters................................. 28 SECTION 5.9 No Solicitation by AN.................................................... 28 SECTION 5.10 No Solicitation by MC.................................................... 29 SECTION 5.11 Brokers or Finders....................................................... 30 SECTION 5.12 Publicity................................................................ 30 SECTION 5.13 Notification of Certain Matters.......................................... 30 SECTION 5.14 Directors' and Officers' Insurance and Indemnification................... 30 SECTION 5.15 Expenses................................................................. 31 SECTION 5.16 Repurchase Option........................................................ 31 SECTION 5.17 Fair Price Statute....................................................... 33 SECTION 5.18 Further Assurances....................................................... 33 ARTICLE VI CONDITIONS SECTION 6.1 Conditions to Each Party's Obligation To Effect the Merger............... 34 SECTION 6.2 Conditions to Obligations of AN to Effect the Merger..................... 34 SECTION 6.3 Conditions to Obligations of MC to Effect the Merger..................... 35 ARTICLE VII TERMINATION SECTION 7.1 Termination.............................................................. 35 SECTION 7.2 Termination Fee.......................................................... 37 SECTION 7.3 Effect of Termination.................................................... 37
ii 4
PAGE ---- ARTICLE VIII MISCELLANEOUS SECTION 8.1 Amendment and Modification............................................... 37 SECTION 8.2 Nonsurvival of Representations and Warranties............................ 37 SECTION 8.3 Notices.................................................................. 37 SECTION 8.4 Headings................................................................. 38 SECTION 8.5 Interpretation........................................................... 38 SECTION 8.6 Counterparts............................................................. 38 SECTION 8.7 Entire Agreement; Third Party Beneficiaries.............................. 38 SECTION 8.8 Governing Law............................................................ 39 SECTION 8.9 Assignment............................................................... 39 SECTION 8.10 Further Assurances....................................................... 39 ANNEXES Annex A -- Conditions to the Offer Annex B -- Directors of the Surviving Corporation Annex C -- Terms of VCRs Annex D -- Employment and Employee Benefits SCHEDULES AN: Schedule 3.1 -- Subsidiaries of AN Schedule 3.2 -- AN Capitalization; AN Pending Transactions Schedule 3.4(a) -- AN Consents and Approvals Schedule 3.4(c) -- AN FCC Authorizations Schedule 3.6 -- Undisclosed Liabilities Schedule 3.7 -- Certain Changes Schedule 3.8 -- Employee Benefit Plans Schedule 3.9 -- Litigation Schedule 3.11 -- Taxes Schedule 3.15 -- Transactions with Affiliates Schedule 5.1(a) -- Permitted Activities by AN MC: Schedule 4.1 -- Subsidiaries of MC Schedule 4.2 -- MC Capitalization; Commitments Regarding MC Securities Schedule 4.4 -- MC Consents and Approvals Schedule 4.6 -- Undisclosed Liabilities Schedule 4.7 -- Certain Changes Schedule 4.8 -- Employee Benefit Plans Schedule 4.9 -- Litigation Schedule 4.11 -- Taxes Schedule 4.15 -- Transactions with Affiliates Schedule 5.1(b) -- Permitted Activities by MC
iii 5 INDEX OF DEFINED TERMS
PAGE ---- A+ Network............................................................................. 11 Affiliates............................................................................. 26 AN..................................................................................... 1 AN Benefit Plans....................................................................... 12 AN Certificates........................................................................ 5 AN Comfort Letter...................................................................... 26 AN Employee Agreements................................................................. 12 AN ERISA Affiliate..................................................................... 12 AN Fairness Opinion.................................................................... 4 AN Financial Advisor................................................................... 4 AN Financial Statements................................................................ 12 AN Material Agreements................................................................. 11 AN Option.............................................................................. 6 AN Option Plans........................................................................ 7 AN Pending Transactions................................................................ 9 AN SEC Documents....................................................................... 12 AN State Certificates.................................................................. 11 AN Termination Fee Event............................................................... 32 Average Parent Share Price............................................................. 5 CERCLA................................................................................. 15 Claim.................................................................................. 31 Closing................................................................................ 4 Closing Date........................................................................... 4 Code................................................................................... 1 Combination Act........................................................................ 1 Communications Act..................................................................... 11 Confidentiality Agreement.............................................................. 28 Conversion Ratio....................................................................... 5 D&O Insurance.......................................................................... 31 DGCL................................................................................... 1 Effective Time......................................................................... 4 Election contest....................................................................... 32 Environmental Law...................................................................... 15 ERISA.................................................................................. 12 Exchange Act........................................................................... 2 Exchange Agent......................................................................... 5 FCC.................................................................................... 11 Final Regulatory Order................................................................. 32 Fully diluted basis.................................................................... 10 GAAP................................................................................... 12 Governmental Entity.................................................................... 11 HSR Act................................................................................ 11 Indemnified Party...................................................................... 30 Interest Payment Event................................................................. 32 IRS.................................................................................... 12 Junior Preferred....................................................................... 11 Material Adverse Effect................................................................ 11 Materials of Environmental Concern..................................................... 15 MC..................................................................................... 1 MC Benefit Plans....................................................................... 19 MC Employee Agreements................................................................. 19 MC ERISA Affiliate..................................................................... 19
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PAGE ---- MC Fairness Opinion.................................................................... 3 MC Financial Advisor................................................................... 3 MC Financial Statements................................................................ 19 MC Licenses............................................................................ 18 MC Material Agreements................................................................. 18 MC Options............................................................................. 17 MC Pending Transactions................................................................ 17 MC SEC Documents....................................................................... 18 MC Shares.............................................................................. 3 MC Voting Agreement.................................................................... 1 Meeting................................................................................ 25 Merger................................................................................. 1 Merger Agreement....................................................................... A-1 Merger Consideration................................................................... 5 Merger Documents....................................................................... 4 Minimum Condition...................................................................... 2 Notes.................................................................................. 7 Offer.................................................................................. 1,2 Offer Documents........................................................................ 2 Offer Price............................................................................ 2 Offer to Purchase...................................................................... 2 Parent Pending Transactions............................................................ 17 Participant............................................................................ 32 Proposal............................................................................... 25 Proxy Statement........................................................................ 15 Registration Statement................................................................. 15 Regulatory Filings..................................................................... 27 Repurchase Event....................................................................... 31 Repurchase Period...................................................................... 32 Repurchase Shares...................................................................... 32 Rights................................................................................. 1 Rights Plan............................................................................ 1 SAS 49................................................................................. 26 Schedule 14D-1......................................................................... 2 Schedule 14D-9......................................................................... 3 SEC.................................................................................... 2 Securities Act......................................................................... 11 Shareholders' Agreement................................................................ 1 Shares................................................................................. 1 Solicitation........................................................................... 32 State Authority........................................................................ 11 Subsidiary............................................................................. 9 Surviving Corporation.................................................................. 4 Tax Return............................................................................. 14 Taxes.................................................................................. 14 TBCA................................................................................... 1 TIPA................................................................................... 1 VCRs................................................................................... 5 Voting Debt............................................................................ 10 Voting Stock........................................................................... 32
v 7 AGREEMENT AND PLAN OF MERGER AGREEMENT AND PLAN OF MERGER, dated as of May 16, 1996, between METROCALL, INC., a Delaware corporation ("MC"), and A+ NETWORK, Inc., a Tennessee corporation ("AN"). WHEREAS, the Boards of Directors of MC and AN have approved, and deemed it advisable and in the best interests of their respective stockholders to consummate, a combination of their respective businesses upon the terms and subject to the conditions set forth herein; WHEREAS, it is intended that the business combination be accomplished by MC commencing a cash tender offer (the "Offer") for certain issued and outstanding shares of common stock of AN, $.01 par value (the "Shares"), together with the related share purchase rights (the "Rights") issued pursuant to the Rights Agreement dated February 16, 1995 by and between AN and First Union National Bank of North Carolina, as Rights Agent (the "Rights Plan"), to be followed by a merger of AN with and into MC (the "Merger"); WHEREAS, to satisfy a condition to MC entering into this Agreement and incurring the obligations set forth herein, concurrently with the execution and delivery of this Agreement, certain shareholders of AN have entered into a Shareholders' Option and Sale Agreement (the "Shareholders' Agreement") with MC pursuant to which such shareholders have agreed, on the terms and subject to the conditions thereof, to sell certain of their Shares to MC, to vote certain of their Shares and to grant MC an option to purchase certain of such Shares; WHEREAS, to satisfy a condition of AN's entering into this Agreement and incurring the obligations set forth herein, concurrently with the execution and delivery of this Agreement, certain stockholders of MC have entered into a voting agreement (the "MC Voting Agreement") granting AN a proxy with respect to the voting of their MC Shares (as defined below); WHEREAS, the Board of Directors of AN has (i) adopted this Agreement pursuant to Section 48-21-104(a) of the Tennessee Business Corporation Act (the "TBCA"), resolved to submit this Agreement for approval by the holders of the Shares pursuant to Section 48-21-104(b) of the TBCA, and resolved to recommend acceptance of the Offer by the holders of the Shares, (ii) duly approved the business combination contemplated by this Agreement, the Shareholders' Agreement and the MC Voting Agreement in accordance with the provisions of Section 48-103-205 of the Tennessee Business Combination Act (the "Combination Act"), (iii) caused the transactions contemplated hereby not to be a "take over offer" as defined in Section 48-103-102(10)(B)(v) of the Tennessee Investor Protection Act ("TIPA"), and (iv) determined that MC will not be deemed an "Acquiring Person" for the purposes of the Rights Plan. WHEREAS, the Board of Directors of MC has (i) adopted this Agreement, resolved to submit this Agreement for approval by the stockholders of MC pursuant to Section 252 of the Delaware General Corporation Law ("DGCL"), and resolved to recommend that all stockholders of MC approve and adopt this Agreement and the Merger, and (ii) duly approved the business combination contemplated by this Agreement, the Shareholders' Agreement and the MC Voting Agreement so as to render inapplicable thereto the provisions of Section 203 of the DGCL; and WHEREAS, for United States federal income tax purposes, it is intended that the Merger provided for herein shall qualify as a reorganization under Section 368(a) of the Internal Revenue Code of 1986, as amended, and the rules and regulations promulgated thereunder (the "Code"), and this Agreement is intended to be and is adopted as a plan of reorganization within the meaning of Section 368 of the Code; NOW, THEREFORE, in consideration of the foregoing and the respective representations, warranties, covenants and agreements set forth herein, the parties hereto agree as follows: ARTICLE I THE OFFER AND MERGER SECTION 1.1 The Offer. (a) As promptly as practicable (but in no event later than five business days after the public announcement of the execution of this Agreement), MC shall commence (within the meaning 1 8 of Rule 14d-2 under the Securities Exchange Act of 1934, as amended (the Exchange Act)), an offer (the Offer) to purchase for cash 2,140,526 Shares, together with the Rights, at a price of $21.10 per Share, net to the seller in cash (such price, or such higher price per Share as may be paid in the Offer, being referred to herein as the "Offer Price" (provided that MC shall not be required to increase the Offer Price)), subject to there being validly tendered in accordance with the terms of the Offer and not withdrawn prior to the expiration of the Offer 2,140,526 Shares and related Rights (the "Minimum Condition") and to the other conditions set forth in Annex A hereto. Except as otherwise provided herein, MC shall, on the terms and subject to the prior satisfaction or waiver of the conditions of the Offer, accept for payment and pay for Shares tendered as soon as such actions are permitted under applicable law. The Offer shall be made by means of an offer to purchase (the "Offer to Purchase") containing the terms set forth in this Agreement, the Minimum Condition and the other conditions set forth in Annex A hereto. MC shall not amend or waive the Minimum Condition and shall not decrease the Offer Price or decrease the Minimum Condition or amend any other material condition of the Offer in any manner adverse to the holders of the Shares without the prior written consent of AN (such consent to be authorized by the Board of Directors of AN or a duly authorized committee thereof). Notwithstanding the foregoing, (i) if on the expiration date of the Offer (A) there exists an AN Acquisition Proposal (as defined in Section 5.9(a)) involving a tender offer, MC may extend the Offer to a date that is two business days after the date the position of AN with respect to the tender offer is first published or sent pursuant to Rule 14e-2 under the Exchange Act, or (B) there exists an AN Acquisition Proposal other than a tender offer, MC may extend the Offer to a date that is two business days after the first date on which AN's failure to reject such AN Acquisition Proposal would permit MC to terminate this Agreement pursuant to Section 7.1(d)(v) hereof, (ii) in circumstances other than those covered by the preceding clause (i), MC may extend the Offer for such period of time, not to exceed 20 business days in the aggregate, as is reasonably expected to be necessary in order to satisfy the Minimum Condition or the other conditions set forth in Annex A hereto, and (iii) the Offer Price may be increased in good faith and the Offer may be extended to the extent required by law in connection with such increase, in each case without the consent of AN. It is agreed the conditions set forth in Annex A hereto are for the benefit of MC and may be asserted by MC regardless of the circumstances giving rise to any such condition (including any action or inaction by MC not inconsistent with the terms hereof) or, except with respect to the Minimum Condition set forth above, may be waived (but not amended) by MC, in whole or in part at any time and from time to time, in its sole discretion. (b) As soon as practicable on the date the Offer is commenced, MC shall file with the United States Securities and Exchange Commission (the "SEC") a Tender Offer Statement on Schedule 14D-1 with respect to the Offer (together with all amendments and supplements thereto and including the exhibits thereto, the "Schedule 14D-1"). The Schedule 14D-1 will include, as exhibits, the Offer to Purchase and a form of letter of transmittal and summary advertisement (collectively, together with any amendments and supplements thereto, the "Offer Documents"). The Offer Documents will contain (or shall be amended in a timely manner to contain) all information which is required to be included therein in accordance with the Exchange Act and the rules and regulations thereunder and any other applicable law, and shall conform in all material respects with the requirements of the Exchange Act and any other applicable law; provided, however, that no agreement or representation is hereby made or shall be made by MC with respect to information supplied or approved by AN in writing expressly for inclusion in the Offer Documents. MC agrees to take all steps necessary to cause the Offer Documents to be filed with the SEC and to be disseminated to holders of Shares, in each case as and to the extent required by applicable federal securities laws. Each of MC, on the one hand, and AN, on the other hand, agrees to promptly correct any information provided by it for use in the Offer Documents if and to the extent that it shall have become false and misleading in any material respect, and MC further agrees to take all steps necessary to cause the Offer Documents as so corrected to be filed with the SEC and to be disseminated to holders of Shares, in each case as and to the extent required by applicable federal securities laws. AN and its counsel shall be given the opportunity to review the Schedule 14D-1 and any amendments thereto before any of them are filed with the SEC. In addition, MC agrees to provide to AN and its counsel, in written form and promptly after receipt, any comments or other communications that MC or its counsel may receive from time to time from the SEC or its staff with respect to the Offer Documents. 2 9 (c) MC hereby approves of and consents to the Offer and represents and warrants that the Board of Directors of MC, at a meeting duly called and held, has, with the affirmative vote of at least a majority of the members of the Board of Directors of MC, (i) determined that this Agreement, the MC Voting Agreement, and the transactions contemplated hereby (which shall include the Offer, the Merger, and the Shareholders' Agreement) are fair to and in the best interests of the holders of shares of MC's common stock, $.01 par value (the "MC Shares"), (ii) adopted this Agreement and resolved to submit this Agreement for approval by the stockholders of MC pursuant to Section 252 of the DGCL, and (iii) approved this Agreement and the transactions contemplated hereby, such determination and approval constituting approval hereof for purposes of Section 203 of the DGCL. (d) MC has received the written opinion of Wheat, First Securities, Inc. (the "MC Financial Advisor"), dated on or before the date of this Agreement, to the effect that, as of such date, the consideration to be paid (i) to the holders of Shares pursuant to the Offer, and (ii) to the holders of Shares pursuant to the Merger, taken together, is fair to the holders of MC Shares from a financial point of view (the "MC Fairness Opinion"). MC has delivered to AN a copy of the MC Fairness Opinion, together with MC Financial Advisor's written consent to the inclusion of or reference to the MC Fairness Opinion (in a form and substance satisfactory to MC Financial Advisor) in the Offer Documents, the Schedule 14D-9 and the Registration Statement (as defined below). SECTION 1.2 AN Actions. (a) AN hereby approves of and consents to the Offer and represents and warrants that the Board of Directors of AN, at a meeting duly called and held, has, with the affirmative vote of at least a majority of the members of the Board of Directors of AN, (i) determined that this Agreement and the transactions contemplated hereby (which shall include the Offer, the Merger and the Shareholders' Agreement) are fair to and in the best interests of the holders of Shares, (ii) approved this Agreement and the transactions contemplated hereby, such determination and approval constituting approval thereof for purposes of Section 48-103-205 of the Combination Act and such that MC is not an "Acquiring Person" under the Rights Plan, (iii) adopted this Agreement pursuant to Section 48-21-104(a) of the TBCA and resolved to submit the Agreement for approval by the holders of the Shares pursuant to Section 28-21-104(b), and (iv) resolved to recommend that the shareholders of AN who desire to receive cash for their Shares (or a portion thereof) accept the Offer and tender their Shares thereunder to MC and that all shareholders of AN approve and adopt this Agreement and the Merger, which recommendation shall comply with Section 48-103-102(10)(B) of TIPA; provided, that such recommendations may be withdrawn, modified or amended upon a determination of the Board of Directors made in accordance with Section 5.9(f). (b) Concurrently with the commencement of the Offer, AN shall file with the SEC a Solicitation/ Recommendation Statement on Schedule 14D-9 (together with all amendments and supplements thereto and including the exhibits thereto, the "Schedule 14D-9") which shall, subject to a determination of the Board of Directors made in accordance with Section 5.9(f), contain the recommendation referred to in clause (iii) of Section 1.2(a) hereof. The Schedule 14D-9 will contain (or be amended in a timely manner to contain) all information which is required to be included therein in accordance with the Exchange Act and the rules and regulations thereunder and any other applicable law, and shall conform in all material respects with the requirements of the Exchange Act and any other applicable law; provided, however, that no agreement or representation is hereby made or shall be made by AN with respect to information supplied or approved by MC in writing expressly for inclusion in the Schedule 14D-9. AN further agrees to take all steps necessary to cause the Schedule 14D-9 to be filed with the SEC and to be disseminated to holders of Shares, in each case as and to the extent required by applicable federal securities laws. Each of AN, on the one hand, and MC, on the other hand, agrees to promptly correct any information such party has previously provided for use in the Schedule 14D-9, if and to the extent that such information shall have become false and misleading in any material respect, and AN further agrees to take all steps necessary to cause the Schedule 14D-9 (as so corrected) to be filed with the SEC and to be disseminated to holders of Shares, in each case as and to the extent required by applicable federal securities laws. MC and its counsel shall be given the opportunity to review the Schedule 14D-9 and any amendments thereto before any of them are filed with the SEC. In addition, AN agrees to provide MC and its counsel, promptly after receipt and in written form, with any 3 10 comments or other communications that AN or its counsel may receive from time to time from the SEC or its staff with respect to the Schedule 14D-9. (c) In connection with the Offer, AN will promptly furnish or cause to be furnished to MC mailing labels containing the names and addresses of the record holders of the Shares as of a recent date and of those persons becoming record holders subsequent to such date and, to the extent known, a list of the beneficial owners of the Shares as of a recent date, together with copies of all security positions listings and all other information in AN's possession or control regarding the beneficial owners of the Shares, and shall furnish MC with such information and assistance as MC or its agents may reasonably request in communicating the Offer to the shareholders of AN. From and after the date of this Agreement, all such information concerning AN's record and, to the extent known, beneficial holders shall be made available to MC. Except for such steps as are necessary to disseminate the Offer Documents or consummate the Merger, MC shall hold in confidence the information contained in any of such labels and lists and the additional information referred to in the preceding sentence, will use such information only in connection with the Offer and the Merger, and, if this Agreement is terminated, will deliver or cause to be delivered to AN all copies of such information then in its possession or the possession of its agents or representatives. (d) AN has received the written opinion of Prudential Securities Incorporated (the "AN Financial Advisor"), dated on or before the date of this Agreement, to the effect that, as of such date, the consideration to be received by holders of Shares (other than MC and its affiliates) pursuant to the Offer and Merger, taken together, is fair to such holders from a financial point of view (the "AN Fairness Opinion"). AN has delivered to MC a copy of the AN Fairness Opinion, together with AN Financial Advisor's written consent to the inclusion of or reference to the AN Fairness Opinion (in a form and substance satisfactory to AN Financial Advisor) in the Offer Documents, the Schedule 14D-9 and the Registration Statement. SECTION 1.3 The Merger. Upon the terms and subject to the conditions set forth in Article VI hereof, and in accordance with the DGCL and the TBCA, AN shall be merged with and into MC. The closing (the "Closing") of the Merger shall take place as promptly as practicable but in no event later than the date that is two business days after satisfaction or waiver of the conditions set forth in Article VI (other than those relating to documents to be delivered at the Closing). The Closing will be held at such time and at such place as the parties hereto may agree. The date on which the Closing occurs is hereinafter referred to as the "Closing Date." Following the Merger, the separate corporate existence of AN will cease, and MC shall continue as the surviving corporation (the "Surviving Corporation") and shall succeed to and assume all of the rights and obligations of AN. SECTION 1.4 Effective Time. Upon the Closing, the parties hereto shall cause the Merger to be consummated by filing with the Secretary of State of the State of Delaware and the Secretary of State of the State of Tennessee articles of merger, certificates of merger or other appropriate documents (in any such case, the "Merger Documents") in such form as is required by, and executed in accordance with, this Agreement and the relevant provisions of the TBCA and the DGCL (the date and time of the later of such filings being referred to herein as the "Effective Time"). The Merger shall have the effects set forth in Section 48-21-108 of the TBCA and the Section 252 of DGCL. SECTION 1.5 Certificate of Incorporation and By-Laws. The Certificate of Incorporation and By-Laws of MC, as in effect immediately prior to the Effective Time, shall be the Certificate of Incorporation and By-Laws of the Surviving Corporation. SECTION 1.6 Directors and Officers of Surviving Corporation. (a) The directors of MC immediately prior to the Effective Time shall be the directors of the Surviving Corporation at the Effective Time. (b) The officers of MC shall be the officers of the Surviving Corporation and shall hold their office from the Effective Time until they resign or their earlier death or removal. 4 11 ARTICLE II CONVERSION OF SHARES; EXCHANGE PROCEDURES SECTION 2.1 Conversion of Shares. (a) Each Share, together with the related Rights, issued and outstanding immediately prior to the Effective Time (other than Shares held by MC or any Subsidiary (as defined in Section 3.1) of MC) shall, by virtue of the Merger and without any action on the part of the holder thereof, be converted into the right to receive (i) such number of duly authorized, validly issued, fully paid and nonassessable MC Shares equal to the Conversion Ratio (as defined in Section 2.2), and (ii) a number of rights to receive amounts to be determined in accordance with, and which rights are evidenced by, Variable Common Rights having the terms described in Annex C hereto ("VCRs") in an amount equal to the number of MC Shares to be received pursuant to clause (i); plus (iii) cash, if any, for fractional MC Shares and VCRs pursuant to Section 2.3(f) hereof (collectively, the "Merger Consideration"). (b) Each Share (i) held in the treasury of AN or any Subsidiary of AN and (ii) held by MC or any Subsidiary of MC immediately prior to the Effective Time shall, by virtue of the Merger and without any action on the part of the holder thereof, be cancelled and retired and cease to exist and no Merger Consideration shall be issued in respect thereof. SECTION 2.2 Certain Definitions. "Average MC Share Price" shall mean the average of the last reported bid price per MC Share on the Nasdaq National Market for the 50 consecutive trading days ending on the trading day that is five trading days prior to the Closing Date, provided that the Average MC Share Price shall not exceed $21.88 or be less than $17.90. "Conversion Ratio" shall mean the number determined by dividing $21.10 by the Average MC Share Price and rounding the result to the nearest 1/100,000 of a share. In the event that, between the date of this Agreement and the Effective Time, the number of issued and outstanding Shares or MC Shares shall have been changed into a different number of shares or a different class of shares as a result of a stock split, reverse stock split, stock dividend, spinoff, extraordinary dividend, recapitalization, reclassification or other similar transaction with a record date within such period, the Conversion Ratio shall be appropriately adjusted. The Conversion Ratio shall also be adjusted by multiplying such Ratio at the Effective Time by a fraction, (a) the numerator of which is the sum of (i) Scheduled Shares (as defined below) plus (ii) any Shares with respect to which MC consents to the issuance pursuant to Section 5.1(a) ("Total Permitted Shares"), and (b) the denominator of which is the sum of (i) all Shares issued and outstanding at the Effective Time plus (ii) all Shares that would be issuable by AN pursuant to or in connection with pending acquisition or AN Options, provided, that no adjustment shall be made if the resulting fraction is equal to 1.00 or more. SECTION 2.3 Exchange of Certificates. (a) Prior to the Effective Time, AN and MC shall appoint First Union National Bank of North Carolina (or any other commercial bank or trust company, which shall be reasonably acceptable to AN and MC) to act as exchange agent (the "Exchange Agent") to effect the exchange of certificates representing the Shares as set forth in Section 2.1 hereof (collectively, the "AN Certificates") for the Merger Consideration. The Surviving Corporation shall make available, or shall cause to be made available, to the Exchange Agent for the benefit of the holders of Shares for exchange in accordance with this Article II, certificates representing MC Shares and VCRs issuable pursuant to Section 2.1 and funds in amounts necessary to make any cash payments pursuant to Section 2.3(f). (b) Promptly after the Effective Time, the Surviving Corporation shall cause the Exchange Agent to mail to each person who was, at the Effective Time, a holder of record of a AN Certificate (i) a letter of transmittal which shall specify that delivery shall be effected, and risk of loss and title to an AN Certificate shall pass, upon (and only upon) proper delivery to, and receipt of such AN Certificate by, the Exchange Agent, and which shall be in such form and have such other provisions as the Surviving Corporation may reasonably specify, and (ii) instructions for use in effecting the surrender of such AN Certificate in exchange for a certificate representing MC Shares such holder is entitled to pursuant to this Article II. Upon surrender of an AN Certificate, together with such letter of transmittal duly completed and validly executed in 5 12 accordance with the instructions thereto, and such other documents as may be required pursuant to such instructions, the holder of such AN Certificate shall be entitled to receive in exchange therefor, after the Effective Time, (i) a certificate representing that number of MC Shares to which such holder of Shares shall have become entitled pursuant to the provisions of this Article II, (ii) a certificate representing that number of VCRs to which such holder of Shares shall have become entitled pursuant to the provisions of this Article II, and (iii) if applicable, a check representing the amount of cash to which such holder of Shares shall have become entitled pursuant to the provisions of Section 2.3(f), and the AN Certificate so surrendered shall forthwith be canceled. All payments in respect of Shares which are made in accordance with the terms hereof shall be deemed to have been made in full satisfaction of all rights pertaining to such Shares. (c) No dividends or other distributions declared with respect to Shares and payable to the holders of record thereof after the Effective Time shall be paid to the holder of any unsurrendered AN Certificate until the holder thereof shall surrender such AN Certificate in accordance with Section 2.3(b) hereof. Subject to the effect, if any, of applicable law, after the subsequent surrender and exchange of an AN Certificate, the record holder thereof shall be entitled to receive any such dividends or other distributions, without any interest thereon, which theretofore have become payable with respect to MC Shares, into which the Shares represented by such AN Certificate have been converted. (d) If any portion of the Merger Consideration (whether a certificate representing MC Shares, a certificate representing VCRs or a check representing cash payment pursuant to Section 2.3(f)) is to be issued or paid in a name other than that in which the AN Certificate surrendered in exchange therefor is registered, it shall be a condition to the issuance thereof that the AN Certificate so surrendered shall be properly endorsed (or accompanied by an appropriate instrument of transfer) and otherwise in proper form for transfer, and that the person requesting such exchange shall pay to the Exchange Agent in advance any transfer or other taxes required by reason of the issuance of a certificate representing MC Shares, a certificate representing VCRs or a check representing the cash payment pursuant to Section 2.3(f) in any name other than that of the registered holder of the AN Certificate surrendered, or required for any other reason, or shall establish to the satisfaction of the Exchange Agent that such tax has been paid or is not payable. (e) On and after the Effective Time: the stock transfer books of AN shall be closed and there shall be no further registration of transfers of the Shares which were outstanding immediately prior to the Effective Time; the AN Certificates representing Shares (and the Rights) shall cease to have any rights with respect to such Shares (or Rights) except as otherwise provided for herein or by applicable law; and the MC Shares and VCRs into which Shares have been converted pursuant to Section 2.1 hereof shall be deemed outstanding (subject to Section 2.3(c)) notwithstanding the failure of the holders thereof to surrender and exchange AN Certificates as specified herein. (f) No certificates or scrip representing fractional MC Shares or VCRs shall be issued upon the surrender for exchange of AN Certificates, no dividend, distribution or other payment with respect to MC Shares or VCRs shall be payable on or with respect to any fractional MC Share or VCR and such fractional MC Share shall not entitle the owner thereof to vote or to any other rights of a shareholder or creditor of AN. In lieu of any such fractional MC Share or fractional VCR, the Surviving Corporation shall pay to each shareholder of AN who otherwise would be entitled to receive a fractional MC Share and a fractional VCR an amount in cash determined by (i) dividing $21.10 by the Conversion Ratio and (ii) multiplying the result by the fractional MC Share interest to which such holder would otherwise be entitled. (g) At any time following six (6) months after the Effective Time, the Surviving Corporation may terminate its agreement with the Exchange Agent, and thereafter holders of AN Certificates shall be entitled to look to the Surviving Corporation (subject to abandoned property, escheat or other similar laws) only as general creditors thereof with respect to the consideration payable upon due surrender of their AN Certificates pursuant to the provisions of this Article II. Notwithstanding the foregoing, neither the Surviving Corporation nor the Exchange Agent shall be liable to any holder of a AN Certificate for consideration delivered to a public official pursuant to applicable abandoned property, escheat or similar laws. SECTION 2.4 AN Option Plans. (a) Each outstanding option to purchase Shares (each, a "AN Option") granted pursuant to AN's 1987 Employee Stock Incentive Plan, 1992 Employee Stock Incentive 6 13 Plan, 1992 Non-Qualified Stock Option Plan or the Employee Stock Purchase Plan (collectively, the "AN Option Plans"), or to Dan Hiller which are described in Schedule 3.2, and which have not vested prior to the Effective Time, shall become fully exercisable and vested as of the Effective Time. (b) Effective as of the Effective Time, at the option of the holder thereof, either (i) each AN Option then outstanding and not exercised shall be converted automatically into an option to purchase such number of MC Shares and VCRs equal to the number of Shares subject to such AN Option immediately prior to the Effective Time multiplied by the Conversion Ratio, with the exercise price adjusted accordingly, but otherwise on the same terms and conditions as were applicable under the applicable AN Option Plan and the underlying stock option agreement or (ii) up to a maximum of 40% of the Shares subject to AN Options held by each holder, such percentage to be determined by such holder, shall be cancelled and the holder thereof shall be entitled to receive, with respect to each such Share subject to such AN Option, the Offer Price on the Closing Date net to the holder in cash, less the aggregate unpaid exercise price relating to the exercise of such AN Options, and the remaining AN Options held by such holder shall be converted as described in clause (i) of this sentence. (c) Notwithstanding the foregoing provisions, in the case of any option to which Code Section 421 applies, the option price, the number of shares subject to such option, and the terms and conditions of exercise of such option shall be determined in order to comply with Code Section 424(a). As soon as practicable after the Effective Time, the Surviving Corporation shall deliver to the holders of AN Options appropriate notices setting forth such holders' rights pursuant to AN Option Plans and each underlying stock option agreement. SECTION 2.5 AN Subordinated Notes. After the Effective Time, MC will comply with applicable terms of the Indenture for AN's 11 7/8% Senior Subordinated Notes due 2005 (the "Notes") including, if required, offering to repurchase the Notes or causing them to be assumed by the Surviving Corporation. In the event MC elects to exercise the Scenario I Option (as defined in the Shareholders Agreement), MC shall provide an irrevocable letter of credit (from a bank and containing terms reasonably acceptable to AN) permitting AN to draw sufficient funds for AN to honor the "Change in Control" provisions under the 11 7/8% Senior Subordinated Notes due 2005, dated as of October 25, 1995 (the "Indenture") and to permit the Holders (as defined in the Indenture) to sell such Holder's Notes to AN, in whole or in part, at a purchase price in cash equal to 101% of the principal amount thereof, plus accrued and unpaid interest, if any, to the date of repurchase; provided that MC may substitute for the letter of credit a firm financing commitment satisfactory to AN, in its sole discretion, permitting MC to borrow sufficient funds for AN to honor the obligations set forth above. In such event, MC shall provide AN all funds required to satisfy the "Change in Control" obligations under the Indenture prior to the last date AN is permitted to make payments to the Holders of the Notes to be purchased thereunder. If MC provides such funds to AN, upon the purchase of Notes pursuant to the Change in Control obligations, AN will issue to MC negotiable promissory notes in the respective principal amounts of the funds provided by MC, each of which shall bear interest and otherwise have terms and provisions identical as nearly as possible to the Notes so purchased, including the terms and provisions of the Indenture under which such Notes were issued. SECTION 2.6 Cash Election Merger. In the event of, and subject to, the purchase by MC of Shares pursuant to the Mandatory Option in accordance with Section 3.3.3 of the Shareholders' Agreement, then, notwithstanding any other provision of this Agreement to the contrary, each Share, together with the related Rights, issued and outstanding immediately prior to the Effective Time, other than Shares held by MC or any Subsidiary of MC (the "Non-MC Shares"), shall, by virtue of the Merger and without any action on the part of any holder thereof, be converted into the right to receive cash, on the one hand, and MC Shares and VCRs (collectively, the "Alternative Merger Consideration"), on the other, in accordance with the following terms and procedures: (a) Each person who, at the Effective Time, is a record holder of Non-MC Shares shall have the right to submit an Election Form (as defined below) specifying the number of Shares that such person desires to have converted into the right to receive cash equal to $21.10 (a "Cash Election") or the number of MC Shares and VCRs equal, in each case, to the Conversion Ratio (the "Stock Election"). 7 14 (b) As soon as reasonably practicable after the Effective Time, the Exchange Agent shall mail to each holder of record of the Shares immediately prior to the Effective Time (A) a letter of transmittal (which shall specify that delivery shall be effected, and risk of loss and title to the AN Certificates shall pass, only upon delivery of such AN Certificates to the Exchange Agent and shall be in such form and have such other provisions as MC shall specify), (B) instructions for use in effecting the surrender of the AN Certificates in exchange for the Alternative Merger Consideration, and (C) an election form (the "Election Form") providing for such holders to make the Cash Election and/or the Stock Election. (c) Any Cash Election or Stock Election shall have been validly made only if the Exchange Agent shall have received by 5:00 p.m. New York, New York time on a date (the "Election Deadline") to be mutually agreed upon by MC and AN prior to the Effective Time, an Election Form properly completed and executed (with the signature or signatures thereof guaranteed to the extent required by the Election Form) by such holder accompanied by such holder's AN Certificates, or by an appropriate guarantee of delivery of such AN Certificates. Any holder of Shares who has made an election by submitting an Election Form to the Exchange Agent may at any time prior to the Election Deadline change such holder's election by submitting a revised Election Form, properly completed and signed, that is received by the Exchange Act prior to the Election Deadline. In the event that any holder of Shares shall not have submitted an Election Form or if the Election Form is not in proper form, such holder will be deemed to have elected to have made a Cash Election for 40% of such holder's Shares, and a Stock Election for 60% of such holder's Shares. Promptly following the Election Deadline, the Exchange Agent shall examine the Election Forms and determine the aggregate number of Shares that have made, or are deemed to have made, the Cash Election (the "Requested Cash Amount") and the aggregate number of Shares that have made the Stock Election (the "Requested Stock Amount"). (d) In the event that the Requested Cash Amount exceeds 40% of the aggregate Non-MC Shares ("Cash Cap"): (i) each holder who submitted or is deemed to have submitted a Cash Election shall have the right to receive (i) $21.10 per Share for that number of Shares, or fractions thereof, equal to the number specified or deemed to be specified in the Cash Election, multiplied times a fraction, the numerator of which is the Cash Cap and the denominator of which is the Requested Cash Amount; and (ii) with respect to all other Shares, including Shares not converted into cash pursuant to clause (i) and Shares as to which the holder has submitted or is deemed to have submitted a Stock Election, the holder shall have the right to receive for each such share (A) a number of MC Shares equal to the Conversion Ratio, (B) a number of VCRs equal to the number of MC Shares to be received pursuant to clause (A), plus (C) cash, if any, for fractional MC Shares and VCRs pursuant to Section 2.3(f). (e) In the event that the Requested Stock Amount exceeds 60% of the aggregate Non-MC Shares ("Stock Cap"): (i) each holder who submitted or is deemed to have submitted a Stock Election shall have the right to receive for each Share subject to a Stock Election (A) that number of MC Shares equal in each case, to the Conversion Ratio, multiplied by a fraction, the numerator of which is the Stock Cap and the denominator of which is the Requested Stock Amount, (B) a number of VCRs equal to the number of MC Shares to be received pursuant to clause (A), plus (C) cash for fractional shares calculated pursuant to Section 2.3(f); and (ii) with respect to all other Shares, including Shares not converted into MC Shares and VCRs pursuant to clause (i) and Shares as to which the holder has submitted or is deemed to have submitted a Cash Election, or fractions thereof, the holder shall have the right to receive $21.10 in cash per Share. (f) Promptly after the Effective Time, (i) MC shall deposit (or cause to be deposited) with the Exchange Agent, for the benefit of the holders of the Shares, for exchange in accordance with this Section 2.6, cash in the amount sufficient to pay the aggregate cash portion of the Alternative Merger Consideration, and (ii) MC shall deposit (or cause to be deposited) with the Exchange Agent, for the benefit of the holders of the Shares, certificates representing the MC Shares and VCRs for exchange in accordance with this Section 2.6. 8 15 (g) Except as expressly provided herein, the conversion of Shares and exchange for Alternative Merger Consideration, including without limitation the treatment of unexercised AN Options, shall be governed by the provisions of this Article II. ARTICLE III REPRESENTATIONS AND WARRANTIES OF AN AN represents and warrants to MC as follows: SECTION 3.1 Organization. (a) Except as set forth on Schedule 3.1, each of AN and its Subsidiaries is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation and has all requisite corporate power and authority and all necessary governmental approvals to own, lease and operate its properties and to carry on its business as now being conducted, except where the failure to be so organized, existing and in good standing or to have such power, authority, and governmental approvals would not have a Material Adverse Effect on AN and its Subsidiaries taken as a whole. As used in this Agreement, the word "Subsidiary" means, with respect to any party, any corporation or other organization, whether incorporated or unincorporated, of which at least a majority of the securities or other interests having by their terms ordinary voting power to elect a majority of the Board of Directors or others performing similar functions with respect to such corporation or other organization is directly or indirectly owned or controlled by such party or by any one or more of its Subsidiaries, or by such party and one or more of its Subsidiaries. As used in this Agreement, any reference to "Material Adverse Effect" on or with respect to any entity (or group of entities taken as a whole) means any event, change or effect that is materially adverse to the consolidated financial condition, businesses, results of operations or cash flows of such entity (or, if used with respect thereto, of such group of entities taken as a whole). AN and each of its Subsidiaries is duly qualified or licensed to do business and in good standing in each jurisdiction in which the property owned, leased or operated by it or the nature of the business conducted by it makes such qualification or licensing necessary, except where the failure to be so duly qualified or licensed and in good standing would not, individually or in the aggregate, have a Material Adverse Effect on AN and its Subsidiaries, taken as a whole, or prevent AN from consummating any of the transactions contemplated hereby. (b) AN has heretofore made available to MC a complete and correct copy of the Charter and By-Laws or other organizational documents of AN and the organizational documents of each of its Subsidiaries, as currently in effect. Each such document is in full force and effect and no other organizational documents are applicable to or binding upon AN or any Subsidiary. (c) Schedule 3.1 identifies all the Subsidiaries of AN. SECTION 3.2 Capitalization. (a) The authorized capital stock of AN consists of 30,000,000 shares of common stock and 1,500,000 shares of preferred stock, par value $.01 per share, of which 500,000 shares have been reserved and designated as Series A Junior Participating Preferred Stock ("Junior Preferred"). Schedule 3.2 sets forth (i) the number of issued and outstanding Shares as of the date hereof; (ii) the number of Shares that would be issuable by AN upon the exercise of all unexpired AN Options granted pursuant to AN Option Plans, including the name of each holder of AN Options, the number of AN Options held by such holder, and the date of grant, date of vesting, and exercise price for all such AN Options of AN; (iii) all Shares that would be issuable by AN pursuant to or in connection with each of the acquisition agreements or transactions identified in Schedule 3.2 (the "AN Pending Transactions"); and (iv) all other Shares issuable to any person pursuant to any existing options, warrants, calls, preemptive (or similar) rights, subscriptions or other rights, agreements, arrangements or commitments of any character, except pursuant to the Rights (collectively, the "Scheduled Shares"). As of the date hereof, no shares of preferred stock, including any Junior Preferred, are issued and outstanding or held in the treasury of AN, and no Shares are held in the treasury of AN. AN has taken all necessary corporate and other action to authorize and reserve and to permit it to issue shares of AN's capital stock which may be issued pursuant to AN Options. The Shares subject to the Shareholders' Agreement, together with the Shares acquired by MC in the Offer (assuming the Minimum Condition is not waived or reduced) do, and at all times prior to the earlier of exercise or expiration of the 9 16 options granted pursuant to the Shareholders' Agreement will, represent at least a majority of the Shares on a fully diluted basis. For purposes of this Agreement, "fully diluted basis" shall mean, at any time, the number of Shares that would be outstanding assuming the exercise of all outstanding options and other rights to acquire Shares (other than pursuant to the Rights) or other securities convertible into Shares (including any Shares to be issued pursuant to any AN Pending Transaction), and the conversion of all securities convertible into Shares. All the outstanding shares of AN's capital stock are, and all shares which may be issued pursuant to the exercise of AN Options, when issued in accordance with the respective terms thereof will be, duly authorized, validly issued, fully paid and non-assessable and free of any preemptive (or similar) rights. There are no bonds, debentures, notes or other indebtedness having general voting rights (or convertible into securities having such rights) ("Voting Debt") of AN or any of its Subsidiaries issued and outstanding. Except as set forth in Schedule 3.2 and for the Rights, as of the date hereof, (i) there are no shares of capital stock of AN authorized, issued or outstanding, (ii) there are no existing options, warrants, calls, preemptive (or similar) rights, subscriptions or other rights, agreements, arrangements or commitments of any character, relating to the issued or unissued capital stock of AN or any of its Subsidiaries, obligating AN or any of its Subsidiaries to issue, transfer or sell or cause to be issued, transferred or sold any shares of capital stock or Voting Debt of, or other equity interest in, AN or any of its Subsidiaries or securities convertible into or exchangeable for such shares or equity interest or obligations of AN or any of its Subsidiaries, and (iii) other than as contemplated herein, there are no outstanding contractual obligations of AN or any of its Subsidiaries to repurchase, redeem or otherwise acquire any Shares, or capital stock of AN or any Subsidiary or affiliate of AN. (b) All of the outstanding shares of capital stock of each of AN's Subsidiaries are beneficially owned by AN, directly or indirectly, free and clear of all security interests, liens, claims, pledges, agreements, limitations on voting rights, charges or other encumbrances of any nature whatsoever, other than liens in favor of First National Bank of Chicago. (c) There are no voting trusts or other agreements or understandings to which AN or any of its Subsidiaries is a party with respect to the voting of the capital stock of AN or any of its Subsidiaries. Other than as contemplated herein, none of AN or its Subsidiaries is required to redeem, repurchase or otherwise acquire shares of capital stock of AN, or any of its Subsidiaries, respectively, as a result of the transactions contemplated by this Agreement. SECTION 3.3 Authorization; Validity of Agreement; AN Action. (a) AN has full corporate power and authority to execute and deliver this Agreement and the MC Voting Agreement and to consummate the transactions contemplated hereby and thereby. The execution, delivery and performance by AN of this Agreement and the MC Voting Agreement, and the consummation by it of the transactions contemplated hereby and thereby have been duly authorized by the Board of Directors of AN and no other corporate action on the part of AN is necessary to authorize the execution and delivery by AN of this Agreement and the MC Voting Agreement and the consummation by it of the transactions contemplated hereby and thereby (other than, with respect to the Merger, the approval of this Agreement by the affirmative vote of the holders of a majority of the outstanding Shares). This Agreement and the MC Voting Agreement have been duly executed and delivered by AN and (assuming due and valid authorization, execution and delivery hereof by the other parties hereto and thereto) are valid and binding obligations of AN enforceable against AN in accordance with their terms, except that (i) such enforcement may be subject to applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws, now or hereafter in effect, affecting creditors' rights generally, and (ii) the remedy of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought. (b) The Board of Directors of AN also has approved the transactions contemplated by this Agreement, the MC Voting Agreement and the Shareholders' Agreement so as to render inapplicable thereto the provisions of Section 48-103-206 of the Combination Act and to cause such transactions to fail to meet the definition of "takeover offer" as defined in Section 46-103-102(10)(B)(v) of TIPA, and so that MC and the stockholder parties to the MC Voting Agreement will not be deemed an "Acquiring Person" for purposes of the Rights. 10 17 SECTION 3.4 Consents and Approvals; No Violations; Licenses. (a) Neither the execution, delivery or performance of this Agreement or the MC Voting Agreement by AN nor the consummation by AN of the transactions contemplated hereby or thereby nor compliance by AN with any of the provisions hereof or thereof will (i) conflict with or result in any breach of any provision of the Charter or By-Laws or other organizational documents of AN or of any of its Subsidiaries, (ii) require on the part of AN any filing with, or permit, authorization, consent or approval of, any court, arbitral tribunal, administrative agency or commission or other governmental or other regulatory authority or agency (a "Governmental Entity") except for (A) filings, permits, authorizations, consents and approvals as may be required under, and other applicable requirements of, the Exchange Act, the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"), the Federal Communication Commission ("FCC"), the Communications Act of 1934, as amended (the "Communications Act"), state public utility or public service laws, the Securities Act of 1933, as amended (the "Securities Act"), the DGCL, the TBCA, state or foreign laws relating to takeovers, state securities or blue sky laws, and the laws of other states in which AN is qualified to do or is doing business, or (B) where the failure to obtain such permits, authorizations, consents or approvals or to make such filings, individually or in the aggregate, would not have a Material Adverse Effect on AN and its Subsidiaries, taken as a whole, or prevent AN from consummating the transactions contemplated hereby, (iii) except as disclosed on Schedule 3.4(a), result in a violation or breach of, or constitute (with or without due notice or lapse of time or both) a default (or give rise to any right of termination, cancellation or acceleration) under, any of the terms, conditions or provisions of any note, bond, mortgage, indenture, lease, license, contract, agreement or other instrument or obligation to which AN or any of its Subsidiaries is a party or by which any of them or any of their properties or assets may be bound and which has been included as an exhibit to AN's Annual Report on Form 10-K for the fiscal year ended December 31, 1995 (the "AN Material Agreements") or (iv) violate any order, writ, injunction, decree, statute, rule or regulation applicable to AN, any of its Subsidiaries or any of their properties or assets, excluding from the foregoing clauses (iii) and (iv) such violations, breaches or defaults which would not, individually or in the aggregate, have a Material Adverse Effect on AN and its Subsidiaries, taken as a whole, or prevent AN from consummating the transactions contemplated hereby. (b) AN or one of its Subsidiaries holds all licenses, permits, certificates, franchises, ordinances, registrations, or other rights, applications and authorizations filed with, granted or issued by, or entered by any Governmental Entity, including without limitation, the FCC, or any state or local regulatory authorities or any state or local public service commission or public utility commission asserting jurisdiction over the radio facilities used in AN's business (each, a "State Authority"), that are required for the conduct of their businesses as now being conducted, except for those the absence of which would not individually or in the aggregate have a Material Adverse Effect on AN and its Subsidiaries taken as a whole (collectively, "AN Licenses") and, provided, that no representation is made with respect to such matters on behalf of any third-parties who are part of the "A+ Network". The AN Licenses are valid, in full force and effect, and the terms of said AN Licenses are not subject to any restrictions or conditions that materially limit or would materially limit the operations of the business of AN or any of its Subsidiaries as presently conducted, other than restrictions or conditions generally applicable to licenses of that type. The AN Licenses granted, issued or entered by the FCC are subject to the Communications Act. There are no proceedings pending or, to the best knowledge of AN, complaints or petitions by others, or threatened proceedings, before the FCC or any other Governmental Entity relating to the business or operations of AN or any of its Subsidiaries or The AN Licenses, and there are no facts or conditions that reasonably could be expected to constitute grounds for the FCC to revoke, terminate, suspend, deny, annul, or impose conditions on any renewal of any AN Licenses, that would, individually or in the aggregate, have a Material Adverse Effect on AN and its Subsidiaries, taken as a whole, or prevent AN from consummating the transactions contemplated hereby or to impose any fines, forfeitures or other penalties on AN or its Subsidiaries that would, individually or in the aggregate, have a Material Adverse Effect on AN and its Subsidiaries, taken as a whole. (c) Schedule 3.4(c) contains a true and complete list of each FCC permit and FCC license issued in the name of AN, or any of its Subsidiaries as of May 9, 1996. Schedule 3.4(c) also contains a true and complete list of all licenses, certificates, consents, permits, approvals and authorizations pending before or issued by any State Authority (the "AN State Certificates"). 11 18 SECTION 3.5 SEC Reports and Financial Statements. AN and its Subsidiaries have filed with the SEC all forms, reports, schedules, statements, and other documents required to be filed by them with the SEC (as such documents have been amended since the time of their filing, collectively, the "AN SEC Documents"), and have filed all exhibits required to be filed with AN SEC Documents. As of their respective dates or, if amended, as of the date of the last such amendment, AN SEC Documents, including, without limitation, any financial statements or schedules included therein, complied in all material respects with the applicable requirements of the Securities Act and the Exchange Act, and did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. None of AN's Subsidiaries is required to file any forms, reports or other documents with the SEC pursuant to Section 12 or 15 of the Exchange Act. The financial statements of AN included in AN's Annual Report on Form 10-K for the fiscal year ended December 31, 1995 (including the related notes thereto) and for the quarter ended March 31, 1996, copies of which have been provided to MC (together, the "AN Financial Statements"), have been prepared from, and are in accordance with, the books and records of AN and its consolidated Subsidiaries, comply in all material respects with applicable accounting requirements and with the published rules and regulations of the SEC with respect thereto, have been prepared in accordance with United States generally accepted accounting principles ("GAAP") applied on a consistent basis throughout the periods involved (except as may be indicated in the notes thereto and subject, in the case of unaudited interim financial statements, to normal year-end adjustments), and fairly present the consolidated financial position and the consolidated results of operations and cash flows of AN and its consolidated Subsidiaries as at the dates thereof or for the periods presented therein. SECTION 3.6 No Undisclosed Liabilities. Except (i) as disclosed in AN SEC Documents, (ii) as set forth in Schedule 3.6, (iii) AN Pending Transactions, and (iv) for liabilities incurred in the ordinary course of business and consistent with past practice, and liabilities incurred in connection with the consummation of the transactions contemplated hereby (none of which, individually or in the aggregate, is reasonably likely to have a Material Adverse Effect on AN and its Subsidiaries, taken as a whole), since December 31, 1995, neither AN nor any of its Subsidiaries has incurred any liabilities or obligations of any nature (whether accrued, absolute, contingent or otherwise) which would be required by GAAP to be reflected on a consolidated balance sheet of AN and its Subsidiaries (including the notes thereto), and, which individually or in the aggregate, is reasonably likely to have a Material Adverse Effect on AN and its Subsidiaries, taken as a whole. SECTION 3.7 Absence of Certain Changes. Except as contemplated by this Agreement, for AN Pending Transactions, or as disclosed in the AN SEC Documents or in Schedule 3.7 hereto, since December 31, 1995, (i) AN and its Subsidiaries have conducted their respective businesses only in the ordinary course of business and consistent with past practice, (ii) there has not been any change in the business, properties, assets, liabilities, financial condition, cash flows, operations, licenses, franchises or results of operations of AN or its Subsidiaries which has had a Material Adverse Effect on AN and its Subsidiaries, taken as a whole, and (iii) there has not been any action taken by AN or its Subsidiaries of a type described in clauses (ii) through (xvii) of Section 5.1(a). SECTION 3.8 Employee Benefit Plans; ERISA; Labor. (a) Schedule 3.8 hereto sets forth (i) a list of all employee benefit plans (including but not limited to plans described in section 3(3) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA")), maintained by AN, any of its Subsidiaries or any trade or business, whether or not incorporated (an "AN ERISA Affiliate"), which together with AN would be deemed a "single employer" within the meaning of section 4001(b)(1) of ERISA ("AN Benefit Plans") and (ii) all employment, retention, and severance agreements with employees of AN and its Subsidiaries ("AN Employee Agreements"). True and complete copies of all current AN Benefit Plans and Employee Agreements have been provided to MC by AN. (b) With respect to each AN Benefit Plan: (i) if intended to qualify under section 401(a) or 401(k) of the Code, such plan has received a determination letter from the Internal Revenue Service ("IRS") stating that it so qualifies and that its trust is exempt from taxation under section 501(a) of the Code, no such determination letter has been revoked and no such revocation has been threatened, nothing has occurred that could reasonably be expected to cause the relevant AN Benefit Plan to lose such qualification or exemption; 12 19 (ii) such plan has been administered in all material respects in accordance with its terms and applicable law, including state and federal securities laws; (iii) no breaches of fiduciary duty by AN, or, to AN's knowledge, by any other person, have occurred that might reasonably be expected to give rise to material liability on the part of AN or any AN ERISA Affiliate; (iv) no disputes are pending, or, to the knowledge of AN, threatened that might reasonably be expected to give rise to material liability on the part of AN or any AN ERISA Affiliate; (v) no prohibited transaction (within the meaning of Section 406 of ERISA) has occurred that might reasonably be expected to give rise to material liability on the part of AN or any AN ERISA Affiliate; (vi) all contributions required to be made to such plan as of the date hereof (taking into account any extensions for the making of such contributions) have been made in full; (vii) to AN's knowledge, no AN Benefit Plans are presently under audit or examination (nor has notice been received of a potential audit or examination) by the IRS, Department of Labor, or any other governmental agency or entity, and no matters are pending with respect to any AN Benefit Plan under the IRS's Voluntary Compliance Resolution program, its Closing Agreement Program, or other similar programs; and (viii) all monies withheld from employee paychecks with respect to Benefit Plans have been transferred to the appropriate plan in accordance with the terms of such plan. (c) No AN Benefit Plan is a "multiemployer pension plan," as defined in section 3(37) of ERISA, nor is any AN Benefit Plan a plan described in section 4063(a) of ERISA. No AN Benefit Plan is or has been subject to Title IV of ERISA. (d) No liability under Title IV of ERISA has been incurred by AN or any AN ERISA Affiliate (whether direct, indirect, actual, or contingent, and including, without limitation, withdrawal liability to a multiemployer plan), and no condition exists that presents a material risk to AN or any AN ERISA Affiliate of incurring a material liability under such Title. No AN Benefit Plan has incurred an accumulated funding deficiency, as defined in section 302 of ERISA or section 312 of the Code, whether or not waived. (e) With respect to each AN Benefit Plan that is a "welfare plan" (as defined in section 3(1) of ERISA), no such plan provides medical or death benefits with respect to current or former employees of AN or any of its Subsidiaries beyond their termination of employment (other than to the extent required by applicable law). All group health plans of AN and AN ERISA Affiliates have been operated in material compliance with the requirements of Section 4980B (and its predecessor) and 5000 of the Code, and AN and AN ERISA Affiliates have provided to individuals entitled thereto all required notices and coverage pursuant to Section 4980B, except to the extent that failure to provide such notice or coverage is not reasonably likely to result, individually or in the aggregate, in a Material Adverse Effect on AN and its Subsidiaries, taken as a whole. (f) No AN Benefit Plan, plan documentation or agreement, summary plan description or other written communication distributed generally to employees of AN or its Subsidiaries by its terms prohibits the amendment or termination of any such AN Benefit Plan. (g) As of the date hereof, except for AN Employee Agreements and AN Option Plans, AN and its Subsidiaries are not parties to any (i) agreement with any director, executive officer or other key employee of AN or its Subsidiaries (A) the benefits of which are contingent, or the terms of which are materially altered, upon the occurrence of a transaction involving AN or its Subsidiaries of the nature of any of the transactions contemplated by this Agreement, (B) providing any term of employment or compensation guarantee or (C) providing severance benefits or other benefits after the termination of employment of such director, executive officer or key employee; (ii) agreement, plan or arrangement under which any person may receive payments from AN or its Subsidiaries that may be subject to the tax imposed by Section 4999 of the Code or included in the determination of such person's "parachute payment" under Section 280G of the Code; and (iii) agreement or plan binding AN or its Subsidiaries, including without limitation any stock option plan, stock appreciation right plan, restricted stock plan, stock purchase plan, severance benefit plan or employee benefit plan, any of the benefits of which will be increased, or the vesting of the benefits of which will be accelerated, by the occurrence of any of the transactions contemplated by this Agreement or the value of any of the benefits of which will be calculated on the basis of any of the transactions contemplated by this Agreement. 13 20 (h) As of the date hereof, no collective bargaining agreement is binding and in force against AN or its Subsidiaries or is currently under negotiation, and no current employees of AN or its Subsidiaries are represented by any labor union. As of the date hereof, to AN's knowledge, no labor representation effort exists with respect to AN or its Subsidiaries. SECTION 3.9 Litigation. Schedule 3.9 hereto sets forth each suit, action or proceeding pending (as to which AN has received notice), or, to the knowledge of AN, threatened against AN, any of its Subsidiaries, or any of their properties or assets on the date hereof. Except as set forth on Schedule 3.9, none of the foregoing, individually or in the aggregate, is reasonably likely to have a Material Adverse Effect on AN and its Subsidiaries, taken as a whole, if resolved adversely to AN or its Subsidiaries. As of the date hereof, neither AN nor any of its Subsidiaries, nor any of their respective properties, is subject to any order, writ, judgment, injunction, decree, determination or award having, or which would have, a Material Adverse Effect on AN and its Subsidiaries, taken as a whole, or which would prevent AN from consummating the transactions contemplated hereby. SECTION 3.10 No Default; Compliance with Applicable Laws. Neither AN nor any of its Subsidiaries is in default or violation in any material respect of any term, condition or provision of (i) its respective Charter or By-laws or other organizational documents, (ii) any AN Material Agreement or (iii) any federal, state, local or foreign statute, law, ordinance, rule, regulation, judgment, decree, order, concession, grant, franchise, permit or license or other governmental authorization or approval applicable to AN or any of its Subsidiaries or by which they or their respective assets may be bound (other than matters addressed in Sections 3.4, 3.8, 3.9, 3.11, and 3.12), excluding from the foregoing clauses (ii) and (iii), defaults or violations which are not reasonably likely to have, individually or in the aggregate, a Material Adverse Effect on AN and its Subsidiaries, taken as a whole, or prevent AN from consummating the transactions contemplated hereby. SECTION 3.11 Taxes. Except as set forth on Schedule 3.11: (a) AN and its Subsidiaries have (i) duly and timely filed (or there has been filed on their behalf) with the appropriate governmental authorities all Tax Returns (as hereinafter defined) required to be filed by them on or prior to the date hereof, other than those Tax Returns for which extensions for filing have been obtained in a timely manner, and such Tax Returns are true, correct and complete in all material respects, and (ii) duly paid in full all Taxes (as hereinafter defined) shown to be due on such Tax Returns or have provided adequate reserves in their financial statements for any Taxes that have not been paid. There are no liens on any of the assets of AN or any of its Subsidiaries that arose in connection with any delinquency in paying any tax. (b) As of the date hereof, there are no ongoing federal, state, local or foreign audits or examinations of any Tax Return of AN or its Subsidiaries. (c) As of the date hereof, there are no outstanding requests, agreements, consents or waivers to extend the statutory period of limitations applicable to the assessment of any Taxes or deficiencies against AN or any of its Subsidiaries (excluding extensions for filings that have been timely obtained), and no power of attorney granted by either AN or any of its Subsidiaries with respect to any Taxes is currently in force. (d) Neither AN nor any of its Subsidiaries is a party to any agreement providing for the allocation or sharing of Taxes. (e) "Taxes" shall mean any and all taxes, charges, fees, levies or other assessments, including, without limitation, income, gross receipts, excise, real or personal property, sales, withholding, social security, occupation, use, service, service use, license, net worth, payroll, franchise, transfer and recording taxes, fees and charges, imposed by the Internal Revenue Service or any taxing authority (whether domestic or foreign including, without limitation, any state, county, local or foreign government or any subdivision or taxing agency thereof (including a United States possession)), whether computed on a separate, consolidated, unitary, combined or any other basis; and such term shall include any interest whether paid or received, fines, penalties or additional amounts attributable to, or imposed upon, or with respect to, any such taxes, charges, fees, levies or other assessments. "Tax Return" shall mean any report, 14 21 return, document, declaration or other information or filing required to be supplied to any taxing authority or jurisdiction (foreign or domestic) with respect to Taxes. SECTION 3.12 Environmental Matters. (a) AN and its Subsidiaries have complied in all respects with all applicable Environmental Laws (as defined below), except to the extent that any failure to comply is not reasonably likely to have, individually or in the aggregate, a Material Adverse Effect on AN and its Subsidiaries, taken as a whole. There is no pending or, to the knowledge of AN, threatened, civil or criminal litigation, written notice or violation, formal administrative proceeding or investigation, inquiry or information request by any Governmental Entity relating to any Environmental Law involving AN or any of its Subsidiaries or any of their properties. For purposes of this Agreement, "Environmental Law" means any foreign, federal, state or local law, statute, rule or regulation or the common law relating to the environment or occupational health and safety, including without limitation any statute, regulation or order pertaining to (i) treatment, storage, disposal, generation or transportation of industrial, toxic or hazardous substances or solid or hazardous waste; (ii) air, water and noise pollution; (iii) groundwater and soil contamination; (iv) the release or threatened release into the environment of industrial, toxic or hazardous substances, or solid or hazardous waste, including without limitation emissions, discharges, injections, spills, escapes or dumping of pollutants, contaminants or chemicals; (v) the protection of wildlife, marine sanctuaries and wetlands, including without limitation all endangered and threatened species; (vi) storage tanks, vessels and containers; (vii) underground and other storage tanks or vessels, abandoned, disposed or discarded barrels, containers and other closed receptacles; (viii) health and safety of employees and other persons; and (ix) manufacture, processing, use, distribution, treatment, storage, disposal, transportation or handling of pollutants, contaminants, chemicals or industrial, toxic or hazardous substances or oil or petroleum products or solid or hazardous waste. As used above, the terms "release" and "environment" shall have the meaning set forth in the federal Comprehensive Environmental Response, Compensation and Liability Act of 1980 ("CERCLA"). (b) With the exception of releases that are not reasonably likely to have, individually or in the aggregate, a Material Adverse Effect on AN and its Subsidiaries, taken as a whole, there have been no releases of any Materials of Environmental Concern (as defined below) into the environment by AN or any of its Subsidiaries, or, to the knowledge of AN, by any other party at any parcel of real property or any facility formerly or currently owned, operated or controlled by AN or any of its Subsidiaries. For purposes of this Agreement, "Materials of Environmental Concern" means any chemicals, pollutants or contaminants, hazardous substances (as such term is defined under CERCLA), solid wastes and hazardous wastes (as such terms are defined under the federal Resource Conservation and Recovery Act), toxic materials, oil or petroleum and petroleum products, or any other material subject to regulation under any Environmental Law. SECTION 3.13 Insurance. AN and the Subsidiaries maintain adequate insurance with respect to the their respective businesses and are in compliance with all material requirements and provisions thereof. SECTION 3.14 Offer Documents; Proxy Statement; Registration Statement; Other Information. The information with respect to AN, its officers and directors and its Subsidiaries (i) to be contained in the Schedule 14D-9, (ii) supplied in writing by AN for inclusion in the Offer Documents, (iii) to be contained in the definitive joint Proxy Statement to be furnished to the respective shareholders of AN and the stockholders of MC pursuant to Section 5.2 and which will form a part of MC's Registration Statement on Form S-4 (the "Registration Statement") to be filed with the SEC and will constitute a prospectus of MC with respect to the MC Shares to be issued in the Merger (the "Proxy Statement"), and (iv) to be contained in the Registration Statement will not, on the respective dates on which (A) the Schedule 14D-9, the Offer Documents or any amendment or supplement thereto are filed with the SEC (in the case of each respective document), (B) the Proxy Statement is first mailed to shareholders of AN and MC or on the date of the stockholders' meetings referred to in Section 5.2 (in the case of the Proxy Statement), (C) the Registration Statement becomes effective (in the case of the Registration Statement), and (D) in the case of the Proxy Statement and the Registration Statement, as such Proxy Statement or Registration Statement is then amended or supplemented, at the Effective Time, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading, or necessary to correct any statement made by AN in any earlier filing with the SEC or any amendment thereto or any earlier communication made by AN 15 22 (including the Proxy Statement) to shareholders of AN with respect to the Merger. When the Proxy Statement or any amendment or supplement thereto shall be mailed, and at the time of each meeting and at the Effective Time, the Proxy Statement will comply as to form with all applicable laws including the provisions of the Securities Act and the Exchange Act and the rules and regulations promulgated thereunder. If at any time prior to the Effective Time any event with respect to AN, its officers and directors and its Subsidiaries should occur which is or should be described in an amendment of, or a supplement to, the Proxy Statement or the Registration Statement, AN shall promptly so inform MC and such event shall be so described in an amendment or supplement to the Proxy Statement and such information in such amendment or supplement will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, or necessary to correct any statement made by AN in any earlier filing with the SEC of such Proxy Statement, or any amendment or supplement thereto, or any earlier communication to shareholders of AN with respect to the Merger. SECTION 3.15 Transactions with Affiliates. Except as set forth in the AN SEC Documents or on Schedule 3.15, since December 31, 1995, neither AN nor any of its Subsidiaries has entered into any transaction with any current director or officer of AN or any Subsidiary or any transaction which would be subject to proxy statement disclosure under the Exchange Act pursuant to the requirements of Item 404 of Regulation S-K. SECTION 3.16 Brokers. Other than the AN Financial Advisor, no broker, finder or investment banker is entitled to any brokerage, finder's or other fee or commission from AN in connection with the transactions contemplated by this Agreement. AN has informed MC of the compensation to be paid by AN to the AN Financial Advisor. ARTICLE IV REPRESENTATIONS AND WARRANTIES OF MC MC represents and warrants to AN as follows: SECTION 4.1 Organization. (a) Each of MC and its Subsidiaries is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation and has all requisite corporate power and authority and all necessary governmental approvals to own, lease and operate its properties and to carry on its business as now being conducted, except where the failure to be so organized, existing and in good standing or to have such power, authority, and governmental approvals would not have a Material Adverse Effect on MC and its Subsidiaries taken as a whole. MC and each of its Subsidiaries is duly qualified or licensed to do business and in good standing in each jurisdiction in which the property owned, leased or operated by it or the nature of the business conducted by it makes such qualification or licensing necessary, except where the failure to be so duly qualified or licensed and in good standing would not, individually or in the aggregate, have a Material Adverse Effect on MC and its Subsidiaries, taken as a whole, or prevent MC from consummating any of the transactions contemplated hereby. (b) MC has heretofore made available to AN a complete and correct copy of the Certificate of Incorporation and By-Laws or other organizational documents of MC and the organizational documents of each of its Subsidiaries, as currently in effect. Each such document is in full force and effect and no other organizational documents are applicable to or binding upon MC or any Subsidiary. (c) Schedule 4.1 identifies all the Subsidiaries of MC. (d) At the time of issuance, (i) the MC Shares and VCRs issued pursuant to the Merger or the Shareholders' Agreement will be duly authorized and validly issued, and the MC Shares will be fully paid and nonassessable and not subject to preemptive (or similar) rights; and (ii) the VCRs will represent unsecured obligations of MC ranking pari passu with all other general obligations of MC. SECTION 4.2 Capitalization. (a) The authorized capital stock of MC consists of 26,000,000 shares of common stock and 1,000,000 shares of preferred stock, par value $.01 per share. Schedule 4.2 sets forth the 16 23 (i) the number of issued and outstanding MC Shares as of the date hereof; (ii) the number of MC Shares that would be issuable by MC upon the exercise of all unexpired options to purchase MC Shares ("MC Options"), and date of vesting thereof, (iii) all MC Shares that would be issuable by MC pursuant to or in connection with each of the acquisition agreements or transactions identified in Schedule 4.2 (the "MC Pending Transactions"); and (iv) all other MC Shares issuable to any person pursuant to any existing options, warrants, calls, preemptive (or similar) rights, subscriptions or other rights, agreements, arrangements or commitments of any character. As of the date hereof, no shares of preferred stock are issued and outstanding or held in the treasury of MC, and no MC Shares are held in the treasury of MC. MC has taken all necessary corporate and other action to authorize and reserve and to permit it to issue MC Shares which may be issued pursuant to MC Options or the transactions contemplated hereby. There is no Voting Debt of MC or any of its Subsidiaries issued and outstanding. Except as set forth in Schedule 4.2, as of the date hereof, (i) there are no shares of capital stock of MC authorized, issued or outstanding, (ii) there are no existing options, warrants, calls, preemptive (or similar) rights, subscriptions or other rights, agreements, arrangements or commitments of any character, relating to the issued or unissued capital stock of MC or any of its Subsidiaries, obligating MC or any of its Subsidiaries to issue, transfer or sell or cause to be issued, transferred or sold any shares of capital stock or Voting Debt of, or other equity interest in, MC or any of its Subsidiaries or securities convertible into or exchangeable for such shares or equity interest or obligations of MC or any of its Subsidiaries, and (iii) there are no outstanding contractual obligations of MC or any of its Subsidiaries to repurchase, redeem or otherwise acquire any MC Shares, or capital stock of MC or any Subsidiary or affiliate of MC. (b) All of the outstanding shares of capital stock of each of MC's Subsidiaries are beneficially owned by MC, directly or indirectly, free and clear of all security interests, liens, claims, pledges, agreements, limitations on voting rights, charges or other encumbrances of any nature whatsoever, other than liens in favor of Toronto Dominion Bank or First National Bank of Boston. (c) Except for (i) the Voting Agreement dated August 31, 1994, as amended, which has been terminated effective at the Effective Time, and (ii) the Brock Voting Agreement dated May 15, 1996, there are no voting trusts or other agreements or understandings to which MC or any of its Subsidiaries is a party with respect to the voting of the capital stock of MC or any of its Subsidiaries. None of MC or its Subsidiaries is required to redeem, repurchase or otherwise acquire shares of capital stock of MC, or any of its Subsidiaries, respectively, as a result of the transactions contemplated by this Agreement. SECTION 4.3 Authorization; Validity of Agreement; MC Action. (a) MC has full corporate power and authority to execute and deliver this Agreement and the Shareholders' Agreement and to consummate the transactions contemplated hereby and thereby. The execution, delivery and performance by MC of this Agreement and the Shareholders' Agreement, and the consummation by it of the transactions contemplated hereby and thereby have been duly authorized by the Board of Directors of MC and no other corporate action on the part of MC is necessary to authorize the execution and delivery by MC of this Agreement and the Shareholders' Agreement and the consummation by it of the transactions contemplated hereby and thereby (other than, with respect to the Merger, the adoption of this Agreement by the affirmative vote of the holders of a majority of the outstanding MC Shares). This Agreement and the Shareholders' Agreement have been duly executed and delivered by MC and (assuming due and valid authorization, execution and delivery hereof by the other parties hereto and thereto) are valid and binding obligations of MC enforceable against MC in accordance with their terms, except that (i) such enforcement may be subject to applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws, now or hereafter in effect, affecting creditors' rights generally, and (ii) the remedy of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought. (b) The Board of Directors of MC also has approved the transactions contemplated by this Agreement, the Shareholders' Agreement and the MC Voting Agreement so as to render inapplicable thereto the provisions of Section 203 of the DGCL. 17 24 SECTION 4.4 Consents and Approvals; No Violations; Licenses. (a) Neither the execution, delivery or performance of this Agreement or the Shareholders' Agreement by MC nor the consummation by MC of the transactions contemplated hereby or thereby nor compliance by MC with any of the provisions hereof or thereof will (i) conflict with or result in any breach of any provision of the Certificate of Incorporation or By-Laws or other organizational documents of MC or of any of its Subsidiaries, (ii) require on the part of MC any filing with, or permit, authorization, consent or approval of, any Governmental Entity except for (A) filings, permits, authorizations, consents and approvals as may be required under, and other applicable requirements of, the Exchange Act, the HSR Act, the FCC, the Communications Act, state public utility or public service laws, the Securities Act, the DGCL, the TBCA, state or foreign laws relating to takeovers, state securities or blue sky laws, and the laws of other states in which MC is qualified to do or is doing business, or (B) where the failure to obtain such permits, authorizations, consents or approvals or to make such filings, individually or in the aggregate, would not have a Material Adverse Effect on MC and its Subsidiaries, taken as a whole, or prevent MC from consummating the transactions contemplated hereby, (iii) except as disclosed on Schedule 4.4, result in a violation or breach of, or constitute (with or without due notice or lapse of time or both) a default (or give rise to any right of termination, cancellation or acceleration) under, any of the terms, conditions or provisions of any note, bond, mortgage, indenture, lease, license, contract, agreement or other instrument or obligation to which MC or any of its Subsidiaries is a party or by which any of them or any of their properties or assets may be bound and which has been included as an exhibit to MC's Annual Report on Form 10-K for the fiscal year ended December 31, 1995 (the "MC Material Agreements") or (iv) violate any order, writ, injunction, decree, statute, rule or regulation applicable to MC, any of its Subsidiaries or any of their properties or assets, excluding from the foregoing clauses (iii) and (iv) such violations, breaches or defaults which would not, individually or in the aggregate, have a Material Adverse Effect on MC and its Subsidiaries, taken as a whole, or prevent MC from consummating the transactions contemplated hereby. (b) MC or one of its Subsidiaries holds all licenses, permits, certificates, franchises, ordinances, registrations, or other rights, applications and authorizations filed with, granted or issued by, or entered by any Governmental Entity, including without limitation, the FCC, or any State Authority, that are required for the conduct of their businesses as now being conducted, except for those the absence of which would not individually or in the aggregate have a Material Adverse Effect on MC and its Subsidiaries, taken as a whole (collectively, "MC Licenses"). The MC Licenses are valid, in full force and effect, and the terms of said MC Licenses are not subject to any restrictions or conditions that materially limit or would materially limit the operations of the business of MC or any of its Subsidiaries as presently conducted, other than restrictions or conditions generally applicable to licenses of that type. The MC Licenses granted, issued or entered by the FCC are subject to the Communications Act. There are no proceedings pending or, to the best knowledge of MC, complaints or petitions by others, or threatened proceedings, before the FCC or any other Governmental Entity relating to the business or operations of MC or any of its Subsidiaries or the MC Licenses, and there are no facts or conditions that reasonably could be expected to constitute grounds for the FCC to revoke, terminate, suspend, deny, annul, or impose conditions on any renewal of any MC Licenses, that would, individually or in the aggregate, have a Material Adverse Effect on MC and its Subsidiaries, taken as a whole, or prevent MC from consummating the transactions contemplated hereby or to impose any fines, forfeitures or other penalties on MC or its Subsidiaries that would, individually or in the aggregate, have a Material Adverse Effect on MC and its Subsidiaries, taken as a whole. SECTION 4.5 SEC Reports and Financial Statements. MC and its Subsidiaries have filed with the SEC all forms, reports, schedules, statements, and other documents required to be filed by them with the SEC (as such documents have been amended since the time of their filing, collectively, the "MC SEC Documents"), and have filed all exhibits required to be filed with MC SEC Documents. As of their respective dates or, if amended, as of the date of the last such amendment, MC SEC Documents, including, without limitation, any financial statements or schedules included therein, complied in all material respects with the applicable requirements of the Securities Act and the Exchange Act, and did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. None of MC's Subsidiaries is required to file any forms, reports or other documents with the SEC pursuant to Section 12 or 15 of the Exchange Act. The financial statements of MC included in MC's Annual Report on Form 10-K for 18 25 the fiscal year ended December 31, 1995 (including the related notes thereto) and for the quarter ended March 31, 1996, copies of which have been furnished to AN (together, the "MC Financial Statements"), have been prepared from, and are in accordance with, the books and records of MC and its consolidated Subsidiaries, comply in all material respects with applicable accounting requirements and with the published rules and regulations of the SEC with respect thereto, have been prepared in accordance with GAAP applied on a consistent basis throughout the periods involved (except as may be indicated in the notes thereto and subject, in the case of unaudited interim financial statements, to normal year-end adjustments), and fairly present the consolidated financial position and the consolidated results of operations and cash flows of MC and its consolidated Subsidiaries as at the dates thereof or for the periods presented therein. SECTION 4.6 No Undisclosed Liabilities. Except (i) as disclosed in MC SEC Documents, (ii) set forth in Schedule 4.6, (iii) MC Pending Transactions, and (iv) for liabilities incurred in the ordinary course of business and consistent with past practice, and liabilities incurred in connection with the consummation of the transactions contemplated hereby (none of which, individually or in the aggregate, is reasonably likely to have a Material Adverse Effect on MC and its Subsidiaries, taken as a whole), since December 31, 1995, neither MC nor any of its Subsidiaries has incurred any liabilities or obligations of any nature (whether accrued, absolute, contingent or otherwise) which would be required by GAAP to be reflected on a consolidated balance sheet of MC and its Subsidiaries (including the notes thereto), and which individually or in which the aggregate, is reasonably likely to have a Material Adverse Effect on MC and its Subsidiaries, taken as a whole. SECTION 4.7 Absence of Certain Changes. Except as contemplated by this Agreement, for MC Pending Transactions, or as disclosed in MC SEC Documents or in Schedule 4.7 hereto, since December 31, 1995, (i) MC and its Subsidiaries have conducted their respective businesses only in the ordinary course of business and consistent with past practice, (ii) there has not been any change in the business, properties, assets, liabilities, financial condition, cash flows, operations, licenses, franchises or results of operations of MC or its Subsidiaries which has had a Material Adverse Effect on MC and its Subsidiaries, taken as a whole, and (iii) there has not been any action taken by MC or its Subsidiaries of a type described in clauses (i) through (ix) of Section 5.1(b). SECTION 4.8 Employee Benefit Plans; ERISA; Labor. (a) Schedule 4.8 hereto sets forth (i) a list of all employee benefit plans (including but not limited to plans described in section 3(3) of ERISA), maintained by MC, any of its Subsidiaries or any trade or business, whether or not incorporated (a "MC ERISA Affiliate"), which together with MC would be deemed a "single employer" within the meaning of section 4001(b)(1) of ERISA ("MC Benefit Plans") and (ii) all employment, retention, and severance agreements with employees of MC and its Subsidiaries ("MC Employee Agreements"). True and complete copies of all current MC Benefit Plans and MC Employee Agreements have been made available to AN. (b) With respect to each MC Benefit Plan: (i) if intended to qualify under section 401(a) or 401(k) of the Code, such plan has received a determination letter from the IRS stating that it so qualifies and that its trust is exempt from taxation under section 501(a) of the Code, no such determination letter has been revoked and no such revocation has been threatened, nothing has occurred that could reasonably be expected to cause the relevant MC Benefit Plan to lose such qualification or exemption; (ii) such plan has been administered in all material respects in accordance with its terms and applicable law, including state and federal securities laws; (iii) no breaches of fiduciary duty by MC, or, to MC's knowledge, by any other person have occurred that might reasonably be expected to give rise to material liability on the part of MC or any MC ERISA Affiliate; (iv) no disputes are pending, or, to the knowledge of MC, threatened that might reasonably be expected to give rise to material liability on the part of MC or any MC ERISA Affiliate; (v) no prohibited transaction (within the meaning of Section 406 of ERISA) has occurred that might reasonably be expected to give rise to material liability on the part of MC or any MC ERISA Affiliate; (vi) all contributions required to be made to such plan as of the date hereof (taking into account any extensions for the making of such contributions) have been made in full; (vii) to MC's knowledge, no MC Benefit Plans are presently under audit or examination (nor has notice been received of a potential audit or examination) by the IRS, Department of Labor, or any other governmental agency or entity, and no matters are pending with respect to any Benefit Plan under the IRS's Voluntary Compliance Resolution program, its Closing Agreement Program, 19 26 or other similar programs; and (viii) all monies withheld with respect to MC Benefit Plans have been transferred to the appropriate plan in accordance with the terms of such plan. (c) No MC Benefit Plan is a "multiemployer pension plan," as defined in section 3(37) of ERISA, nor is any MC Benefit Plan a plan described in section 4063(a) of ERISA. No MC Benefit Plan is or has been subject to Title IV of ERISA. (d) No liability under Title IV of ERISA has been incurred by MC or any MC ERISA Affiliate (whether direct, indirect, actual, or contingent, and including, without limitation, withdrawal liability to a multiemployer plan), and no condition exists that presents a material risk to MC or any MC ERISA Affiliate of incurring a material liability under such Title. No MC Benefit Plan has incurred an accumulated funding deficiency, as defined in section 302 of ERISA or section 312 of the Code, whether or not waived. (e) With respect to each MC Benefit Plan that is a "welfare plan" (as defined in section 3(1) of ERISA), no such plan provides medical or death benefits with respect to current or former employees of MC or any of its Subsidiaries beyond their termination of employment (other than to the extent required by applicable law). All group health plans of MC and MC ERISA Affiliates have been operated in material compliance with the requirements of Section 4980B (and its predecessor) and 5000 of the Code, and MC and MC ERISA Affiliates have provided, or will have provided prior to the Effective Date, to individuals entitled thereto all required notices and coverage pursuant to Section 4980B, except to the extent that failure to provide such notice or coverage is not reasonably likely to result, individually or in the aggregate, in a Material Adverse Effect on MC and its Subsidiaries, taken as a whole. (f) No MC Benefit Plan, plan documentation or agreement, summary plan description or other written communication distributed generally to employees of MC or its Subsidiaries by its terms prohibits the amendment or termination of any such Benefit Plan. (g) As of the date hereof, except for MC Employee Agreements or as described in MC SEC Documents, MC and its Subsidiaries are not parties to any (i) agreement with any director, executive officer or other key employee of MC or its Subsidiaries (A) the benefits of which are contingent, or the terms of which are materially altered, upon the occurrence of a transaction involving MC or its Subsidiaries of the nature of any of the transactions contemplated by this Agreement, (B) providing any term of employment or compensation guarantee or (C) providing severance benefits or other benefits after the termination of employment of such director, executive officer or key employee; (ii) agreement, plan or arrangement under which any person may receive payments from MC or its Subsidiaries that may be subject to the tax imposed by Section 4999 of the Code or included in the determination of such person's "parachute payment" under Section 280G of the Code; and (iii) agreement or plan binding MC or its Subsidiaries, including without limitation any stock option plan, stock appreciation right plan, restricted stock plan, stock purchase plan, severance benefit plan or employee benefit plan, any of the benefits of which will be increased, or the vesting of the benefits of which will be accelerated, by the occurrence of any of the transactions contemplated by this Agreement or the value of any of the benefits of which will be calculated on the basis of any of the transactions contemplated by this Agreement. (h) As of the date hereof, no collective bargaining agreement is binding and in force against MC or its Subsidiaries or is currently under negotiation, and no current employees of MC or its Subsidiaries are represented by any labor union. As of the date hereof, to MC's knowledge, no labor representation effort exists with respect to MC or its Subsidiaries. SECTION 4.9 Litigation. Schedule 4.9 hereto sets forth each suit, action or proceeding pending (as to which MC has received notice), or, to the knowledge of MC, threatened against MC, any of its Subsidiaries, or their properties or assets on the date hereof. Except as set forth on Schedule 4.9 hereto, none of the foregoing, individually or in the aggregate, is reasonably likely to have a Material Adverse Effect on MC and its Subsidiaries, taken as a whole, if resolved adversely to MC or its Subsidiaries. As of the date hereof, neither MC nor any of its Subsidiaries, nor any of their respective properties, is subject to any order, writ, judgment, injunction, decree, determination or award having, or which would have, a Material Adverse Effect on MC 20 27 and its Subsidiaries, taken as a whole, or which would prevent MC from consummating the transactions contemplated hereby. SECTION 4.10 No Default; Compliance with Applicable Laws. Neither MC nor any of its Subsidiaries is in default or violation in any material respect of any term, condition or provision of (i) its respective Certificate of Incorporation or By-laws or other organizational documents, (ii) any MC Material Agreement or (iii) any federal, state, local or foreign statute, law, ordinance, rule, regulation, judgment, decree, order, concession, grant, franchise, permit or license or other governmental authorization or approval applicable to MC or any of its Subsidiaries or by which they or their respective assets may be bound (other than matters addressed in Sections 4.4, 4.8, 4.9, 4.10, 4.11, and 4.12), excluding from the foregoing clauses (ii) and (iii), defaults or violations which are not reasonably likely to have, individually or in the aggregate, a Material Adverse Effect on MC and its Subsidiaries, taken as a whole, or prevent MC from consummating the transactions contemplated hereby. SECTION 4.11 Taxes. Except as set forth on Schedule 4.11: (a) MC and its Subsidiaries have (i) duly and timely filed (or there has been filed on their behalf) with the appropriate governmental authorities all Tax Returns (as hereinafter defined) required to be filed by them on or prior to the date hereof, other than those Tax Returns for which extensions for filing have been obtained in a timely manner, and such Tax Returns are true, correct and complete in all material respects, and (ii) duly paid in full all Taxes (as hereinafter defined) shown to be due on such Tax Returns or have provided adequate reserves in their financial statements for any Taxes that have not been paid. There are no liens on any of the assets of MC or any of its Subsidiaries that arose in connection with any delinquency in paying any Tax. (b) As of the date hereof, there are no ongoing federal, state, local or foreign audits or examinations of any Tax Return of MC or its Subsidiaries. (c) As of the date hereof, there are no outstanding requests, agreements, consents or waivers to extend the statutory period of limitations applicable to the assessment of any Taxes or deficiencies against MC or any of its Subsidiaries (excluding extensions for filings that have been timely obtained), and no power of attorney granted by either MC or any of its Subsidiaries with respect to any Taxes is currently in force. (d) Neither MC nor any of its Subsidiaries is a party to any agreement providing for the allocation or sharing of Taxes. SECTION 4.12 Environmental Matters. (a) MC and its Subsidiaries have complied in all material respects with all applicable Environmental Laws, except to the extent that any failure to comply is not reasonably likely to have, individually or in the aggregate, a Material Adverse Effect on MC and its Subsidiaries, taken as a whole. There is no pending or, to the knowledge of MC, threatened, civil or criminal litigation, written notice or violation, formal administrative proceeding or investigation, inquiry or information request by any Governmental Entity relating to any Environmental Law involving MC or any of its Subsidiaries or any of their properties. (b) With the exception of releases that are not reasonably likely to have, individually or in the aggregate, a Material Adverse Effect on MC and its Subsidiaries, taken as a whole, there have been no releases of any Materials of Environmental Concern into the environment by MC or any of its Subsidiaries, or, to the knowledge of MC, by any other party at any parcel of real property or any facility formerly or currently owned, operated or controlled by MC or any of its Subsidiaries. SECTION 4.13 Insurance. MC and the Subsidiaries maintain adequate insurance with respect to the their respective businesses and are in compliance with all material requirements and provisions thereof. SECTION 4.14 Offer Documents; Proxy Statement; Registration Statement; Other Information. The information with respect to MC, its officers and directors and its Subsidiaries (i) to be contained in the Offer Documents, (ii) to be contained in the Proxy Statement; and (iii) to be contained in the Registration Statement will not, on the respective dates on which (A) the Offer Documents or any amendment or 21 28 supplement thereto are filed with the SEC (in the case of each respective document), (B) the Proxy Statement is first mailed to shareholders of AN and the stockholders of MC or on the date of the stockholders' meetings referred to in Section 5.2 (in the case of the Proxy Statement), (C) the Registration Statement becomes effective (in the case thereof), and (D) in the case of the Proxy Statement and the Registration Statement, as such Proxy Statement or Registration Statement is then amended or supplemented, at the Effective Time, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading, or necessary to correct any statement made by MC in any earlier filing with the SEC of such Registration Statement or any amendment thereto (including the Proxy Statement). When the Registration Statement or any post-effective amendment thereto shall become effective and when the Proxy Statement or any amendment or supplement thereto shall be mailed, and at the time of each meeting and at the Effective Time, the Proxy Statement will comply as to form with all applicable laws including the provisions of the Securities Act and the Exchange Act and the rules and regulations promulgated thereunder. If at any time prior to the Effective Time any event with respect to MC, its officers and directors and its Subsidiaries should occur which is or should be described in an amendment of, or a supplement to, the Proxy Statement or the Registration Statement, MC shall promptly so inform AN and such event shall be so described in an amendment or supplement to the Registration Statements and such information in such amendment or supplement will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, or necessary to correct any statement made by MC in any earlier filing with the SEC of such Registration Statement, or any amendment or supplement thereto, or any earlier communication to stockholders of MC with respect to the Merger. SECTION 4.15 Transactions with Affiliates. Except as set forth in MC SEC Documents or on Schedule 4.15, since December 31, 1995, neither MC nor any of its Subsidiaries has entered into any transaction with any current director or officer of MC or any Subsidiary or any transaction which would be subject to proxy statement disclosure under the Exchange Act pursuant to the requirements of Item 404 of Regulation S-K. SECTION 4.16 Financing. MC has sufficient funds available (through existing credit arrangements or otherwise) to purchase Shares pursuant to the Offer and to pay all fees and expenses related to the transactions contemplated by this Agreement. SECTION 4.17 Share Ownership. As of the date hereof, neither MC nor any of its affiliates beneficially owns any Shares. SECTION 4.18 Brokers. Other than the MC Financial Advisor and Daniels & Associates, L.P., no broker, finder or investment banker is entitled to any brokerage, finder's or other fee or commission from MC in connection with the transactions contemplated by this Agreement. MC has informed AN of the compensation to be paid by MC to the MC Financial Advisor and Daniels & Associates, L.P. ARTICLE V COVENANTS SECTION 5.1 Interim Operations of AN and MC. (a) AN covenants and agrees that, except (w) as contemplated by this Agreement, (x) as set forth in Schedule 5.1(a) or Annex D, (y) as agreed in writing by MC, or (z) as contemplated by the AN Pending Transactions, after the date hereof and prior the Effective Time: (i) the business of AN and its Subsidiaries shall be conducted only in, and AN and its Subsidiaries shall not take any action except in, the ordinary and usual course of business and consistent with past practice, and AN and its Subsidiaries shall use all reasonable efforts, consistent with past practice, to maintain and preserve their business organizations, assets, employees and advantageous business relations; 22 29 (ii) AN will not, directly or indirectly, (A) sell, transfer or pledge or agree to sell, transfer or pledge any Shares, preferred stock or capital stock of any of its Subsidiaries beneficially owned by it, either directly or indirectly; or (B) split, combine or reclassify the outstanding Shares or any outstanding capital stock of any of the Subsidiaries of AN; (iii) neither AN nor any of its Subsidiaries shall: (A) amend its Charter or by-laws; (B) issue, grant, sell, pledge, dispose of or encumber any shares of, or securities convertible into or exchangeable for, or options, warrants, calls, commitments or rights of any kind to acquire, any shares of capital stock of any class of AN or its Subsidiaries or any other ownership interests (including but not limited to stock appreciation rights or phantom stock), other than Shares reserved for issuance on the date hereof pursuant to the exercise of AN Options outstanding on the date hereof and options automatically granted pursuant to the 1992 Non-Qualified Stock Option Plan; (C) with the exception of the existing liens in favor of First National Bank of Chicago, transfer, lease, license, sell, mortgage, pledge, dispose of, or encumber any material assets other than in the ordinary and usual course of business and consistent with past practice; (D) incur any indebtedness other than borrowings under existing agreements or modify the terms of any indebtedness; (E) incur any material liability, other than borrowings permitted by clause (D) above of money under existing agreements or incurrence of other liabilities in the ordinary and usual course of business and consistent with past practice; or (F) redeem, purchase or otherwise acquire directly or indirectly any of its capital stock; (iv) AN will not declare, set aside or pay any dividend or other distribution payable in cash, stock or property with respect to its capital stock; (v) neither AN nor any of its Subsidiaries shall modify, amend or terminate any AN Material Agreements or waive, release or assign any material rights or claims, except in the ordinary course of business and consistent with past practice; (vi) each of AN and its Subsidiaries shall maintain in full force and effect such types and amounts of insurance issued by insurers of recognized responsibility insuring it with respect to its respective business and properties, in such amount and against such losses and risks as is usually carried by persons engaged in the same or similar businesses; (vii) neither AN nor any of its Subsidiaries shall; (A) except for or on behalf of Subsidiaries, assume, guarantee, endorse or otherwise become liable or responsible (whether directly, contingently or otherwise) for the obligations of any other person; (B) make any loans, advances or capital contributions to, or investments in, any other person (other than to Subsidiaries of AN pursuant to AN's written obligations on the date hereof), other than in the ordinary course of business and consistent with past practice; or (C) enter into any commitment or transactions with respect to any of the foregoing (including, but not limited to, any borrowing, capital expenditure or purchase, sale or lease of assets); (viii) neither AN nor any of its Subsidiaries shall change any of the accounting methods used by it unless required by GAAP; (ix) except as permitted by Section 5.1(a)(xi), neither AN nor any of its Subsidiaries will adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of AN or any of its Subsidiaries (other than the Merger); (x) neither AN nor any of its Subsidiaries will take, or agree to take any action that would result in any of the conditions set forth herein or in Annex A not being satisfied, unless the Board of Directors of AN makes a determination in accordance with Section 5.9(f) below; (xi) neither AN nor any of its Subsidiaries will acquire (by merger, consolidation, or acquisition of stock or assets or otherwise) any corporation, partnership or other business organization or division of any such entity; provided, however, that AN may engage in such a transaction if (i) AN notifies MC prior to entering into any such transaction, (ii) the purchase price for each such transaction is payable only in cash and such price does not exceed $5,000,000, and (iii) the purchase price for each such transaction does not exceed eight times annualized EBITDA for the most recent calendar quarter ended. 23 30 (xii) neither AN nor any of its Subsidiaries will increase the compensation or fringe benefits of any of its directors, officers or employees, except for increases in compensation of employees of AN or its Subsidiaries who are not executive officers or directors of AN in the ordinary course of business and consistent with past practice, or grant any severance or termination pay not currently required to be paid under existing severance plans to, or enter into any employment, consulting or severance agreement with, any present or former director, officer or other employee of AN or any of its Subsidiaries, or establish, adopt, enter into or amend or terminate any collective bargaining, bonus, profit sharing, thrift, compensation, stock option, restricted stock, pension, retirement, deferred compensation, termination, severance or other plan, agreement, trust, fund, policy or arrangement for the benefit of any directors, officers or employees, other than employment of non-executive officers in the ordinary course of business and consistent with past practice; (xiii) neither AN nor any of its Subsidiaries will make any material tax election or settle or compromise any material federal, state, local or foreign tax liability except for settlements that would not be material to AN or do not otherwise materially impair the business of AN; (xiv) neither AN nor any of its Subsidiaries will settle or compromise any pending or threatened suit, action or claim, which settlement or compromise is material or which relates to the transactions contemplated hereby; (xv) neither AN nor any of its Subsidiaries will pay, discharge or satisfy any material claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge or satisfaction in the ordinary course of business and consistent with past practice of liabilities (A) reflected or reserved against in the financial statements of AN, (B) incurred in the ordinary course of business and consistent with the past practice or (C) incurred in a manner not otherwise prohibited under this Section 5.1(a); (xvi) AN shall not effect a registration under the Securities Act with respect to Shares held by any person and entity, other than the registration on a Registration Statement on Form S-8 of Shares to be issued pursuant to AN Options and the registration of Shares pursuant to registration rights agreements in effect on the date hereof or pursuant to the Shareholders' Agreement; (xvii) neither AN nor any of its Subsidiaries will modify or amend any AN Pending Transaction in any manner that would increase the consideration payable pursuant to such transaction; and (xviii) neither AN nor any of its Subsidiaries will authorize or enter into an agreement to do any of the foregoing. (b) MC covenants and agrees that except (w) as contemplated by this Agreement or the Shareholders' Agreement, (x) as set forth in Schedule 5.1(b), (y) as agreed in writing by AN, or (z) as contemplated by any MC Pending Transactions, after the date hereof and prior to the Effective Time: (i) MC will not (A) amend its Certificate of Incorporation or By-Laws; or (B) redeem, purchase or otherwise acquire directly or indirectly any of its capital stock, provided, that the Board of Directors of MC may adopt a resolution to amend MC's Certificate of Incorporation to increase the number of authorized MC Shares by 7,500,000, and if the Board of Directors of MC declares that such amendment is advisable, the Board may submit such resolution for a vote of the stockholders at the Meeting, and if such amendment is approved at the Meeting, MC may so amend its Certificate of Incorporation; (ii) MC will not declare, set aside or pay any dividend or other distribution payable in cash, stock or property with respect to its capital stock; (iii) MC will not, directly or indirectly, split, combine or reclassify the outstanding MC Shares; (iv) with the exception of the existing liens in favor of Toronto Dominion Bank and the First National Bank of Boston, neither MC nor any of its Subsidiaries will issue, sell, pledge, dispose of or encumber any shares of, or securities convertible into or exchangeable for, or options, warrants, calls, commitments or rights of any kind to acquire, any shares of capital stock of any class of MC or its 24 31 Subsidiaries, other than (A) issuances of MC Shares reserved for issuance on the date hereof upon exercise of MC Options outstanding on the date hereof, (B) issuances by MC of MC Shares or other securities for the fair market value of such MC Shares or other securities at the time of such issuance, provided, that the issuance of MC Shares pursuant to an acquisition agreement with a third party on terms negotiated on an arms' length basis or the issuance of other securities convertible into MC Shares to an unaffiliated third party on terms negotiated on an arms' length basis shall be deemed for purposes hereof the issuance of MC Shares at the fair market value of such MC Shares, and (C) the granting (and issuance of MC Shares upon exercise) of options pursuant to MC's director and employee stock option plans as in effect on the date hereof, with exercise prices equal to the fair market value of MC Shares on the date of grant. (v) MC will not adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of MC or any of its Subsidiaries; (vi) neither MC nor any of its Subsidiaries will take, or agree to take, any action that would result in any of the conditions set forth herein or in Annex A not being satisfied; (vii) neither MC nor any of its Subsidiaries will consummate any acquisitions (by merger, consolidation, or acquisition of stock or assets or otherwise), other than MC Pending Transactions; provided, that MC may make acquisitions to the extent that they (A) comply with the requirements of Section 5.1(b)(iv)(B), (B) do not involve businesses that would be considered "significant subsidiaries" within the meaning of Rule 1-02(v) of Regulation S-X, and (C) do not result in the issuance of more than 3,000,000 MC Shares in the aggregate; (viii) neither MC nor any of its Subsidiaries shall engage in any business other than that conducted in the telecommunications industry; and (ix) neither MC nor any of its Subsidiaries will authorize or enter into an agreement to do any of the foregoing. SECTION 5.2 Stockholder Approval; Meetings; Etc. (a) Subject to the fiduciary duties of AN's Board of Directors and MC's Board of Directors under applicable law, as the case may be, each of AN and MC will take all action necessary in accordance with applicable law, the rules of Nasdaq, this Agreement and AN's or MC's, as the case may be, Charter and By-Laws to convene a meeting of its stockholders (each, a "Meeting") as promptly as practicable after consummation of the Offer to consider and vote upon a proposal to adopt this Agreement (the "Proposal"). Subject to a determination of the respective Board of Directors of AN and MC made in accordance with Section 5.9(f), each of AN and MC will (i) recommend that their respective stockholders vote in favor of the Proposal and (ii) use their respective best efforts to cause to be solicited proxies from stockholders of AN or MC, as the case may be, to be voted at their Meetings in favor of the Proposal and to take all other actions necessary or advisable to secure the vote or consent of stockholders required to effect the Merger. MC agrees to vote all Shares purchased in the Offer or pursuant to the Shareholders' Agreement in favor of the Proposal. In addition, AN shall present a resolution to be approved by the affirmative vote of the outstanding Shares as required by Section 48-103-503(a) of the Tennessee Greenmail Act in order to exempt the transactions contemplated by Section 5.16 from the provisions thereof. (b) MC shall use its best efforts to cause, immediately prior to the Effective Time, Ray M. Russenberger and Elliott H. Singer to be appointed to the Board of Directors of the Surviving Corporation, to serve in the classes set forth on Annex B. (c) MC agrees to use its reasonable best efforts to take the actions described in Section 3.3.2 and 3.3.3 of the Shareholders' Agreement. SECTION 5.3 Proxy Statement, Registration Statement, Etc. (a) AN and MC shall promptly after consummation of the Offer prepare and file with the SEC under the Exchange Act, and shall use their best efforts to have cleared by the SEC and shall thereafter promptly mail to their stockholders, the Proxy Statement for the Meetings, which shall also constitute the prospectus included in the Registration Statement to be filed by MC pursuant to Section 5.3(b) hereof. The Proxy Statement shall be mailed to stockholders of 25 32 each of AN and MC, as the case may be, at least 20 business days in advance of the date of its Meeting. MC shall furnish AN, and AN shall furnish MC, with all information and shall take such other action as AN or MC, as the case may be, may reasonably request in connection with the Proxy Statement. Subject to a determination of the respective Board of Directors of AN and MC made in accordance with Section 5.9(f), the Proxy Statement shall contain the recommendation of each Board of Directors that stockholders of AN and MC, as the case may be, approve and adopt the Proposal. (b) MC shall promptly after consummation of the Offer prepare and file with the SEC under the Securities Act the Registration Statement with respect to MC Shares and the VCRs to be issued in the Merger and shall use its best efforts to have the Registration Statement declared effective by the SEC as promptly as practicable. MC shall also take any action required to be taken under state blue sky or other securities laws in connection with the issuance of MC Shares and the VCRs in the Merger, including qualification under the Trust Indenture Act with respect to the VCRs. AN shall furnish MC with all information and shall take such other action as MC may reasonably request in connection with any such action. (c) AN and MC shall notify one another of the receipt of the comments of the SEC and of any requests by the SEC for amendments or supplements to the Proxy Statement or the Registration Statement or for additional information, and shall promptly supply one another with copies of all correspondence between any of them (or their representatives) and the SEC (or its staff) with respect thereto. If, at any time prior to either Meeting, any event should occur relating to or affecting AN, MC, or their respective officers or directors, which event should be described in an amendment or supplement to the Proxy Statement or the Registration Statement, the parties shall promptly inform one another and shall cooperate in promptly preparing, filing and clearing with the SEC and, if required by applicable securities laws, mailing to AN's or MC's stockholders, as the case may be, such amendment or supplement. (d) Notwithstanding anything to the contrary in this Agreement, AN shall have no obligation to mail the Proxy Statement to its shareholders unless and until AN shall have received a "comfort letter" from Deloitte and Touche LLP, the independent auditors of MC, in the form, scope and content contemplated by Statement of Auditing Standards No. 49 issued by the American Institute of Certified Public Accountants, Inc. ("SAS 49"), relating to financial statements and other financial data with respect to MC and its consolidated Subsidiaries included or incorporated by reference in the Proxy Statement and such other matters as may be reasonably required by AN, and based upon procedures carried out to a specified date not earlier than five days prior to the date thereof. (e) Notwithstanding anything to the contrary contained in this Agreement, MC shall not mail the Proxy Statement to its stockholders unless and until the Registration Statement has been declared effective under the Securities Act, and MC shall have no obligations to mail the Proxy Statement to its stockholders unless and until MC shall have received a "comfort letter" from Arthur Andersen LLP, the independent auditors of AN, in the form, scope, and content contemplated by SAS 49, relating to the financial statements and other financial data with respect to AN and its consolidated Subsidiaries included or incorporated by reference in the Proxy Statement and such other matters as may be reasonably required by MC, and based upon procedures carried out to a specified date not earlier than five days prior to the date thereof. SECTION 5.4 Compliance with the Securities Act. (a) Prior to the Effective Time, AN shall cause to be delivered to MC a list identifying all persons who are, at the time of the Meeting, considered by AN to be "affiliates" of AN for purposes of Rule 145 under the Securities Act (the "Affiliates"). (b) AN shall use reasonable efforts to cause each person who is identified as an affiliate of AN to deliver to MC on or prior to the Effective Time a written agreement, in such form as may be agreed to by the parties, that such person will not offer to sell, sell or otherwise dispose of any of MC Shares issued to such person in connection with the Merger, except pursuant to an effective registration statement or in compliance with Rule 145 or pursuant to an exemption from the registration requirements of the Securities Act. The Surviving Corporation shall be entitled to place appropriate legends on the certificates evidencing MC Shares to be received by such affiliates pursuant to the terms of this Agreement, and to issue appropriate stop transfer instructions to the transfer agent for MC Shares, to the effect that MC Shares received or to be received by 26 33 such affiliate pursuant to the terms of this Agreement may only be sold, transferred or otherwise conveyed, and the holder thereof may only reduce his interest in or risks relating to such shares pursuant to an effective registration statement under the Securities Act or in accordance with the provisions of paragraph (d) of Rule 145 or pursuant to an exemption provided from registration under the Securities Act. The foregoing restrictions on the transferability of MC Shares shall apply to all purported sales, transfers and other conveyances of the shares received or to be received by such affiliate pursuant to the Merger and to all purported reductions in the interest in or risks relating to such MC Shares. SECTION 5.5 Nasdaq Listing. MC shall use all reasonable efforts to cause MC Shares to be admitted for quotation on the Nasdaq National Market System. SECTION 5.6 Approvals and Consents; Cooperation. (a) Subject to the terms and conditions herein provided, each of the parties hereto agrees to use all reasonable efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary, proper or advisable to consummate and make effective as promptly as practicable the transactions contemplated by the Offer and this Agreement, and to cooperate with each of the other parties hereto in connection with the foregoing, including using all reasonable efforts: (i) to obtain all necessary waivers, consents and approvals from other parties to loan agreements, leases and other contracts; (ii) to obtain all necessary consents, approvals and authorizations as are required to be obtained under any federal, state or foreign laws or regulations; (iii) to lift or rescind any injunction or restraining order or other order adversely affecting the ability of the parties to consummate the transactions contemplated hereby; (iv) to effect all necessary registrations and filings, including, but not limited to, filings under the HSR Act and Communications Act and submissions of information requested by Governmental Entities; and (v) to fulfill all conditions to this Agreement. Each of AN and MC further covenants and agrees that, prior to the exercise by MC of its right to terminate the Offer under paragraphs (c) or (d) of Annex A hereto, each of AN and MC shall use its respective best efforts (which shall not be construed to require the payment of any money to a third party (other than legal counsel) or the divestiture of any business or assets) to prevent, with respect to a threatened or pending preliminary or permanent injunction or the other order, decree or ruling or statute, rule, regulation or executive order specified in such paragraphs, the entry, enactment or promulgation thereof, as the case may be. For purposes of the foregoing, the obligation of MC to use "best efforts" or "reasonable efforts" to obtain waivers, consents and approvals to loan agreements, leases and other contracts shall not include any obligation to agree to a modification of the terms of such documents, except as expressly contemplated hereby or to make any monetary payment in consideration of such waiver, consent or approval. (b) AN and MC shall take all reasonable actions necessary to file as soon as practicable notifications under the HSR Act and to respond as promptly as practicable to any inquiries received from the Federal Trade Commission and the Antitrust Division of the Department of Justice for additional information or documentation and to respond as promptly as practicable to all inquiries and requests received from any State Attorney General or other Governmental Entity in connection with antitrust matters. (c) Within fifteen business days of the date of this Agreement, or as soon thereafter as practicable, MC and AN shall prepare and make all filings (the "Regulatory Filings") required to be made with the FCC pursuant to the Communications Act and with any State Authority as are required to permit the consummation of the Merger and shall thereafter promptly make any additional or supplemental submissions required or requested by the FCC and any such State Authority. With respect to the Regulatory Filings, counsel to AN shall be responsible for preparing, with the advice and consent of counsel to MC, the transferor's portion of the submissions with respect to the AN Licenses, and counsel to MC shall be responsible for preparing, with the advice and consent of counsel to AN, the transferee's portion of such submissions. Counsel to AN shall also be responsible for preparing, with the advice and consent of counsel to MC, any pro forma transfer applications with respect to the AN Licenses that are required to permit the Merger. All filing fees associated with the preparation and filing of Regulatory Filings pursuant to this Section 5.6(c) shall be shared equally by MC and AN. Each party shall bear its own counsel fees in connection with the Regulatory Filings. (d) Notwithstanding any provision of this Agreement or the Shareholders' Agreement to the contrary, MC shall not assume, either directly or indirectly, de jure or de facto control of AN without the prior consent of the FCC and any State Authority of competent jurisdiction. Nothing contained herein shall, without the 27 34 prior consent of the FCC and any State Authority of competent jurisdiction, give MC any control or responsibility for (i) AN's facilities, including without limitation control of use of the facilities; (ii) daily operations; (iii) policy decisions, including preparing and filing applications with the FCC; (iv) employment, supervision and dismissal of personnel; or (v) payment of financing obligations, including expenses arising out of operations. Without the prior consent of the FCC and any State Authority of competent jurisdiction, MC shall not receive any monies and profits derived from the operation of the AN facilities. SECTION 5.7 Access to Information. Upon reasonable notice, each of AN and MC shall (and shall cause each of its Subsidiaries to) afford to the officers, employees, accountants, counsel, financing sources and other representatives of MC or AN, as the case may be, access, during normal business hours during the period prior to the Effective Time, to all its officers, employees, properties, facilities, books, contracts, commitments and records and, during such period, each of AN and MC shall (and shall cause each of its Subsidiaries to) furnish promptly to MC or AN, as the case may be (a) a copy of each report, schedule, registration statement and other document filed or received by it during such period pursuant to the requirements of federal securities laws and (b) all other information concerning its business, properties and personnel as MC or AN, as the case may be, may reasonably request. Each of MC and AN will hold any such information which is nonpublic in confidence in accordance with the provisions of the Confidentiality Agreement between AN and MC, dated on or about November 22, 1995 (the "Confidentiality Agreement"). No investigation pursuant to this Section 5.7 shall affect any representations or warranties of the parties herein or the conditions to the obligations of the parties hereto. Without limiting the foregoing, prior to the earlier of the Effective Time or the termination of the Agreement, each party shall have the right to have no more than two (2) representatives, who shall be directors or members of senior management of such party, attend regular or special meetings of the Board of Directors of the other party; provided, that such representatives may not attend any portion of any meeting concerning this Agreement or the transactions contemplated hereby. Each party will give reasonable notice to the other of such meetings, and the party's representatives may be present by telephone. SECTION 5.8 Employee Benefits and Relocation Matters. (a) MC agrees to use its reasonable best efforts to maintain a southeast/southwest regional operations center in Pensacola, Florida for a period not less than three years from the Effective Time, provided that such operations center may be closed in the event of a consolidation or merger of MC or a sale of substantially all of the assets of MC or of a majority of MC's common stock outstanding after the Effective Time. (b) The parties' agreement with respect to certain employment matters is set forth in Annex D hereto. SECTION 5.9 No Solicitation by AN. (a) AN, its affiliates and their respective officers, directors, employees, representatives and agents shall immediately cease all existing discussions or negotiations, if any, with any parties (other than MC) conducted heretofore with respect to any AN Acquisition Proposal. For purposes of this Agreement, "AN Acquisition Proposal" shall mean any proposal relating to (i) a possible acquisition of AN, whether by way of merger, purchase of all or substantially all of the assets of AN, or any similar transaction, or (ii) a tender offer for more than 5% of the Shares (excluding any AN Pending Transaction or any other transactions permitted by Section 5.1(a)). (b) AN may, directly or indirectly, furnish information and access, in each case only in response to a request for such information or access, to any person made after the date hereof which was not encouraged, solicited or initiated by AN or any of its affiliates or any of their respective officers, directors, employees, representatives, financial advisors or agents after the date hereof, pursuant to appropriate confidentiality agreements, and may participate in discussions and negotiate with such party concerning any AN Acquisition Proposal, but only if (i) such party has submitted a written proposal to the Board of Directors of AN relating to any such transaction involving economic consideration per Share that the Board of Directors of AN reasonably believes is economically superior to the consideration to be paid hereunder and which does not include or contemplate any condition relating to the obtaining of funds for such AN Acquisition Proposal and (ii) the Board of Directors of AN has made a determination in accordance with Section 5.9(f). AN shall notify MC immediately if any written or oral AN Acquisition Proposal is made and shall keep MC promptly 28 35 advised of all written or oral AN Acquisition Proposals, provide a copy of any written AN Acquisition Proposal and provide in writing the terms of all oral AN Acquisition Proposals. (c) Except as set forth in this Section 5.9, neither AN or any of its affiliates, nor any of their respective officers, directors, employees, representatives, financial advisors or agents, shall, directly or indirectly, encourage or solicit submission of any inquiries, proposals or offers by; participate in or initiate any discussions or negotiations with; disclose any information about AN or its Subsidiaries to, or otherwise assist, facilitate or encourage, or enter into any agreement or understanding with any corporation, partnership, person or other entity or group (other than MC, any affiliate or associate of MC or any designees of MC) in connection with any AN Acquisition Proposal; provided that the Board of Directors of AN shall not recommend that the shareholders of AN tender their Shares in connection with any tender offer unless the Board of Directors of AN makes a determination in accordance with Section 5.9(f). (d) AN agrees not to release any third party from, or waive any provisions of, any confidentiality or standstill agreement to which AN is a party, unless the Board of Directors of AN makes a determination in accordance with Section 5.9(f). AN will use all reasonable efforts to have all copies of all nonpublic information it or AN Financial Advisor has distributed to other potential purchasers returned to it as soon as possible after the date hereof. (e) Nothing contained in this Section 5.9 shall prohibit AN or its Board of Directors from taking and disclosing to AN's shareholders a position with respect to a tender or exchange offer by a third party pursuant to Rules 14d-9 and 14e-2 promulgated under the Exchange Act or from making such disclosure to AN's shareholders or otherwise if the Board of Directors makes a determination in accordance with Section 5.9(f). (f) For purposes of this Agreement, any determination of directors made in accordance with this Section 5.9(f) shall mean that directors constituting a majority of all directors then in office of AN shall reasonably determine in good faith, after consultation with and based upon the advice of independent legal counsel, that the taking of action or the failure to take action (or to withdraw or modify a recommendation) would constitute a breach of such directors' fiduciary duties to stockholders of AN under applicable law. SECTION 5.10 No Solicitation by MC. (a) MC, its affiliates and their respective officers, directors, employees, representatives and agents shall immediately cease all existing discussions or negotiations, if any, with any parties (other than AN) conducted heretofore with respect to any MC Acquisition Proposal. For purposes of this Agreement, "MC Acquisition Proposal" shall mean any proposal relating to (i) a possible acquisition of MC, whether by way of merger, purchase of all or substantially all of the assets of MC, or any similar transaction, or (ii) a tender offer for more than 5% of the MC Shares (excluding any MC Pending Transactions or any other transactions permitted by Section 5.1(b)). (b) MC may, directly or indirectly, furnish information and access, in each case only in response to a request for such information or access, to any person made after the date hereof which was not encouraged, solicited or initiated by MC or any of its affiliates or any of their respective officers, directors, employees, representatives, financial advisors or agents after the date hereof, pursuant to appropriate confidentiality agreements, and may participate in discussions and negotiate with such party concerning any MC Acquisition Proposal, but only if the Board of Directors of MC has made a determination in accordance with Section 5.10(f). MC shall notify AN immediately if any written or oral MC Acquisition Proposal is made and shall keep AN promptly advised of all written or oral MC Acquisition Proposals, provide a copy of any written MC Acquisition Proposal and provide in writing the terms of all oral MC Acquisition Proposals. (c) Except as set forth in this Section 5.10, neither MC or any of its affiliates, nor any of their respective officers, directors, employees, representatives, financial advisors or agents, shall, directly or indirectly, encourage or solicit submission of any inquiries proposals, or offers by; participate in or initiate any discussions or negotiations with, or disclose any information about MC or any Subsidiaries to, or otherwise assist, facilitate, or encourage, or enter into any agreement or understanding with, any corporation, partnership, person or other entity or group (other than AN, any affiliate or associate of AN or any designees of AN) in connection with any MC Acquisition Proposal; provided that the Board of Directors of MC shall not 29 36 recommend that the stockholders of MC tender their MC Shares in connection with any tender offer unless the Board of Directors of MC makes a determination in accordance with Section 5.10(f). (d) MC agrees not to release any third party from, or waive any provisions of, any confidentiality or standstill agreement to which MC is a party, unless the Board of Directors of MC makes a determination in accordance with Section 5.10(f). MC will use all reasonable efforts to have all copies of all nonpublic information it or MC Financial Advisor has distributed to other potential companies returned to it as soon as possible after the date hereof. (e) Nothing contained in this Section 5.10 shall prohibit MC or its Board of Directors from taking and disclosing to MC's stockholders a position with respect to a tender or exchange offer by a third party pursuant to Rules 14d-9 and 14e-2 promulgated under the Exchange Act or from making such disclosure to MC's stockholders or otherwise if the Board of Directors makes a determination in accordance with Section 5.10(f). (f) For purposes of this Agreement, any determination of directors made in accordance with this Section 5.10(f) shall mean that directors constituting a majority of all directors then in office shall reasonably determine in good faith, after consultation with and based upon the advice of independent legal counsel, that the taking of action or the failure to take action (or to withdraw or modify a recommendation) would constitute a breach of such directors' fiduciary duties to stockholders of MC under applicable law. SECTION 5.11 Brokers or Finders. Each of MC and AN represents, as to itself, its Subsidiaries and its affiliates, that no agent, broker, investment banker, financial advisor or other firm or person is or will be entitled to any brokers' or finder's fee or any other commission or similar fee in connection with any of the transactions contemplated by this Agreement except the AN Financial Advisor, whose fees and expenses will be paid by AN in accordance with its agreement with such firm, and the MC Financial Advisor and Daniels & Associates L.P., whose fees and expenses will be paid by MC in accordance with MC's agreement with such firms. Each of MC and AN agrees to indemnify and hold the other harmless from and against any and all claims, liabilities or obligations with respect to any other fees, commissions or expenses asserted by any person on the basis of any act or statement alleged to have been made by such party or its affiliates. SECTION 5.12 Publicity. The initial press release with respect to the execution of this Agreement shall be a joint press release acceptable to MC and AN. Thereafter, so long as this Agreement is in effect, neither AN, MC nor any of their respective affiliates shall issue or cause the publication of any press release or other announcement with respect to the Merger, this Agreement or the other transactions contemplated hereby without the prior consultation of the other party, except as may be required by law or by the rules of Nasdaq. SECTION 5.13 Notification of Certain Matters. AN shall give prompt notice to MC and MC shall give prompt notice to AN of (i) the occurrence or non-occurrence of any event the occurrence or non-occurrence of which would cause any representation or warranty contained in this Agreement to be untrue or inaccurate at or prior to the Effective Time and (ii) any failure of AN or MC, as the case may be, to comply with or satisfy any covenant, condition or agreement to be complied with or satisfied by it hereunder, provided, however, that the delivery of any notice pursuant to this Section 5.13 (a) is not required until an executive officer of AN or MC, as the case may be, has actual knowledge of the circumstance requiring such notice and (b) shall not limit or otherwise affect the remedies available hereunder to the party receiving such notice. SECTION 5.14 Directors' and Officers' Insurance and Indemnification. (a) From and after the Effective Time, MC shall, or shall cause the Surviving Corporation, to the fullest extent permitted under applicable law, AN's Charter, By-Laws or indemnification agreements in effect on the date hereof, including provisions relating to advancement of expenses incurred in the defense of any action or suit, to indemnify, defend and hold harmless all persons who are now, or have been at any time prior to the date hereof, or who become prior to the Effective Time, an officer, director, employee or agent of AN or any of its Subsidiaries, or who are or were serving at the request of AN or any of its Subsidiaries as a director, officer, employee or agent of another corporation, partnership, trust, limited liability company or other business enterprise (each, an "Indemnified Party"), against all losses, claims, damages, liabilities, costs and expenses (including attorney's fees and expenses) judgments, fines, losses, and amounts paid in settlement in connection with any actual or threatened action, suit, claim, 30 37 proceeding or investigation (each a "Claim") to the extent that any such Claim is based on, or arises out of, (i) the fact that such person is or was a director, officer, employee or agent of AN or any of its Subsidiaries; or (ii) this Agreement, or any of the transactions contemplated hereby or thereby, in each case to the extent that any such Claim pertains to any matter or fact arising, existing, or occurring prior to or at the Effective Time, regardless of whether such Claim is asserted or claimed prior to, at or after the Effective Time. Without limiting the foregoing, in the event that any Claim is brought against an Indemnified Party (whether arising before or after the Effective Time), the Indemnified Party may retain counsel satisfactory to them, and MC (or prior to the Effective Time, AN) shall advance the fees and expenses of such counsel for the Indemnified Party in accordance with Section 12(a) of Article 12 of the Charter of AN in effect on the date hereof. (b) MC and AN agree that the Surviving Corporation's Certificate of Incorporation shall contain provisions no less favorable with respect to rights to indemnification and limitations on liability provided in AN's Charter and By-Laws as in effect as of the date hereof, for a period of six (6) years from the Effective Time to the extent such rights are consistent with the DGCL; provided, that, in the event any claim or claims are asserted or made within such six (6) year period, all rights to indemnification in respect of any such claim or claims shall continue until disposition of any and all such claims; provided further, that any determination required to be made with respect to whether an Indemnified Party's conduct complies with the standards set forth under applicable law, MC's Certificate of Incorporation or By-Laws or such agreements, as the case may be, shall be made by independent legal counsel selected by MC and reasonably acceptable to the Indemnified Party and; provided further, that nothing in this Section 5.14 shall impair any rights or obligations of any present or former directors or officers of AN. (c) In the event the Surviving Corporation or any of its successors or assigns (i) consolidates with or merges into any other person and shall not be the continuing or surviving corporation or entity of such consolidation or merger, or (ii) transfers or conveys all or substantially all of its properties and assets to any person, then, and in each such case, to the extent necessary to effectuate the purposes of this Section 5.14, proper provision shall be made so that the successors and assigns of the Surviving Corporation shall succeed to the obligations set forth in this Section 5.14 and none of the actions described in clauses (i) or (ii) shall be taken until such provision is made. (d) MC or the Surviving Corporation shall use all reasonable efforts to maintain AN's existing officers' and directors' liability insurance policy ("D&O Insurance") for a period of not less than six (6) years after the Effective Date; provided, (i) that MC may substitute therefor policies of substantially similar coverage and amounts containing terms no less advantageous to such former directors or officers; and (ii) if the existing D&O Insurance expires or is canceled during such period, MC or the Surviving Corporation will use reasonable efforts to obtain substantially similar D&O Insurance to the extent available. SECTION 5.15 Expenses. Except as otherwise provided in the penultimate sentence of Section 5.6(c) and in Section 7.2, whether or not the Merger is consummated, all costs and expenses incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the party incurring such expense, except that the filing fee for the Proxy Statement or Registration Statement, and all expenses incurred in connection with the printing and mailing of the Proxy Statement and prospectus included in the Registration Statement shall be borne one-half by AN and one-half by MC. The payment of costs and expenses by MC or AN shall not reduce any consideration paid in the Merger. Notwithstanding the foregoing, the costs and expenses incurred in connection with the Shareholders' Agreement will be paid in accordance with the terms of such Agreements. SECTION 5.16 Repurchase Option. (a) For the purposes of this Section 5.16: A "Repurchase Event" shall occur automatically if (i) either (A) the Offer has been consummated or (B) a Scenario II Trigger Event (as defined in the Shareholders' Agreement) shall have occurred, (ii) AN is not in material breach of any of its obligations under this Agreement entitling MC to terminate this Agreement, (iii) there has been no AN Termination Fee Event (as hereinafter defined) and (iv) this Agreement has been terminated in accordance with its terms. 31 38 "Interest Payment Event" shall mean, in the case of a Repurchase Event, the occurrence of any of the following (i) a Final Regulatory Order (as hereinafter defined) by the FCC or any State Authority has been entered prohibiting the transfer of the AN Licenses to MC; (ii) the entry of a non-appealable final order by a court of competent jurisdiction prohibiting the consummation of the Merger, or (iii) November 16, 1996 (provided that, if at November 16, 1996 the sole reason the Merger shall not have occurred is the failure to obtain a Final Regulatory Order permitting the consummation of the Merger from the FCC, such date shall be February 16, 1997). "AN Termination Fee Event" shall mean the termination of this Agreement in accordance with its terms solely pursuant to Sections 7.1(d)(iv) or (v). "Regulatory Order" shall mean an action taken or order issued by the FCC with respect to the AN Licenses as to which (i) no request for stay by the FCC of the action or order is pending, no such stay is in effect, and, if any deadline for filing any such request is designated by statute or regulation, it has passed; and (ii) with respect to an action taken or order issued by the FCC granting consent to the Merger, such consent shall be without material adverse conditions, other than conditions that have been agreed to by AN and MC or that are routine conditions with respect to transfers of this nature. A "Final Regulatory Order" shall mean a Regulatory Order as to which (i) no petition for rehearing or reconsideration of the action or order is pending before the FCC and the time for filing any such petition has passed; and (ii) the FCC does not have the action or order under reconsideration on its own motion and the time for such reconsideration has passed. "Repurchase Period" shall mean the period commencing upon the occurrence of the Repurchase Event and ending on the earlier of (i) the first anniversary of a Repurchase Event and (ii) the sale or distribution of all Repurchase Shares. "Repurchase Shares" means all Shares purchased by MC and/or its affiliates pursuant to the Offer, the Shareholders' Agreement or otherwise. "Voting Stock" means the Shares or any other shares of the capital stock of AN having the ordinary power to vote in the election of directors. (b) In the event of a Repurchase Event and during the Repurchase Period, (i) MC shall not (A) acquire any additional Shares or other Voting Stock other than pursuant to any stock dividend, stock split or similar event, (B) solicit proxies with respect to Voting Stock of AN or be a "participant" in an "election contest" or "solicitation" (as such terms are used in Regulation 14A under the Exchange Act) with respect to Voting Stock of AN, (C) deposit any Voting Stock of AN or the Repurchase Shares into a voting trust, (D) propose or advise any other entity to propose any MC Acquisition Proposal, or (E) act in concert with any person for the purpose of holding any Voting Stock of AN; and (ii) the Repurchase Shares may only be voted pro rata with the Shares voted by all other shareholders of AN (excluding MC and its affiliates) with respect to all matters. Notwithstanding the foregoing, (x) MC may sell, transfer or otherwise dispose of any Shares 90 days after the termination of this Agreement if this Agreement is terminated solely pursuant to Section 7.1(d)(v), (y) MC may tender or exchange Repurchase Shares into any tender offer or AN Acquisition Proposal with respect to which the Board of Directors of AN has recommended to AN's shareholders that they accept such tender offer or AN Acquisition Proposal and tender or exchange their Shares pursuant to such tender offer or AN Acquisition Proposal (provided that to the extent the Repurchase Shares are not purchased or exchanged pursuant to such tender offer or AN Acquisition Proposal under this clause (y), such Repurchase Shares shall remain subject to the provisions of this Section 5.16), and (z) MC may pledge the Repurchase Shares pursuant to a bona fide pledge to secure indebtedness of MC or any of its Subsidiaries, provided, that such Repurchase Shares will remain subject to the provisions of this Section 5.16. (c) In the event of an Interest Payment Event, AN shall have the right during the period ending 90 days after the Repurchase Event either to (i) repurchase all the Repurchase Shares or (ii) designate a third party to purchase the Repurchase Shares, which third party shall repurchase such Repurchase Shares, in each case at a price per Share equal to (x) with respect to the Repurchase Shares purchased pursuant to the Offer, the Offer Price plus an interest factor of 10.125% per annum commencing on the date of the consummation of the 32 39 Offer and ending on the date of such purchase of the Repurchase Shares and (y) with respect to the Repurchase Shares purchased pursuant to the Shareholders' Agreement, cash equal to the price paid therefor (such price with respect to consideration consisting of MC Shares to be equal to the Average MC Share Price used in determining the consideration paid therefor) plus an interest factor of 10.125% per annum commencing on the date any such cash was paid and ending on the date of such purchase; provided, that in the event of such an election, the repurchase shall not occur any earlier than six months and one day after the Shares were acquired by MC. (d) In the event of any Repurchase Event which is not an Interest Payment Event, AN shall have the right during the period ending 90 days after the Repurchase Event either to (i) repurchase all the Repurchase Shares or (ii) designate a third party to purchase the Repurchase Shares, which third party shall repurchase such Repurchase Shares, in each case at a price per Share equal to (x) with respect to the Repurchase Shares purchased pursuant to the Offer, the Offer Price and (y) with respect to the Repurchase Shares purchased pursuant to the Shareholders' Agreement, the price paid therefor (such price with respect to consideration consisting of MC Shares to be equal to the Average MC Share Price used in determining the consideration paid therefor). (e) (i) If a Repurchase Event occurs and AN has not elected to purchase any Repurchase Shares pursuant to paragraph (c) or (d), as applicable, or (ii) upon request by MC given within 90 days after this Agreement has been terminated due to an AN Termination Fee Event or solely pursuant to Section 7.1(d)(iii), then AN and MC shall cooperate in good faith to sell all of the Repurchase Shares in an orderly and reasonably widespread distribution, subject to the following: (a) In the event of an underwritten public offering, AN shall be entitled to select the lead underwriter, which shall be reasonably acceptable to MC, and MC shall be entitled to select one or more co-managing underwriters, which shall be reasonably acceptable to AN. (b) All sales shall be made at market prices or, in the case of an underwritten public offering, the price at which such underwriter reasonably determines. MC shall bear all expenses incurred in connection with such sales, including underwriter's discounts, commissions and expenses, except for AN's legal fees, accounting fees and other expenses, which shall be borne in all cases by AN. (f) Notwithstanding the provisions of Section 7.3 hereof, the provisions of this Section 5.16 shall survive any termination of this Agreement. SECTION 5.17 Fair Price Statute. If any "fair price" or "control share acquisition" or "anti-takeover" statute, or other similar statute or regulations or any state "blue sky" statute shall become applicable to the transactions contemplated hereby or by the Shareholders' Agreement, AN and the members of the Board of Directors of AN shall grant such approvals and take such actions as are necessary so that the transactions contemplated hereby and thereby may be consummated as promptly as practicable on the terms contemplated hereby and thereby, and otherwise act to minimize the effects of such statute or regulation on the transactions contemplated hereby or thereby. SECTION 5.18 Further Assurances. Each party hereto shall take all such actions and execute all such documents and instruments that are reasonably requested by the other party to carry out the intent of the parties under this Agreement, and in particular, AN shall take all such actions necessary to obtain the release, or assignment to MC's lenders, of all liens in favor of First National Bank of Chicago prior to the Effective Time, including executing and delivering for filing appropriate UCC-3 statements and other necessary documents for release or assignment of such liens. 33 40 ARTICLE VI CONDITIONS SECTION 6.1 Conditions to Each Party's Obligation To Effect the Merger. The respective obligation of each party to effect the Merger shall be subject to the satisfaction on or prior to the Closing Date of each of the following conditions: (a) Purchase of Shares in Offer. MC shall have purchased Shares pursuant to the Offer or pursuant to the Shareholders' Agreement; (b) Stockholder/Shareholder Approval. This Agreement shall have been approved and adopted by the requisite vote of the holders of capital stock of MC and AN in accordance with the DGCL and TBCA and the respective Certificates of Incorporation/Charters and By-Laws of MC and AN; (c) Statutes; Consents. No statute, rule, order, decree or regulation shall have been enacted or promulgated by any Government Entity preventing the Merger or the consummation of the transactions contemplated hereby, and all orders and approvals from Governmental Entities required for the consummation of the Merger and the transactions contemplated hereby shall have been obtained and shall be in effect at the Effective Time; (d) Injunctions. There shall be no order or injunction of a foreign or United States federal or state court or other governmental authority of competent jurisdiction in effect precluding, restraining, enjoining or prohibiting consummation of the Merger; (e) Regulatory Approval. A Regulatory Order permitting the Merger to be consummated shall have been received from the FCC (or at the election of MC, approval shall have been received from the FCC), and Regulatory Orders permitting the Merger to be consummated shall have been received from any requisite State Authorities; (f) HSR Act. The expiration or early termination of any waiting period under the HSR Act shall have occurred; (g) Registration Statement. The Registration Statement for MC Shares and VCRs, and the Trust Indenture Act qualification for VCRs, shall have been declared effective and no stop order with respect thereto shall be in effect at the Effective Time; and (h) Nasdaq Listing. The MC Shares to be issued in the Merger shall have been admitted for quotation on the Nasdaq National Market System. SECTION 6.2 Conditions to Obligations of AN to Effect the Merger. The obligation of AN to effect the Merger shall be subject to the satisfaction on or prior to the Closing Date of the following additional conditions: (a) MC shall have performed and complied in all material respects with all obligations and agreements required to be performed and complied with by it under this Agreement at or prior to the Effective Time; (b) The representations and warranties of MC contained in this Agreement shall have been true and correct in all material respects at the time when made, and (except for representations made as of a certain date) shall be deemed made again on the Closing Date and shall be true in all material respects as of such date, except for changes specifically permitted by this Agreement; (c) Except for the transactions contemplated by this Agreement, and except for matters which affect generally the economy or the industry in which MC and its Subsidiaries are engaged, as of the Closing Date, there shall not have occurred any change in the business, properties, assets, liabilities, financial conditions, cash flows, operations, licenses, franchises or results of operations of MC or its Subsidiaries which has a Material Adverse Effect on MC and its Subsidiaries, taken as a whole; 34 41 (d) AN shall have received a certificate from MC, signed on behalf of MC by the Chief Executive Officer or Chief Financial Officer of MC, dated the Closing Date, to the effect that the conditions set forth in paragraph (a), (b) and (c) above have been satisfied; and (e) AN shall have received the opinion of Wilmer, Cutler & Pickering, dated the Closing Date and in a form reasonably acceptable to AN, to the effect that MC Shares and VCRs to be issued in the Merger have been duly authorized, and when issued in accordance with this Agreement will be validly issued, and with respect to MC Shares, fully paid and nonassessable and no holder of any MC Shares outstanding as of such date has any preemptive or other rights to subscribe for MC Shares pursuant to the DGCL, the Certificate of Incorporation or pursuant to agreements of MC set forth on a schedule to such opinion, which MC will have certified to such counsel as representing all agreements which contain preemptive right or rights to subscribe for MC Shares. SECTION 6.3 Conditions to Obligations of MC to Effect the Merger. The obligation of MC to effect the Merger shall be subject to the satisfaction on or prior to the Closing Date of the following additional conditions: (a) AN shall have performed or complied in all material respects with all obligations and agreements required to be performed or complied with by it under this Agreement at or prior to the Effective Time; (b) The representations and warranties of AN contained in this Agreement shall have been true and correct in all material respects at the time when made, and (except for representations made as of a certain date) shall be deemed made again on the Closing Date and shall be true in all material respects as of such date, except for changes specifically permitted by this Agreement; (c) Except for the transactions contemplated by this Agreement and the Shareholders' Agreement, and except for matters which affect generally the economy or the industry in which AN and its Subsidiaries are engaged, as of the Closing Date, there shall not have occurred any change in business, properties, assets, liabilities, financial condition, cash flows, operations, licenses, franchises or results of operations of AN or its Subsidiaries which has a material adverse effect on AN and its Subsidiaries taken as a whole; (d) MC shall have received a certificate from AN, signed on behalf of AN by the Chief Executive Officer or Chief Financial Officer of AN, dated the Closing Date, to the effect that the conditions set forth in paragraph (a), (b) and (c) above have been satisfied. ARTICLE VII TERMINATION SECTION 7.1 Termination. Anything herein or elsewhere to the contrary notwithstanding, this Agreement may be terminated and the Merger contemplated herein may be abandoned at any time prior to the Effective Time, whether before or after stockholder approval thereof: (a) By the mutual written consent of MC and AN. (b) By either AN or MC: (i) If any Governmental Entity shall have issued an order, decree or ruling or taken any other action (which order, decree or other action the parties hereto shall use their reasonably efforts to lift), in each case permanently restraining, enjoining or otherwise prohibiting the transactions contemplated by this Agreement and such order, decree, ruling or other action shall have become final and non-appealable; or (ii) If the Merger shall not have occurred by November 15, 1996, provided, that if at November 16, 1996, the sole reason the Merger shall not have occurred is the failure to obtain a Final Regulatory Order permitting the consummation of the Merger from the FCC, MC may extend 35 42 the date in this clause (ii) to February 16, 1997, provided, further, that the foregoing date may be extended for an additional 60 days at MC's option following an event described in Section 3.3.2 or 3.3.3 of the Shareholders' Agreement if necessary to allow time for the Meeting, provided, further, that notwithstanding the foregoing, the right to terminate this Agreement under this Section 7.1(b)(ii) shall not be available to any party whose failure to fulfill any obligation under this Agreement has been the cause of or resulted in the failure of the Merger to occur on or before November 16, 1996 (or February 16, 1997, as the case may be). (c) By AN: (i) if MC shall have terminated the Offer, or the Offer shall have expired, without MC purchasing any Shares pursuant thereto; provided that AN may not terminate this Agreement pursuant to this Section 7.1(c)(i) if AN is in material breach of any of its covenants or agreements in this Agreement; (ii) if, due to an occurrence that, if occurring after the commencement of the Offer, would result in a failure to satisfy any of the conditions set forth in Annex A hereto, MC or any of its affiliates shall have failed to commence the Offer on or prior to five business days following the date of the initial public announcement of the Offer; provided, that AN may not terminate this Agreement pursuant to this Section 7.1(c)(ii) if AN is in material breach of any of its covenants or agreements in this Agreement; (iii) if MC shall have failed to perform and comply in all material respects with all material obligations and agreements required to be performed and complied with by it under this Agreement or the Shareholders' Agreement, which failure to perform shall not have been cured prior to the expiration of thirty (30) days following notice of such failure; (iv) if the Proposal shall not have been approved and adopted by the requisite vote of the holders of capital stock of MC in accordance with the DGCL and the Certificate of Incorporation and By-Laws of MC at a Meeting held for that purpose (including any adjournment thereof); or (v) if the Board of Directors of MC shall have (A) withdrawn or modified or changed in any manner adverse to AN its approval or recommendation of this Agreement, the Offer or the Merger or (B) shall have failed to recommend against a MC Acquisition Proposal involving a tender offer or failed to reject any other MC Acquisition Proposal within ten business days of receipt by the Board of Directors of MC of such proposal or shall have executed an agreement in principle (or similar agreement) or definitive agreement relating to a MC Acquisition Proposal or similar business combination with a person or entity other than AN (or the Board of Directors of MC resolves to do any of the foregoing). (d) By MC: (i) if MC shall have terminated the Offer, or the Offer shall have expired without MC purchasing any Shares thereunder, provided, that MC may not terminate this Agreement pursuant to this Section 7.1(d)(i) if it has failed to purchase Shares in the Offer in violation of the material terms hereof or thereof; (ii) if, due to an occurrence that if occurring after the commencement of the Offer would result in a failure to satisfy any of the conditions set forth in Annex A hereto, MC or any of its affiliates shall have failed to commence the Offer on or prior to five business days following the date of the initial public announcement of the Offer, provided that MC may not terminate this Agreement pursuant to this Section 7.1(d)(ii) if MC is in material breach of any of its covenants or agreements in this Agreement or the Shareholders' Agreement; (iii) if AN or any of its Subsidiaries shall have failed to perform and comply in all material respects with all material obligations and agreements required to be performed and complied with by them under this Agreement which failure to perform shall not have been cured prior to the expiration of thirty (30) days following notice of each failure; 36 43 (iv) if the Proposal shall not have been adopted by the requisite vote of the holders of capital stock of AN in accordance with the TBCA and the Charter and By-Laws of AN at a Meeting held for that purpose (including any adjournment thereof); provided, that all Shares then owned by MC are voted in favor of the Proposal; or (v) if the Board of Directors of AN shall have (A) withdrawn or modified or changed, in any manner adverse to MC, its approval or recommendation of this Agreement, the Offer or the Merger or (B) shall have failed to recommend against an AN Acquisition Proposal involving a tender offer or failed to reject any other AN Acquisition Proposal within ten business days of receipt by the Board of Directors of AN of such proposal or shall have executed an agreement in principle (or similar agreement) or definitive agreement relating to an AN Acquisition Proposal or similar business combination with a person or entity other than MC (or the Board of Directors of AN resolves to do any of the foregoing) and MC shall not have exercised its right to purchase Shares under the Shareholders' Agreement. SECTION 7.2 Termination Fee. (a) If this Agreement is terminated pursuant to Section 7.1(c)(iv) or (c)(v), then MC will immediately pay to AN a termination fee equal to $10,000,000 in cash. (b) If this Agreement is terminated pursuant to Section 7.1(d)(iv) or (d)(v), then AN will immediately pay to MC a termination fee equal to $10,000,000 in cash. (c) The agreement contained in Section 7.2 is an integral part of the transactions contemplated by this Agreement and constitutes liquidated damages in the event of a termination under the Sections specified herein and not a penalty. SECTION 7.3 Effect of Termination. In the event of the termination of this Agreement as provided in Section 7.1, written notice thereof shall forthwith be given to the other party or parties specifying the provision hereof pursuant to which such termination is made, and this Agreement (except for the provisions of Sections 5.15, 5.16 and 7.2, which shall survive such termination) shall forthwith become null and void and, subject to the provisions of Section 7.2, there shall be no liability on the part of MC or AN except for fraud or for material breach of this Agreement. ARTICLE VIII MISCELLANEOUS SECTION 8.1 Amendment and Modification. Subject to applicable law, this Agreement may be amended, modified and supplemented in any and all respects, whether before or after any vote of the shareholders of AN contemplated hereby, by written agreement of the parties hereto, at any time prior to the Closing Date with respect to any of the terms contained herein; provided, however, that after the approval of this Agreement by the shareholders of AN, no such amendment, modification or supplement shall reduce or change the Conversion Ratio. SECTION 8.2 Nonsurvival of Representations and Warranties. None of the representations and warranties in this Agreement or in any schedule, instrument or other document delivered pursuant to this Agreement shall survive the Effective Time. SECTION 8.3 Notices. All notices and other communications hereunder shall be in writing and shall be deemed given if delivered personally, telecopied (which is confirmed) or sent by an overnight courier service, 37 44 such as Federal Express, to the parties at the following addresses (or at such other address for a party as shall be specified by like notice): (a) If to MC to: Metrocall, Inc. 6910 Richmond Highway Alexandria, Virginia 22306 Attention: Vincent D. Kelly Telecopy No.: (703) 768-9625 with a copy (which shall not constitute notice) to: Wilmer, Cutler & Pickering 2445 M Street, N.W. Washington, D.C. 20037 Attention: George P. Stamas and Thomas W. White Telecopy No.: (202) 663-6363 and (b) if to AN, to: A+ Network, Inc. 40 South Palafox Street Pensacola, Florida 32501 Attention: Chuck Emling Telecopy No.: (904) 432-9208 with a copy (which shall not constitute notice) to: Waller Lansden Dortch & Davis 511 Union Street Suite 2100 Nashville, TN 37219 Attention: Ralph W. Davis Telecopy No: (615) 244-6804 SECTION 8.4 Headings. The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. SECTION 8.5 Interpretation. When a reference is made in this Agreement to a Section, such reference shall be to a Section of this Agreement unless otherwise indicated. Whenever the words "include," "includes" or "including" are used in this Agreement they shall be deemed to be followed by the words "without limitation." As used in this Agreement, the term "affiliate(s)" shall have the meaning set forth in Rule 12b-2 of the Exchange Act. SECTION 8.6 Counterparts. This Agreement may be executed in two or more counterparts, all of which have been considered one and the same agreement and shall become effective when two or more counterparts have been signed by each of the parties and delivered to the other parties, it being understood that all parties need not sign the same counterpart. SECTION 8.7 Entire Agreement; Third Party Beneficiaries. This Agreement, the Shareholders' Agreement, the MC Voting Agreement and the Confidentiality Agreement (including the documents and the instruments referred herein and therein): (a) constitute the entire agreement and supersede all prior agreements and understandings, both written and oral, among the parties with respect to the subject matter hereof, and (b) are not intended to confer upon any person other than the parties hereto any rights or remedies hereunder, except that Article II and Section 5.14 shall confer on the third parties contemplated thereby the benefits thereof. 38 45 SECTION 8.8 Governing Law. This Agreement shall be governed and construed in accordance with the laws of the State of Delaware without giving effect to the principles of conflicts of law thereof. SECTION 8.9 Assignment. Neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by any of the parties hereto (whether by operation of law or otherwise) without the prior written consent of the other parties; provided, that MC may assign its rights hereunder to a direct or indirect wholly-owned subsidiary, so long as MC remains liable for its obligations hereunder. Subject to the preceding sentence, this Agreement will be binding upon, inure to the benefit of and be enforceable by the parties and their respective successors and assigns. SECTION 8.10 Further Assurances. The parties agree to execute such further instruments and documents as shall reasonably be necessary to carry out the transactions contemplated by this Agreement, including, without limitation, to file any notices, or to obtain any consents appropriate to carry out the transactions contemplated by this Agreement. [The remainder of this page is intentionally left blank.] 39 46 IN WITNESS WHEREOF, MC and AN have caused this Agreement to be signed by their respective officers thereunto duly authorized as of the date first written above. METROCALL, INC. By: /s/ VINCENT D. KELLY ------------------------------------ Name: Vincent D. Kelly Title: Vice President and Chief Financial Officer A+ NETWORK, INC. By: /s/ CHARLES A. EMLING III ------------------------------------ Name: Charles A. Emling III Title: President and Chief Executive Officer 40 47 ANNEX A CONDITIONS TO THE OFFER The capitalized terms used in this Annex A have the meaning set forth in the attached Agreement, except that the term "Merger Agreement" shall be deemed to refer to the attached Agreement. Notwithstanding any other provisions of the Offer, and in addition to (and not in limitation of) MC's rights to extend and amend the Offer at any time in its sole discretion (subject to the provisions of the Merger Agreement), MC shall not be required to accept for payment or, subject to any applicable rules and regulations of the SEC, including Rule 14e-1(c) under the Exchange Act (relating to the Offer), pay for, and may delay the acceptance for payment of or, subject to the restriction referred above, the payment for, any tendered Shares, and may amend the Offer consistent with the terms of the Merger Agreement or terminate the Offer if (i) any applicable waiting period under the HSR Act has not expired or terminated prior to the expiration of the Offer, (ii) the Minimum Condition has not been satisfied, or (iii) at any time on or after May 16, 1996 and before the time of acceptance of Shares for payment pursuant to the Offer, any of the following events shall occur: (a) the affirmative vote of the holders of more than a majority of the outstanding Shares is required to consummate the Merger or MC is not entitled to vote its Shares, including any Shares acquired pursuant to the Shareholders' Agreement for the Merger; (b) any change shall have occurred in the business, properties, assets, liabilities, capitalization, stockholder's equity, financial condition, cash flows, operations, licenses, franchises or results of operations of AN or its Subsidiaries which has a Material Adverse Effect on AN and its Subsidiaries taken as a whole, except for matters which affect generally the economy or industry in which AN and its Subsidiaries are engaged; (c) (I) there shall have been instituted or pending any, or there is threatened any, action, proceeding, application or counterclaim by any government or governmental authority or agency, or by AN or an affiliate of AN, which (i) challenges or seeks to challenge the acquisition by MC (or any affiliate of MC) of the Shares, restrain or prohibit the making or consummation of the Offer or the Merger, prohibits the performance by MC of the Offer, the Merger, the Shareholders' Agreement or any agreements contemplated thereby, or seeks to obtain any material damages directly or indirectly relating to the transactions contemplated by the Offer, the Merger, or Shareholders' Agreement, (ii) seeks to make the purchase of, or payment for, some or all of the Shares pursuant to the Offer or the Merger or Shareholders' Agreement illegal or results in a material delay in the ability of MC to accept for payment or pay for some or all of the Shares, (iii) seeks to prohibit or limit the ownership or operation by MC (or any affiliate of MC) of all or any material portion of the business or assets of AN and its Subsidiaries or of MC and its affiliates or to compel MC (or any affiliate of MC) to dispose of or to hold separately all or any material portion of the business or assets of MC or any of its affiliates or of AN or any of its Subsidiaries or seeks to impose any material limitation on the ability of MC, or any other affiliate of MC, to conduct AN's or any of its Subsidiary's business or own such assets, (iv) seeks to impose or confirm material limitations on the ability of MC (or any affiliate of MC) to acquire or hold or to exercise full rights of ownership of the Shares, including but not limited to, the right to vote the Shares purchased by them on all matters properly presented to the stockholders of AN, or (v) seeks to require divestiture by MC of any of its Subsidiaries or affiliates of all or any of the Shares, or (II) there shall have been instituted any action, proceeding, application or counterclaim by any person (other than a Governmental Entity or AN, or an affiliate of AN), before any court or governmental regulatory or administrative agency, authority or tribunal, with respect to the matters set forth in subsections (i)-(v) above, which has resulted in the issuance of a temporary restraining order ("TRO"), preliminary injunction or permanent injunction enjoining the Merger, this Agreement or the transactions contemplated hereby if such TRO, preliminary injunction or permanent injunction has not been removed or rescinded within 20 business days after the original expiration date of the Offer; A-1 48 (d) there shall be any action taken, or any statute, rule, regulation shall be enacted, promulgated, entered, enforced or deemed applicable to, or any order shall be entered or enforced with respect to, the Offer, the Merger or the Shareholders' Agreement by any government, governmental authority or court, domestic, foreign or supranational, other than the routine application to the Offer, the Merger or other subsequent business combination of waiting periods under the HSR Act or approval of license transfers under the Communications Act or by state regulatory agencies that is reasonably likely to, directly or indirectly, result in any of the consequences referred to in clauses (i) through (v) of subsection (c)(I) above; (e) the representations and warranties of AN set forth in the Merger Agreement shall not have been true and correct in all material respects on the date of the Merger Agreement or shall not be true and correct as of the date of consummation of the Offer as though made on or as of such date or AN shall have breached or failed to perform or comply with any obligation, agreement or covenant required by the Merger Agreement to be performed or complied with by it except, in such cases, (i) for changes specifically permitted by the Merger Agreement and (ii) those representations and warranties that address matters only as of a particular date which are true and correct as of such date; (f) the Merger Agreement shall have been terminated in accordance with its terms; (g) (i) it shall have been publicly disclosed that any person, entity or "group" (as defined in Section 13(d)(3) of the Exchange Act), other than MC, shall have acquired beneficial ownership (determined pursuant to Rule 13d-3 promulgated under the Exchange Act) of more than 25% of any class or series of capital stock of AN (including the Shares) through the acquisition of stock, formation of a group or otherwise, other than any person or group existing on the date hereof which beneficially owns more than 25% of any class or series of capital stock of AN, or (ii) AN shall have entered into or announced its intention to enter into a definitive agreement or agreement in principle with any person with respect to an AN Acquisition Proposal or similar business combination. (h) AN's Board of Directors shall have withdrawn, or modified or changed in any manner adverse to MC (including by amendment of the Schedule 14D-9) its recommendation of the Offer, the Merger Agreement, or the Merger, or recommended an AN Acquisition Proposal, or shall have resolved to do any of the foregoing; or (i) any party to the Shareholders' Agreement other than MC shall have breached or failed to perform, in each case in any material respect, any of its agreements under such agreement or any of the representations and warranties of any such party set forth in such agreement shall not be true in any material respect, in each case, when made or at any time prior to the consummation of the Offer as if made at and as of such time, or the Shareholders' Agreement shall have been invalidated or terminated with respect to any Shares subject thereto; which in the reasonable judgment of MC, in any such case, and regardless of the circumstances giving rise to such conditions, makes it inadvisable to proceed with the Offer and/or with such acceptance for payment or payments. The foregoing conditions are for the sole benefit of MC and may be asserted by MC regardless of any circumstances giving rise to any condition and may be waived by MC, in whole or in part at any time and from time to time in the sole discretion of MC. The failure by MC (or any affiliate of MC) at any time to exercise any of the foregoing rights will not be deemed a waiver of any right and each right will be deemed an ongoing right which may be asserted at any time and from time to time. A-2 49 ANNEX B DIRECTORS OF THE SURVIVING CORPORATION The following sets forth the membership, by class, of the Board of Directors of the Surviving Corporation. Class of 1997 S. Brock W. Collins F. Martin Class of 1998 E. Singer R. Aprahamian To be determined Class of 1999 H. Brock R. Johnston R. Russenberger B-1 50 ANNEX C PRINCIPAL TERMS OF INDEXED VARIABLE COMMON RIGHTS ("VCRS") ISSUER..................... Metrocall, Inc. ("MC") PAYMENT AT MATURITY........ Following the maturity of a VCR, the holder of such VCR (the "VCR Holder") shall have the right to receive the amount, if any, by which the Target Price exceeds the greater of the Current Market Value and the Minimum Price (each as defined below). The VCRs shall mature on the Maturity Date unless otherwise extended to the Extended Maturity Date (as defined below). FORM OF PAYMENT............ MC, at its option, may pay any amount due under the terms of the VCRs to the VCR Holders in cash or MC Common Stock valued based on the Current Market Value as defined below or common stock equivalents at fair market value (as determined by an independent nationally recognized investment bank). TARGET PRICE............... "Target Price" means (i) at the Maturity Date, $21.10 reduced but not increased by the "Index Factor", as hereinafter defined, and (ii) at the Extended Maturity Date, $25.10 reduced but not increased by the Index Factor. In each case, such Target Prices shall be adjusted upon the occurrence of any event described in the Section entitled "Antidilution" set forth below. CURRENT MARKET VALUE....... "Current Market Value" means with respect to the Maturity Date and the Extended Maturity Date, the median of the averages of the closing bid prices on the Nasdaq NMS (or such other exchange on which such shares are then listed) of shares of MC's Common Stock, par value $.01 per share (the "Common Stock"), during each 20 consecutive trading day period that both begins and ends in the Valuation Period. "Valuation Period" means the 60 trading day period immediately preceding (and including) the Maturity Date or the Extended Maturity Date, as the case may be. MINIMUM PRICE.............. "Minimum Price" means (i) at the Maturity Date, $16.10, and (ii) at the Extended Maturity Date, $18.10. In each case, subject to adjustment upon the occurrence of any event described in the Section entitled "Antidilution" set forth below. INDEX FACTOR............... An Index Factor shall be calculated based upon the ratio of the relevant ending period stock prices for the Comparable Paging Company Index (the Index Factor numerator) and the initial Comparable Paging Company Index (the Index Factor denominator). The Comparable Paging Company Index shall consist of the stocks of ARCH COMMUNICATIONS GROUP, INC., MOBILMEDIA COMMUNICATIONS, INC., AND PRONET, INC., or each's successors. The initial Comparable Paging Company Index shall be the median of the simple arithmetic average of closing bid prices of the index group for the 20 trading days preceding May 14, 1996. The ending period Comparable Company Paging Index shall be the same median of the simple arithmetic average of closing bid prices of the index group as measured in the identical fashion as MC's closing bid prices during the relevant Valuation Periods preceding the Maturity Date, Extended Maturity Date, or Disposition Date, as the case may be. In each case, such adjustments shall be made, as appropriate, for each C-1 51 company's stock prices that is included in the Comparable Paging Company Index, upon the occurrence of any event similar to that described in the "Antidilution" section below. EARLY TERMINATION.......... If the closing bid prices of the Common Stock exceeds (i) $21.10 for any 50 calendar day period prior to the Maturity Date, or (ii) $25.10 for any 50 calendar day period between the Maturity Date and the Extended Maturity Date, then the VCRs shall immediately expire and be of no further force and effect. MATURITY DATE; EXTENSION THEREOF.................. "Maturity Date" means the first anniversary of the effective time (the "Effective Time") of the merger between MC and A+ Network, Inc. ("AN") (the "Merger"); provided, however, that MC, at its option, may extend the Maturity Date to the second anniversary of the Effective Time (the "Extended Maturity Date"). MC shall exercise either such option to extend by publishing notice of such exercise in the Wall Street Journal (Eastern Edition), or if the Wall Street Journal is not then published, such other newspaper with general circulation in the City of New York, New York no later than one business day preceding the Maturity Date, as the case may be. NO INTEREST................ Other than in the case of interest on the Default Amount (as defined below), no interest shall accrue on any amounts payable to the VCR Holders pursuant to the terms of VCRs. DISPOSITION PAYMENT........ Following the consummation of a Disposition (as defined below), MC shall pay to each VCR Holder for each VCR held by such VCR Holder an amount, if any, by which the Discounted Target Price (as defined below) exceeds the greater of (a) the fair market value (as determined by an independent nationally recognized investment banking firm) of the consideration, if any, received by holders of Common Stock for each share of Common Stock held by such holder as a result of such Disposition and (b) the Minimum Price. DISPOSITION EVENT.......... "Disposition" means (a) a merger, consolidation or other business combination involving MC as a result of which no shares of Common Stock shall remain outstanding, (b) a sale, transfer or other disposition, in one or a series of transactions, of all or substantially all of the assets of MC or (c) a reclassification of Common Stock as any other capital stock of MC or any other person. ACCELERATION UPON EVENT OF DEFAULT.................. If an Event of Default (as defined below) occurs and is continuing, either the bank or trust company acting as the trustee (the "Trustee") or VCR Holders holding at least 25% of the outstanding VCRs, by notice to MC (and to the Trustee if given by VCR Holders), may declare the VCRs to be due and payable, and upon any such declaration, the Default Amount shall become due and payable and, thereafter, shall bear interest at an interest rate of 12% per annum until payment is made to the Trustee. "Default Amount" means the amount, if any, by which the Discounted Target Price exceeds the Minimum Price. DISCOUNTED TARGET PRICE.... "Discounted Target Price" means (a) if a Disposition or an Event of Default shall occur prior to the Maturity Date, $21.10 reduced but not increased by the relevant Index Factor, discounted to the Disposition Payment Date (as defined below) or the Default Payment Date (as C-2 52 defined below), as the case may be, at a per annum rate of 8%; or (b) if a Disposition or an Event of Default shall occur after the Maturity Date but prior to the Extended Maturity Date, $25.10 reduced but not increased by the relevant Index Factor discounted to the date of the Disposition Payment Date or Default Payment Date, as the case may be, at a per annum rate of 8%. In each case, the Discounted Target Price and the Minimum Price shall be adjusted upon the occurrence of any event described in the Section entitled "Antidilution" set forth below. "Disposition Payment Date", with respect to a Disposition, means the date established by MC for payment of the amount due on the VCRs in respect of such Disposition, which in no event shall be more than 38 days after the date on which such Disposition was consummated. "Default Payment Date" means the date on which the VCRs become due and payable upon the declaration thereof following an Event of Default. EVENTS OF DEFAULT.......... "Event of Default", with respect to the VCRs, means any of the following which shall have occurred and be continuing; (a) default in the payment of all or any part of the amounts payable in respect of any of the VCRs as and when the same shall become due and payable following the Maturity Date or the Extended Maturity Date, the Disposition Payment Date or otherwise; (b) material default in the performance, or material breach, of any material covenant or warranty of MC,and continuance of such material default or breach for a period of 98 days after written notice has been given to MC by the Trustee or to MC and the Trustee by VCR Holders holding at least 25% of the outstanding VCRs; or (c) certain events of bankruptcy, insolvency, reorganization or other similar events in respect of MC. ANTIDILUTION............... If MC shall in any manner subdivide (by stock split, stock dividend or otherwise) or combine (by reverse stock split or otherwise) the number of outstanding shares of Common Stock, MC shall correspondingly subdivide or combine the VCRs and shall appropriately adjust the Target Price, the Minimum Price and the Discounted Target Price. TRADING.................... None of MC or any of its affiliates shall trade in shares of Common Stock during the period commencing 18 trading days before the Valuation Period and ending on the last day of the Valuation Period, except with respect to employee benefit plans and other incentive compensation arrangements. VCR AGREEMENT.............. The VCRs will be issued pursuant to a VCR Agreement between MC and the Trustee. MC shall use its reasonable best efforts to cause the VCR Agreement to be qualified under the Trust Indenture Act of 1939, as amended. REGISTRATION............... The VCRs will be issued in registered form. NATURE AND RANKING OF VCRS....................... The VCRs are unsecured obligations of MC and will rank equally with all other unsecured obligations of MC. DIVIDENDS.................. If any dividends are paid on the MC Common Stock prior to the Maturity Date or the Extended Maturity Date, as applicable, the holders of the VCRs shall have no right to receive any such dividends. C-3 53 ANNEX D EMPLOYMENT AND EMPLOYEE BENEFITS COVENANTS The capitalized terms used in this Annex D have the meaning set forth in the attached Agreement, except that the term "Merger Agreement" shall be deemed to refer to the attached Agreement. (a) Charles A. Emling, III ("Emling"), AN's executive officers, managers, salespeople, and staff will continue to participate in the AN Benefit Plans and AN Employee Agreements as in effect on the date of the Merger Agreement until the Effective Time. (b) AN will use its best efforts to cause Ray D. Russenberger and Elliot H. Singer to enter into non-compete agreements with MC that will take effect at the Effective Time. (c) MC will review compensation arrangements and bonus plans in its normal budgeting cycle, with the expectation of transitioning current AN employees to the MC compensation arrangements and bonus plans as of the later of the Effective Time and January 1, 1997. (d) Emling will cooperate with the officers of MC and Tom Matthews in identifying employees whose services will not be required by the Surviving Corporation. Employees who are terminated after the date hereof and before the Effective Time will be provided with severance, less any applicable withholding and social security taxes, equal to the lesser of (i) one (1) month's salary (at the level in effect on the date hereof) for each full year employed by AN to a maximum of six months' pay and (ii) the severance payable under the AN Benefit Plans as of the date hereof. (e) AN shall provide all notices, if any, required by the Worker Adjustment and Retraining Notification Act with respect to actions taken before the Effective Time. (f) Certain existing one-year employment contract will be revised in accordance with the employment contract entered into with Emling as of the date hereof (to take effect at the Effective Time). MC currently contemplates that these arrangements will cover Poole, Schultz, Goldstein, and Smith. (g) AN will review the performance of Goldstein and Schultz at their customary anniversary date (summer 96) for both salary increases and bonuses based on 1996 performance. (h) MC agrees to employ all or substantially all of AN employees who are legally on payroll on the Effective Date and to enroll them in the MC Benefit Plans in accordance with the terms of such plans. The employees so hired will be at-will employees of MC. (i) MC is under no obligation to provide or continue any MC Benefit Plan or arrangement or any other plan or arrangement before or after the Effective Time and may amend or terminate any such plan or arrangement in whole or in part, and may modify any provision thereof, including any provision dealing with eligibility, levels or types of benefits, deductibles, or co-payment obligations, or any other right, feature, or characteristic. (j) AN agrees that it will take appropriate steps to ensure that the AN 401(k) plan meets any ERISA requirements applicable with respect to participating in the Tender Offer and the Merger. In particular, AN will take the appropriate steps to ensure that the trustee(s) of the AN 401(k) Plan meet their obligations with respect to the Shares held in that plan. The parties hereto agree that no employee or former employee of AN (or its predecessors) or beneficiary or dependent thereof, whether hired before or after the date hereof, shall have any third-party beneficiary rights under this Annex D. D-1 54 Manually signed facsimile copies of the Letter of Transmittal will be accepted. The Letter of Transmittal and certificates for Shares and any other required documents should be sent or delivered by each shareholder or his broker, dealer, commercial bank, trust company or other nominee to the Depositary at one of its addresses set forth below: The Depositary for the Offer is: THE BANK OF NEW YORK
BY: MAIL BY FACSIMILE TRANSMISSION: BY HAND OR OVERNIGHT COURIER: Tender & Exchange (212) 815-6213 Tender & Exchange Department Department P.O. Box 11248 Confirm by Telephone: 101 Barclay Street Church Street Station (800) 507-9357 Receive and Deliver Window New York, NY 10286-1248 New York, NY 10286
Any questions and requests for assistance or additional copies of the Offer to Purchase and the Letter of Transmittal may be directed to the Information Agent at its addresses and telephone numbers set forth below. Shareholders may also contact their broker, dealer, commercial bank or trust company for assistance concerning the Offer. The Information Agent for the Offer is: [GEORGESON & COMPANY INC. LOGO] WALL STREET PLAZA NEW YORK, NEW YORK 10005 BANKS AND BROKERS CALL COLLECT (212) 440-9800 CALL TOLL-FREE: (800) 223-2064 The Dealer Manager for the Offer is: WHEAT FIRST BUTCHER SINGER Riverfront Plaza 901 East Byrd Street Richmond, Virginia 23219 CALL TOLL-FREE: (800) 826-2804 EX-99.11.C.2 11 SHAREHOLDER'S OPTION AND SALE AGREEMENT 1 EXHIBIT 11(C)(2) A+ SHAREHOLDERS' OPTION AND SALE AGREEMENT BY AND AMONG METROCALL, INC. AND CERTAIN SHAREHOLDERS OF A+ NETWORK, INC. May 16, 1996 2 A+ SHAREHOLDERS' OPTION AND SALE AGREEMENT 1. Certain Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 ------------------- 2. Representations and Warranties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 ------------------------------ 2.1. Representations and Warranties of the Shareholders . . . . . . . . . . . . . . . . . . . . . . 4 -------------------------------------------------- 2.1.1 Binding Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 ----------------- 2.1.2 No Conflict. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 ----------- 2.1.3 Ownership of Owned Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 ------------------------- 2.1.4 Purchase Not for Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 ----------------------------- 2.1.5 Tax Representation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 ------------------ 2.2 Representations and Warranties of MC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 ------------------------------------ 2.2.1 Binding Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 ----------------- 2.2.2 No Conflict. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 ----------- 2.2.3 Purchase Not for Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 ----------------------------- 2.2.4 MC Securities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 ------------- 3. Transactions for Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 ----------------------- 3.1 Certain Prohibited Transfers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 ---------------------------- 3.2 Scenario I Transactions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 ----------------------- 3.2.1 Cash Purchase of Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 ------------------------ 3.2.2 Scenario I Option. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 ----------------- 3.3 Scenario II Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 ------------------------ 3.3.1 Scenario II Trigger Event . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 ------------------------- 3.3.2 Scenario II Option . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 ------------------ 3.3.3 Scenario II Mandatory Share Purchase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 ------------------------------------ 3.3.4 Savings Clause . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 -------------- 4. Voting Agreement and Proxy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 -------------------------- 5. Legends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 ------- 6. Registration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 ------------ 7. Specific Enforcement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 -------------------- 8. Commissions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 ----------- 9. Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 -------- 10. Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 ---------
3 11. Scope of Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 ------------------ 12. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 ------- 13. Entire Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 ---------------- 14. Successors and Assigns. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 ---------------------- 15. Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 ------------ 16. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 ------------- 17. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 ----------- 18. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 --------------- 19. No Solicitation; Best Efforts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 -----------------------------
ii 4 A+ SHAREHOLDERS' OPTION AND SALE AGREEMENT A+ SHAREHOLDERS' OPTION AND SALE AGREEMENT, dated as of May 16, 1996 (this "Agreement"), by and among Metrocall, Inc., a Delaware corporation ("MC"), and the shareholders identified on Annex I hereto (each, a "Shareholder" and collectively, the "Shareholders") of A+ Network, Inc., a Tennessee corporation ("AN"). WHEREAS, MC and AN have entered into an Agreement and Plan of Merger of even date herewith (the "Merger Agreement"), pursuant to which it is intended that a business combination be accomplished by MC commencing a cash tender offer (the "Offer") for certain issued and outstanding shares of common stock of AN, $.01 par value (the "Shares"), together with the related share purchase rights (the "Rights") issued pursuant to the Rights Agreement dated February 16, 1995 by and between AN and First Union National Bank of North Carolina, as Rights Agent (the "Rights Plan"), to be followed by a merger of AN with and into MC (the "Merger"); WHEREAS, as of the date hereof, each of the Shareholders is beneficial owner of, and, except for the RR Option Shares (as defined below), has the sole right to vote and dispose of, the number of Shares (together with the related rights) which is set forth opposite such Shareholder's name in Annex II (the "Owned Shares"); and WHEREAS, as a condition to its willingness to enter into the Merger Agreement, MC has required that each of the Shareholders agree, and each of the Shareholders is willing to agree, upon the terms and subject to the conditions set forth herein, to grant MC certain rights with respect to certain of the Owned Shares. NOW, THEREFORE, in consideration of the foregoing and the agreements set forth below, the parties hereto agree as follows: 1. Certain Definitions. "Adjusted Owned Shares" shall mean such number of Shares, as selected by MC, that in the aggregate is greater than 40%, but does not exceed 49.9% (or such lesser percentage as may be required by applicable law), of the issued and outstanding Shares on the date of calculation. The RR Option Shares shall be disregarded for purposes of calculating the Adjusted Owned Shares for each Shareholder's pro rata share under Section 3.3.1. "AN Acquisition Proposal" shall mean any proposal relating to (i) a possible acquisition of AN, whether by way of merger, purchase of all or substantially all of the assets of AN, or any similar transaction, or (ii) a tender offer for more than 5% of the Shares (excluding AN Pending Transactions as defined in the Merger Agreement or any other transactions permitted by Section 5.1(a)of the Merger Agreement). 1 5 "AN Securities" shall mean the Owned Shares, together with all options and other rights to purchase Shares granted to MC pursuant to this Agreement. "Average MC Share Price" shall mean the average of the last reported bid price per MC Share on the Nasdaq National Market for the 50 consecutive trading days ending on the trading day that is five trading days prior to the relevant date of Closing, provided that the Average MC Share Price shall not exceed $21.88 or be less than $17.90. "Cash Purchase Shares" shall mean a number of Shares equal to 40% of the number of Owned Shares. "Closing" shall mean the closing of the sale of any AN Securities, which in each case shall occur at the offices of Wilmer, Cutler & Pickering, 2445 M Street, N.W., Washington D.C. 20037, at 11:00 a.m. (Eastern Time) on the date specified herein for such closing. "Conversion Ratio" shall have the meaning set forth in Section 2.2 of the Merger Agreement, provided, that for the purposes of this Agreement, the Conversion Ratio shall be calculated using the Average MC Share Price as defined above. "Effective Time" shall have the meaning set forth in Section 1.5 of the Merger Agreement. "Evidence of Financing" shall mean a letter of credit or other acceptable financing commitment satisfying MC's obligations with respect to the Scenario I Option under Section 2.5 of the Merger Agreement. "Exercise Conditions" shall have the meaning set forth in Section 3.2.2(c). "FCC" shall mean the Federal Communications Commission. "Final Regulatory Order" shall mean a Regulatory Order as to which (i) no petition for rehearing or reconsideration of the action or order is pending before the FCC and the time for filing any such petition has passed; and (ii) the FCC does not have the action or order under reconsideration on its own motion and the time for such reconsideration has passed. "MC Securities" shall mean the MC Shares and VCRs issuable to the Shareholders pursuant to this Agreement or the Merger Agreement. "MC Shares" shall mean duly authorized, validly issued, fully paid and nonassessable shares of common stock of MC, $.01 par value. "Option Period" shall have the meaning set forth in Section 3.2.2(b). "RR Option Shares" shall have the meaning set forth in Section 2.1.3(b). 2 6 "Regulatory Order" shall mean an action taken or order issued by the FCC with respect to the AN Licenses (as defined in the Merger Agreement) as to which (i) no request for stay by the FCC of the action or order is pending, no such stay is in effect, and, if any deadline for filing any such request is designated by statute or regulation, it has passed; and (ii) with respect to an action taken or order issued by the FCC granting consent to the Merger, such consent shall be without material adverse conditions, other than conditions that have been agreed to by AN and MC or that are routine conditions with respect to transfers of this nature. "Scenario I Option" shall have the meaning given such term in Section 3.2.2. "Scenario I Option Shares" shall mean, with respect to each Shareholder, all of the Owned Shares owned by such Shareholder (other than the Cash Purchase Shares previously purchased by MC, or with respect to Mr. Russenberger, the RR Option Shares). "Scenario II Option" shall have the meaning given such term in Section 3.3.2. "Scenario II Option Shares" shall mean, with respect to each Shareholder, all of the Owned Shares owned by such Shareholder (other than the Adjusted Owned Shares previously purchased by MC, or with respect to Mr. Russenberger, the RR Option Shares). "Scenario II Tender Offer" shall have the meaning given such term in Section 3.3.2 hereof. "Scenario II Trigger Event" shall occur if (i) prior to expiration of the Offer, AN receives an AN Acquisition Proposal or an event described in Section 7.1(d)(iv) of the Merger Agreement occurs, (ii) the Offer expires in accordance with its terms (including any extension permitted under Section 1.1 of the Merger Agreement) without any Shares accepted for payment in circumstances in which all conditions to the Offer other than the Minimum Condition or the condition relating to an injunction in paragraph (c)(II) of Annex A to the Merger Agreement, shall have been satisfied, and (iii) as soon as practicable, but in no event later than two business days after the expiration of the Offer, MC gives notice to AN and the Shareholders of its election not to terminate the Merger Agreement pursuant to Section 7.1(d) (iv) or (v) of the Merger Agreement, but in lieu thereof shall have elected to exercise its rights under Section 3.3 hereof. "Scenario II Trigger Shares" shall mean the Adjusted Owned Shares minus the Cash Purchase Shares. "VCR" has the same meaning as set forth in Section 2.1 of the Merger Agreement. 3 7 2. Representations and Warranties. 2.1. Representations and Warranties of the Shareholders. Each of the Shareholders, individually and not jointly, represents and warrants to MC with respect to itself as follows: 2.1.1 Binding Agreement. Such Shareholder has the capacity to execute and deliver this Agreement and to consummate the transactions contemplated hereby. Such Shareholder has duly and validly executed and delivered this Agreement and this Agreement constitutes a legal, valid and binding obligation of such Shareholder, enforceable against such Shareholder in accordance with its terms, except that (i) such enforcement may be subject to applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws, now or hereafter in effect, affecting creditors' rights generally and (ii) the remedy of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought. 2.1.2 No Conflict. Neither the execution and delivery of this Agreement, the consummation of the transactions contemplated hereby, nor the compliance with any of the provisions hereof, (a) require on the part of such Shareholder, any permit, authorization, consent or approval of, or filing (except for filings under the Securities Exchange Act of 1934, as amended (the "1934 Act"), the Securities Act of 1933 (the "Securities Act"), the Communications Act of 1934, as amended (the "Communications Act"), the Hart-Scott-Rodino Antitrust Improvements Act of 1976 ("HSR Act"), or state public utility or public service laws (if any)) with, or notification to, any governmental entity, (b) result in a violation or breach of, or constitute (with or without notice or lapse of time or both) a default (or give rise to any right of termination, cancellation or acceleration) under, any contract, agreement, instrument, commitment, arrangement or understanding with respect to any of the Owned Shares owned by such Shareholder, or result in the creation of a security interest, lien, charge, encumbrance, equity or claim upon such shares, (c) require any material consent, authorization or approval of any person other than a governmental entity, or (d) violate any order, writ, injunctions decree, statute, rule or regulation applicable to such Shareholder or to the Owned Shares owned by such Shareholder, excluding from the foregoing clauses (a)-(d) such violations, breaches or defaults which would not, individually or in the aggregate, prevent such Shareholder from consummating the transactions contemplated hereby. 2.1.3 Ownership of Owned Shares. (a) With respect to all the Owned Shares (other than the RR Option Shares), except as otherwise provided in this Agreement, such Shareholder is the beneficial owner of the number of Shares set forth opposite such Shareholder's name in Annex II hereto, free and clear of any security interests, liens, charges, encumbrances, equities, claims, options (other than pledges pursuant to commercially customary brokers' margin accounts which would not restrict the exercise of any of the options hereunder upon payment of the margin loan) or as otherwise set forth in Annex II or limitations of whatever nature and free of any other limitation or restriction (including any restriction on the right to 4 8 vote, sell or otherwise dispose of the Owned Shares), other than those arising under the Securities Act of 1933 and applicable state securities laws. (b) With respect to 299,375 of the Owned Shares of which Mr. Ray Russenberger is the beneficial owner, (the "RR Option Shares"), Mr. Russenberger has granted options in favor of certain persons and, therefore, the RR Option Shares are not available for sale hereunder. 2.1.4 Purchase Not for Distribution. Any MC Securities will not be acquired with a view to the public distribution thereof and will not be transferred or otherwise disposed of except in a transaction registered or exempt from registration under the Securities Act, and in compliance with applicable state securities laws. 2.1.5 Tax Representation. Each of the Shareholders has no present intention to transfer any MC Securities. 2.2 Representations and Warranties of MC. MC represents and warrants to the Shareholders as follows: 2.2.1 Binding Agreement. MC is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware and has full corporate power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement by MC and the consummation of the transactions contemplated hereby have been duly and validly authorized by the Board of Directors of MC. MC has duly and validly executed this Agreement and this Agreement constitutes a legal, valid and binding obligation of MC, enforceable against MC in accordance with its terms, except that (i) such enforcement may be subject to applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws, now or hereafter in effect, affecting creditors' rights generally and (ii) the remedy of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought. 2.2.2 No Conflict. Neither the execution and delivery of this Agreement, the consummation by MC of the transactions contemplated hereby, nor the compliance by MC with any of the provisions hereof will (a) conflict with or result in a breach of any provision of its Certificate of Incorporation or By-laws, (b) require any permit, authorization, consent or approval of, or filing (except for filings under the 1934 Act, the Securities Act, the HSR Act, the Communications Act, or state public utility or public service laws (if any)) with, or notification to, any governmental entity, (c) result in a violation or breach of, or constitute (with or without notice or lapse of time or both) a default (or give rise to any right of termination, cancellation or acceleration) under any contract, agreement, instrument, commitment, arrangement or understanding, (d) require any material consent, authorization or approval of any person other than a governmental entity, or (e) violate any order, writ, injunction, decree or law applicable to MC, excluding from the foregoing clauses (b)-(e) such 5 9 violations, breaches or defaults which would not, individually or in the aggregate, prevent the MC from consummating the transactions contemplated hereby. 2.2.3 Purchase Not for Distribution. The AN Securities are not being acquired with a view to the public distribution thereof (except as provided in Section 5.16 of the Merger Agreement) and will not be transferred or otherwise disposed of except in a transaction registered or exempt from registration under the Securities Act and in compliance with applicable state securities laws. 2.2.4 MC Securities. The MC Securities have been duly authorized, and, if issued, will be validly issued, and any MC Shares issuable pursuant hereto will be fully paid and nonassessable and not subject to preemptive (or similar) rights; and any VCRs issuable pursuant hereto will represent unsecured obligations of MC ranking pari passu with all other general obligations of MC. 3. Transactions for Shares 3.1 Certain Prohibited Transfers. Each Shareholder agrees not, during the term of this Agreement, to: (a) grant any proxies or enter into a voting agreement or other arrangement with respect to any Owned Shares (other than the RR Option Shares) owned by such Shareholder, other than this Agreement; (b) deposit any Owned Shares owned by such Shareholder into a voting trust; (c) sell, transfer, pledge, encumber, assign or otherwise dispose of, or enter into any contract, option or other arrangement or understanding with respect to the sale, transfer, pledge, encumbrance, assignment or other disposition of, any Owned Shares held by such Shareholder, other than pursuant to this Agreement or, with respect to Mr. Russenberger, pursuant to the exercise of options to purchase the RR Option Shares; provided, that each Shareholder may pledge its Owned Shares pursuant to a bona fide pledge to secure indebtedness of such Shareholder, and may transfer Shares by gift to or for the benefit of immediate family members, provided further, that as a condition to any such pledge or gift the pledgee or donee must acknowledge and agree to be bound by the provisions of this Agreement with respect to such Owned Shares; nor (d) tender any Owned Shares pursuant to the Offer or any other tender offer. 6 10 3.2 Scenario I Transactions. 3.2.1 Cash Purchase of Shares. (a) Subject to and conditioned upon the consummation of the Offer, each Shareholder agrees to sell and MC agrees to purchase from the Shareholders on a pro rata basis the Cash Purchase Shares for a cash purchase price of $21.10 per Share, or such higher price as shall be paid for Shares tendered pursuant to the Offer. (b) The Closing of the sale of the Cash Purchase Shares shall occur no later than the first business day after which payment is made for any Shares MC has accepted for payment under the Offer. At the Closing each Shareholder will deliver to MC a certificate or certificates representing the Cash Purchase Shares owned by such Shareholder, and MC shall make payment of the purchase price therefor to each Shareholder in immediately available funds. 3.2.2 Scenario I Option. (a) Each Shareholder hereby grants to MC the exclusive and irrevocable option to purchase all, but not less than all, the Scenario I Option Shares, upon the terms and subject to conditions set forth herein (the "Scenario I Option"). (b) The Scenario I Option may be exercised by MC in whole, but not in part, following satisfaction of the Exercise Conditions, for a period commencing upon the later to occur of (i) 61 days after MC has delivered the Evidence of Financing and (ii) the receipt by MC of a Regulatory Order from the FCC, and ending on the earlier of six months after the Closing of the purchase by MC of the Cash Purchase Shares or the termination of this Agreement in accordance with its terms (the "Option Period"). (c) For purposes hereof, the Exercise Conditions, each of which is required to be satisfied prior to the exercise of the Scenario I Option, shall be: (i) the occurrence of the Closing of the purchase by MC of the Cash Purchase Shares; (ii) the approval and adoption of the Merger Agreement by the requisite vote of the holders of capital stock of MC in accordance with the provisions of the Delaware General Corporation Law and the Certificate of Incorporation and By-Laws of MC and the requirements of the Nasdaq National Market System; and (iii) the absence of any material breach by MC of its obligations and agreements in the Merger Agreement that is continuing and has not been cured. (d) In the event MC is entitled to and wishes to exercise the Scenario I Option, MC shall send a written notice to the Shareholders specifying a date (not less than five nor more than ten business days from the date such notice is given) for the Closing of the purchase of all, but not less than all, the Scenario I Option Shares. (e) The consideration to be paid to each Shareholder upon exercise by MC of the Scenario I Option shall equal (i) such number of MC Shares equal to the Conversion Ratio as of the date of the Closing of the Scenario I Option, multiplied by the number of 7 11 Scenario I Option Shares owned by such Shareholder, (ii) a number of VCRs to become effective upon the Effective Time, in an amount equal to the number of MC Shares to be received pursuant to clause (i), plus cash, if any, for fractional MC Shares and VCRs calculated pursuant to the formula in Section 2.3(f) of the Merger Agreement. (f) At the Closing of the Scenario I Option, each Shareholder will deliver to MC a certificate or certificates representing the Scenario I Option Shares owned by such Shareholder, duly endorsed for transfer or accompanied by appropriate stock powers, and MC shall issue or deliver to such Shareholder certificates representing the number of MC Shares and VCRs to which such Shareholder is entitled, and payment will be made in immediately available funds representing any cash for fractional MC Shares or VCRs to which such Shareholder is entitled. MC shall pay any transfer tax arising out of the exercise of the Scenario I Option. (g) In the event that the Merger Consideration per Share (as defined in the Merger Agreement) includes a greater number of MC shares or VCRs than has been or would otherwise be paid pursuant to Section 3.2.2(e), with respect to each Scenario I Option Share held by a Shareholder immediately prior to the closing of the Scenario I Option, MC shall pay each Shareholder such additional MC Shares and VCRs, together with cash for fractional Shares and VCRs as are necessary to provide each Shareholder the same Merger Consideration per Share as all shareholders of AN receive in the Merger. 3.3 Scenario II Transactions. 3.3.1 Scenario II Trigger Event (a) In the event of a Scenario II Trigger Event, MC shall have the right, but not the obligation, to purchase from the Shareholders on a pro rata basis all, but not less than all, the Adjusted Owned Shares, as follows: (i) all, but not less than all, of the Cash Purchase Shares, for a purchase price of $21.10 per Share in cash, or, if higher, the highest price per Share as had been offered by MC pursuant to the Offer prior to its termination or expiration; and (ii) the Scenario II Trigger Shares, for consideration to be paid to each Shareholder equal to (A) such number of MC Shares equal to the Conversion Ratio as of the date of the Closing of the purchase of the Scenario II Trigger Shares, multiplied by the number of Scenario II Trigger Shares, (B) a number of VCRs to become effective upon the Effective Time, in an amount equal to the number of MC Shares to be received pursuant to Clause (A), plus cash, if any, for fractional MC Shares and VCRs calculated pursuant to the formula in Section 2.3(f) of the Merger Agreement. 8 12 (iii) in the event that the Merger Consideration per Share (as defined in the Merger Agreement) includes a greater number of MC shares or VCRs than has been or would otherwise be paid pursuant to Section 3.3.1(a)(ii), with respect to each Scenario II Trigger Share held by a Shareholder immediately prior to the Closing of the sale of the Adjusted Owned Shares, MC shall pay each Shareholder such additional MC Shares and VCRs, together with cash for fractional Shares and VCRs as are necessary to provide each Shareholder the same Merger Consideration per Share as all shareholders of AN receive in the Merger. (b) The Closing of the sale of the Adjusted Owned Shares will take place no later than two business days after the occurrence of the Scenario II Trigger Event. Notwithstanding the foregoing, if, prior to the date of such Closing, a court of competent jurisdiction shall have enjoined the consummation of the transactions contemplated by this Agreement, MC shall have the right to extend the date of such Closing for up to 60 days and so long as MC is not in breach of Section 18, to control the proceedings to seek to vacate or remove the injunction so long as MC is diligently pursuing such remedy, provided, MC may not settle any litigation involving such injunction in a manner adverse to any of the Shareholders without the prior consent of all the Shareholders. (c) At the Closing of the sale of the Adjusted Owned Shares, each Shareholder will deliver to MC a certificate or certificates representing the Adjusted Owned Shares, duly endorsed for transfer or accompanied by appropriate stock powers, and MC shall make payment of cash in immediately available funds representing the purchase price for the Cash Purchase Shares owned by such Shareholder and, if applicable, MC shall issue or deliver to such Shareholder certificates representing the number of MC Shares and VCRs to which such Shareholder is entitled pursuant to this Section 3.3.1, and shall make payment in immediately available funds representing any cash for fractional MC Shares or VCRs to which such Shareholder is entitled. 3.3.2 Scenario II Option. Subject to the Closing of the sale of the Adjusted Owned Shares, MC shall use its reasonable best efforts, to the extent permitted by applicable law, including the receipt of a Regulatory Order, to commence a new tender offer pursuant to which MC shall offer to purchase no less than the number of Shares constituting the Minimum Condition for the Offer at a price no less than the highest price offered in the Offer ("Scenario II Tender Offer"). In such event, and subject to and conditioned upon the purchase of Shares pursuant to the Scenario II Tender Offer, each Shareholder hereby grants to MC the exclusive and irrevocable option during the Option Period, to purchase all, but not less than all, of the Scenario II Option Shares (the "Scenario II Option"), which Option shall have the same terms and conditions (other than the number of shares to be purchased) as the Scenario I Option. 3.3.3 Scenario II Mandatory Share Purchase. Subject to the Closing of the sale of the Adjusted Owned Shares, in the event that a Scenario II Tender Offer expires without MC purchasing any shares, MC shall use its reasonable best efforts to acquire as soon as practicable 9 13 the remainder of the Scenario II Option Shares. In such event, each Shareholder hereby grants to MC the exclusive and irrevocable option during the Option Period ("Mandatory Option") to purchase all, but not less than all, of the remainder of the Scenario II Option Shares and MC shall be required to exercise such option as promptly as possible. MC shall not effect the Merger unless prior to the Effective Time, MC shall have exercised the Mandatory Option, which shall have the same terms and conditions (other than the number of shares to be purchased) as the Scenario I Option. 3.3.4 Savings Clause. Notwithstanding the Scenario I Option and the Scenario II Option, each Shareholder shall have the right upon the terms and conditions of the Merger Agreement, to receive the Merger Consideration for any Shares owned by such Shareholder as of the Effective Time. 4. Voting Agreement and Proxy. (a) The Owned Shares will be voted during the term of this Agreement as follows to the extent permitted by applicable law: (i) in favor of the transactions contemplated by the Merger Agreement; and (ii) against (A) any extraordinary corporate transaction, such as a merger, rights offering, reorganization, recapitalization or liquidation involving AN or any of its subsidiaries, or (B) a sale or transfer of a material amount of assets of AN or any of its subsidiaries or the issuance of any securities of AN or any subisidiary. (b) Each Shareholder constitutes and appoints MC or its officers, and each of them, with full power of substitution, to be his true and lawful proxy and attorney-in-fact during the Option Period to vote all Owned Shares (other than Shares purchased by MC) solely with respect to the matters described in, and in accordance with, Section 4(a). This proxy shall be deemed coupled with an interest, and is irrevocable. In lieu of MC exercising its proxy, MC may elect to have each Shareholder vote its respective Owned Shares in accordance with Section 4 (a), provided that such Shares may be voted in person or by proxy. (c) Nothing contained in this Agreement (including without limitation Sections 3 and 4) shall give MC any control or responsibility for AN's facilities, including without limitation control of use of the facilities; daily operations; policy decisions, including preparing and filing applications with the FCC; employment, supervision and dismissal of personnel; payment of financing obligations, including expenses arising out of operations. MC shall not receive any monies and profits derived from the operation of the AN facilities. 5. Legends. (a) Upon issuance to MC of any Shares upon purchase thereof pursuant to this Agreement, such Shares shall be endorsed with a restrictive legend which shall read substantially as follows: 10 14 "THE TRANSFER OF THE STOCK REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO RESTRICTIONS ARISING UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND PURSUANT TO THE TERMS OF AN AGREEMENT AND PLAN OF MERGER DATED AS OF MAY 15, 1996. A COPY OF SUCH AGREEMENT WILL BE PROVIDED TO THE HOLDER HEREOF WITHOUT CHARGE UPON RECEIPT BY THE ISSUER OF A WRITTEN REQUEST THEREFOR." (b) Upon issuance to each Shareholder of any Shares pursuant to this Agreement, all certificates representing the MC Securities acquired by such Shareholder shall be endorsed with a restrictive legend which shall read substantially as follows: "THE TRANSFER OF THE STOCK REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO RESTRICTIONS ARISING UNDER THE SECURITIES ACT OF 1933, AS AMENDED." 6. Registration. (a) Shelf Registration. As promptly as practicable but no later than 90 days after the earlier of the first Closing in which MC Securities are received by the Shareholders, or, if any of the MC Securities received by the Shareholders in the Merger have not been registered, the Effective Time, MC shall file and use its best efforts to cause to be declared effective a "shelf" registration statement (the "Registration Statement") on any appropriate form pursuant to Rule 415 (or similar rule that may be adopted by the Securities and Exchange Commission ("SEC")) under the Securities Act for all such unregistered MC Securities received by the Shareholders (the "Registrable Securities"), which form shall be available for the sale of the Registrable Securities in accordance with the intended method or methods of distribution thereof. Except as set forth below, MC agrees to use its best efforts to keep the Registration Statement continuously effective and usable for resale of Registrable Securities, for a period of 36 months from the first Closing in which MC Securities are received by the Shareholders or such shorter period which will terminate upon the earlier of (i) consummation of the Merger and the registration on a Registration Statement of all the MC Securities issued to the Shareholders pursuant to this Agreement or the Merger (ii) when all the Registrable Securities have been sold pursuant to the Registration Statement or (iii) in the case of an underwritten public offering, when such underwriter has completed the distribution of all the Registrable Securities (the "Effective Period"). MC shall prepare and file with the SEC amendments and post-effective amendments to the Registration Statement and such amendments and supplements to the prospectus used in connection therewith as may be necessary to maintain the effectiveness of such registration during the Effective Period or as may be required by the rules, regulations or instructions applicable to the registration form utilized by MC or by the Securities Act or rules and regulations thereunder for shelf registration or otherwise necessary to keep the Registration Statement effective for the Effective Period and cause the prospectus as so supplemented to be filed pursuant to Rule 424 under the Securities Act, and to otherwise comply with the provisions of the Securities Act during the Effective Period; provided, that before filing 11 15 the Registration Statement or a prospectus contained therein, or any amendments or supplements thereto, MC will furnish to the Shareholders and their counsel for review and comment, copies of all documents proposed to be filed. The selling Shareholders shall have the right to select the intended method of distribution under the Registration Statement. (b) Blue Sky. MC shall use its best efforts to qualify all Registrable Securities under any applicable state securities laws; provided, however, that purchaser shall not be required to qualify as a foreign corporation or execute a general consent to service of process in any jurisdiction. (c) Selection of Underwriters. If any offering pursuant to the Registration Statement is an underwritten offering, MC will select a managing underwriter, which managing underwriter shall be reasonably satisfactory to the selling Shareholders holding a majority in number of the Registrable Securities; provided, however, that the selling Shareholders holding a majority in number of the Registrable Securities shall be entitled to select one co-managing underwriter, which co-managing underwriter shall be reasonably satisfactory to MC. (d) Blackout Period. MC shall be entitled to (i) postpone the filing or effectiveness of the Registration Statement, or (ii) if effective, elect that the Registration Statement not be useable and require the Shareholders to suspend sales pursuant to the prospectus contained therein, for a reasonable period of time, but not in excess of 60 days (a "Blackout Period"), if the MC determines in good faith that the registration and distribution of Registrable Securities (or the use of the Registration Statement or related prospectus) would interfere with any pending material acquisition, material corporate reorganization or any other material corporate development involving the MC or any of its subsidiaries or would require premature disclosure thereof. MC shall promptly give the Shareholders written notice of such determination, containing a general statement of the reasons for such postponement or restriction on use and an approximation of the anticipated delay; provided, however, that the aggregate number of days included in all Blackout Periods during any consecutive 12 months during the Effective Period shall not exceed 120 days. (e) Holdback Agreement. If during the period commencing 90 days after the effectiveness of the Registration Statement (i) MC shall file a registration statement (other than in connection with the registration of securities issuable pursuant to an employee stock option, stock purchase or similar plan or pursuant to a merger, exchange offer or a transaction of the type specified in Rule 145(a) under the Securities Act) with respect to MC Securities and (ii) with reasonable prior notice, MC (in the case of a non-underwritten offering by MC pursuant to such registration statement) advises the Shareholders in writing that a public sale or distribution of Registrable Securities would adversely affect such offering or the managing underwriter (in the case of an underwritten offering by MC pursuant to such registration statement) advises MC and the Shareholders in writing that a public sale or distribution of Registrable Securities would adversely affect such offering, then each Shareholder shall, to the extent not prohibited by applicable law, (x) refrain from effecting any 12 16 public sale or distribution of such Registrable Securities commencing on the effectiveness of such registration statement, (y) be entitled to include such Registrable Securities in such registration statement, subject to customary underwriter cut back, and sell such Registrable Securities pursuant thereto, and (z) sign a customary lock-up agreement with the managing underwriter (in the case of an underwritten offering) or the MC of scope and duration identical to the scope and duration of the lock-up agreement signed by the MC and each director and executive officer of the MC, but in no event to exceed 90 days. Notwithstanding the foregoing, in the event the Registrable Securities held by the selling Shareholders are cut back in the registration statement of MC pursuant to clause (y) and the selling Shareholders may only include in the registration statement pursuant to clause (y) an amount of Registrable Securities less than the greater of (A) 250,000 MC Shares and 250,000 VCRs (as adjusted for stock splits, stock dividends and similar events) and (B) 25% of the number of MC Securities registered pursuant to such registration statement, then the provisions of this clause (e) shall not restrict the sale of Registrable Securities by the selling Shareholders pursuant to the Registration Statement. (f) Expenses. The Registration Statement shall be prepared and filed at MC's expense, including underwriting discounts or commissions, brokers' fees, "blue sky" fees and the fees and disbursements of purchaser's counsel and accountants related thereto, and the fees and disbursements of one counsel for the Shareholders. (g) Shareholders Information. The Shareholders shall provide in writing all information reasonably requested by MC for inclusion in or in connection with the Registration Statement and any such information shall not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. (h) Underwriting Agreement. In connection with any underwritten registration pursuant to this Section 6, (i) MC and the Shareholders shall provide each other and any underwriter of the offering, if any, with customary representations, warranties, covenants, indemnification and contribution in connection with such registration, (ii) MC shall obtain opinions of counsel to the MC and updates thereof (which counsel and opinions (in form, scope and substance) shall be reasonably satisfactory to the managing underwriters, if any, and the Shareholders) addressed to each selling Shareholder and the underwriters, if any, covering the matters customarily covered in opinions requested in comparable offerings, and (iii) MC shall obtain "cold comfort" letters and updates thereof from the MC's independent certified public accountants addressed to the selling Shareholders and the underwriters, if any, such letters to be in customary form and covering matters of the type customarily covered in "cold comfort" letters by independent certified public accountants in connection with comparable offerings. (i) Listing. MC will promptly file an application to authorize for quotation the MC Shares to be acquired hereunder on the Nasdaq National Market or such other securities exchange on which MC shares are then listed and will use its best efforts to obtain approval of such listing as soon as practicable. 13 17 (j) Copies. MC shall furnish to each Shareholder such number of copies of the Registration Statement and of each amendment and post-effective amendment thereto, the prospectus and prospectus supplement, as applicable, in order to facilitate the disposition of the Registrable Securities by such Shareholder in accordance with this Section 6. (k) Notifications. MC shall notify each Shareholder if MC becomes aware that the prospectus included in the Registration Statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements there if not misleading in light of the circumstances then existing, and subject to Section 6 (d), at the request of any such Shareholder, prepare and furnish to such Shareholder a reasonable number of copies of an amendment or Supplement to the Registration Statement or related prospectus as may be necessary so that, as thereafter delivered to the purchasers of such Registrable Securities, such prospectus shall not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing. (l) Due Diligence. Upon reasonable notice, MC shall afford access, during normal business hours, to any Shareholder, any underwriter participating in any disposition pursuant to the Registration Statement, and any attorney, accountant or other agent retained by any such Shareholder or underwriter, to all historical financial and other records and other pertinent information and corporate documents and properties of any of MC and its subsidiaries and affiliates, as shall be reasonably necessary to enable them to exercise their due diligence responsibility with respect to the Registration Statements. (m) Rule 144. MC shall file all reports required to be filed by it pursuant to the 1934 Act, such that the condition set forth in Rule 144(c) under the Securities Act, applying to the sale of MC Shares by the Shareholders pursuant to Rules 144 and/or 145, shall be satisfied. (n) Indemnification; Contribution. (i) Indemnification by MC. MC agrees to indemnify each Shareholder, its officers and directors and each person who controls such Shareholders (within the meaning of the Securities Act), and any agent or investment adviser thereof against all losses, claims, damages, liabilities and expenses (including reasonable attorneys' fees and expenses of investigation) incurred by such party pursuant to any actual or threatened action, suit, proceeding or investigation arising out of or based upon (a) any untrue or alleged untrue statement of material fact contained in the Registration Statement, any prospectus or preliminary prospectus, or any amendment or supplement to any of the foregoing or any document incorporated by reference therein or (b) any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein (in the case of a prospectus or a preliminary prospectus, in light of the circumstances under which they were made) not misleading, except in each case insofar as the same arise out of or are based upon, any such untrue statement or omission made in reliance on and in conformity with information with respect to such indemnified party furnished in writing to MC by such 14 18 indemnified party or its counsel expressly for use therein. Notwithstanding the foregoing provisions of this Section 6(n) (i), MC will not be liable to any Shareholder or any other person, if any, who controls such Shareholder, under the indemnity agreement in this Section 6(n)(i) for any such loss, claim, damage, liability (or action or proceeding in respect thereof) or expense that arises out of such Shareholder's failure to send or give a copy of the final prospectus (at or prior to the written confirmation of the sale of the Registrable Securities to such person) to the person asserting an untrue statement or alleged untrue statement or omission or alleged omission contained in any preliminary prospectus if such statement or omission was corrected in such final prospectus and MC has previously furnished copies thereof in accordance with this Agreement. (ii) Indemnification by Shareholders. In connection with the Registration Statement, each Shareholder will furnish to MC in writing such information, including with respect to the name, address and the amount of Registrable Securities held by such Shareholder, as MC reasonably requests for use in such Registration Statement or the related prospectus and agrees to indemnify and hold harmless severally and not jointly (in the same manner and to the same extent as set forth in Section 6(n)(i)) MC and its affiliates, directors, officers and controlling persons against any losses, claims, damages, liabilities and expenses resulting from any untrue or alleged untrue statement of a material fact or any omission of a material fact or any omission or alleged omission of a material fact required to be stated in the Registration Statement or prospectus or any amendment or supplement to either of them or necessary to make the statements therein (in the case of a prospectus, in the light of the circumstances under which they were made) not misleading, but only to the extent that any such untrue statement or omission is made in reliance on and in conformity with information with respect to such Shareholder furnished in writing to purchaser by such Shareholder or its counsel specifically for inclusion therein. (iii) Conduct of Indemnification Proceedings. Any person entitled to indemnification hereunder agrees to give prompt written notice to the indemnifying party after the receipt by such indemnified party of any written notice of the commencement of any action, suit, proceeding or investigation or threat thereof made in writing for which such indemnified party may claim indemnification or contribution pursuant to this Agreement (provided that failure to give such notification shall not affect the obligations of the indemnifying person pursuant to this Section 6(n) except to the extent the indemnifying party shall have been actually prejudiced as a result of such failure). In case any such action shall be brought against any indemnified party and such indemnified party shall notify the indemnifying party of the commencement thereof, the indemnifying party shall be entitled to participate therein and, to the extent that it shall wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel reasonably satisfactory to such indemnified party, and after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party shall not be liable to such indemnified party under these indemnification provisions for any legal expenses of other counsel or any other expenses, in each case subsequently incurred by such indemnified party. Notwithstanding the foregoing, the indemnified party shall have the right to employ its own counsel in any such case, but the fees 15 19 and expenses of such counsel shall be at the expense of such indemnified party unless (a) the employment of such counsel shall have been authorized in writing by the indemnifying party in connection with the defense of such action, (b) the indemnifying party shall not have employed counsel to take charge of the defense of such action within a reasonable time after notice of commencement of the action, or (c) the defendants in such action include both an indemnified party and an indemnifying party and such indemnified party shall have reasonably concluded that representation by the same counsel would present a conflict of interest due to the availability to it of defenses which are different from or additional to those available to the indemnifying party (in which case the indemnifying party shall not have the right to direct the defense of such action on behalf of the indemnified party or parties), in any of which events all indemnified parties shall have the right to employ not more than one counsel to represent all indemnified parties and the fees and expenses of no more than one such separate counsel shall be borne by the indemnifying party. The indemnifying party will not be subject to any liability for any settlement made without its consent (which will not be unreasonably withheld). (iv) Contribution. If the indemnification from the indemnifying party provided for in this Section 6(n) is unavailable to an indemnified party hereunder in respect of any losses, claims, damages, liabilities or expenses referred to therein, then the indemnifying party, in lieu of indemnifying such indemnified party, shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages, liabilities and expenses in such proportion as is appropriate to reflect the relative fault of the indemnifying party and indemnified party in connection with the actions which resulted in such losses, claims, damages, liabilities and expenses, as well as any other relevant equitable considerations. The relative fault of such indemnifying party and indemnified party shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact, has been made by, or relates to information supplied by, such indemnifying party or indemnified party, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such action. The amount paid or payable by a party as a result of the losses, claims, damages, liabilities and expenses referred to above shall be deemed to include, subject to the limitations set forth in Section 6(n)(iii), any legal and other fees and expenses reasonably incurred by such indemnified party in connection with any investigation or proceeding. The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 6(n) were determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to in the immediately preceding paragraph. Notwithstanding the provisions of this Section 6(n), no Shareholder shall be required to contribute any amount in excess of the amount by which the total price at which the Registrable Securities of such Shareholder were offered to the public exceeds the amount of any damages which such Shareholder has otherwise been required to pay by reason of such untrue statement or omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. 16 20 If indemnification is available under this Section 6(n), the indemnifying parties shall indemnify each indemnified party to the full extent provided in Section 6(n)(i) or (ii), as the case may be, without regard to the relative fault of said indemnifying parties or indemnified party or any other equitable consideration provided for in this Section 6(n)(iv). 7. Specific Enforcement. The parties hereto acknowledge that damages would be an inadequate remedy for a breach of this Agreement and that the obligations of the parties hereto shall be specifically enforceable, in addition to any other remedy which may be available at law or in equity. 8. Commissions. Each Shareholder and MC in connection with the transactions contemplated hereby, severally agree to indemnify and hold the other harmless from and against any and all claims, liabilities or obligations with respect to any brokerage fees, commissions or finders' fees asserted by any person on the basis of any act or statement alleged to have been made by such party or its affiliate. MC acknowledges that Shareholders shall have no liability for any fees of the AN Financial Adviser as described in the Merger Agreement. 9. Expenses. Except as otherwise provided herein, all costs and expenses incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the party incurring such expenses, provided that AN shall pay all expenses of the Shareholders in connection with the preparation, negotiation and execution of this Agreement. 10. Amendment. This Agreement may not be modified, amended, altered or supplemented except upon the execution and delivery of a written agreement executed by the parties hereto. 11. Scope of Agreement. Nothing in this Agreement shall, is intended to, or shall be construed to, limit or in any way restrict the ability of any Shareholder to act in such Shareholder's capacity as an officer or director of AN or to exercise or carry out such Shareholder's fiduciary duties as an officer or director of AN, so long as such Shareholder fulfills his obligations under this Agreement. 12. Notices. All notices and other communications hereunder shall be in writing and shall be deemed given upon (a) transmitter's confirmation of a receipt of a facsimile transmission, (b) confirmed delivery by a standard overnight carrier or when delivered by hand or (c) the expiration of five business days after the day when mailed by certified or registered mail, postage prepaid, addressed at the following addresses (or at such other address for a party as shall be specified by like notice). 17 21 If to MC, to: Metrocall, Inc. 6910 Richmond Highway Alexandria, Virginia 22306 Attention: Vincent D. Kelly Telecopy: (703) 768-9625 with a copy to: Wilmer, Cutler & Pickering 2445 M Street, N.W. Washington, D.C. 20037 Attention: George P. Stamas and Thomas W. White Telecopy: (202) 663-6363 If to any Shareholder, to the address listed under such Shareholder's name on Annex II hereto with copies to: Waller Lansden Dortch & Davis 511 Union Street Suite 2100 Nashville, TN 37219 Attention: Ralph W. Davis Telecopy: (615) 244-6804 And Hutchins, Wheeler & Dittmar 101 Federal Street Boston, MA 02110 Attention: James Westra Telecopy: (617) 951-1295 13. Entire Agreement. This Agreement (including the documents and instruments referred to herein) constitutes the entire agreement and supersedes all other prior agreements and understandings, both written and oral, among the parties, or any of them, with respect to the subject matter hereof. 14. Successors and Assigns. This Agreement shall not be assigned by operation of law or otherwise without the prior written consent of the other parties hereto, except that the rights of the parties under Section 6 hereof may be assigned to any transferee of 50,000 or more Registrable Securities, provided such transferee assumes the transferor's obligations thereunder. This Agreement will be binding upon, inure to the benefit of and be enforceable by 18 22 each party and such party's respective heirs, beneficiaries, executors, representatives and permitted assigns. 15. Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument. 16. Governing Law. This Agreement shall be governed in all respects, including validity, interpretation and effect, by the laws of the State of Delaware (without giving effect to the provisions thereof relating to conflicts of law). 17. Termination. This Agreement shall terminate on the earliest of (i) the expiration of the Option Period, (ii) the purchase by MC of all Owned Shares (other than the RR Option Shares) pursuant to this Agreement, (iii) the agreement of the parties hereto to terminate this Agreement (iv) consummation of the Merger, (v) two business days after termination or expiration of the Offer without the purchase of any Shares pursuant thereto unless a Scenario II Trigger Event shall have occured and MC shall have purchased Shares in accordance with this Agreement, and (vi) termination of the Merger Agreement pursuant to its terms, provided that in any event this Agreement shall terminate on March 16, 1997, and provided further that the provisions of Sections 8, 9 and 18 hereof shall survive indefinitely and the provisions of Section 6 shall survive for the period provided therein. 18. Indemnification. Except as otherwise provided in Section 6(n), MC shall indemnify, defend and hold harmless each Shareholder and each officer, director, employee, affiliate or agent of each Shareholder from and against all losses, claims, damages, liabilities, costs and expenses (including attorney's fees and expenses) judgments, fines, losses, and amounts paid in settlement in connection with any actual or threatened action, suit, claim, proceeding or investigation (each a "Claim") to the extent that any such Claim is based on, or arises out of, this Agreement or any of the transactions contemplated hereby except to the extent such Claim arises from the gross negligence or willful misconduct of such Shareholder. Such indemnification shall be provided in the manner set forth in Section 6(n)(iii) hereof. 19. No Solicitation. Each Shareholder in its capacity as shareholder of AN acknowledges and agrees for himself or itself to comply with the provisions of Section 5.9 of the Merger Agreement regarding AN Acquisition Proposals. 19 23 IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by the Shareholders and a duly authorized officer of MC on the day and year first written above. METROCALL, INC. By:/s/ VINCENT D. KELLY ------------------------- Name: Vincent D. Kelly Title: Vice President and Chief Financial Officer 24 ANNEX I Signatures /s/ RAY D. RUSSENBERGER - ---------------------------------- Ray D. Russenberger /s/ ELLIOTT H. SINGER - ---------------------------------- Elliott H. Singer /s/ IRBY C. SIMPKINS, JR. - ---------------------------------- Irby C. Simpkins, Jr. /s/ BROWNLEE O. CURRY - ---------------------------------- Brownlee O. Curry /s/ CHARLES A. EMLING, III - ---------------------------------- Charles A. Emling, III /s/ SUMMIT INVESTORS II, L.P. - ---------------------------------- Summit Investors II, L.P. /s/ SUMMIT VENTURES III, L.P. - ---------------------------------- Summit Ventures III, L.P. 25 ANNEX II The Shareholders Number of Cash Purchase Shares ------------------------------ Name and Address: Number of Owned Shares (40%) ----------------- ---------------------- ----- Ray Russenberger 3,010,833(1)/ 1,204,333 c/o A+ Network, Inc. 40 South Palafox Street Pensacola, FL 3250l Fax: (904) 432-0308 Elliott H. Singer 1,229,170 491,668 c/o A+ Network, Inc. 2416 Hillsboro Rd. Nashville, TN 37212 Fax: (615) 385-4265 Irby C. Simpkins 131,704 52,682 c/o Nashville Banner 1100 Broadway Nashville, TN 37203 Fax: (615) 259-8871 Brownlee O. Curry 131,704 52,682 c/o Nashville Banner 1100 Broadway Nashville, TN 37203 Fax: (615) 259-8871
----------------------- (1)/ Includes 299,375 shares subject to options granted by Mr. Russenberger. Mr. Russenberger retains voting power with respect to these shares. 26 Chuck Emling 369,512(2)/ 147,805 c/o A+ Network, Inc. 40 South Palafox Street Pensacola, FL 32501 Fax: (904) 432-0308 Summit Investors II, L.P. 8,223 3,288 c/o Bruce Evans 600 Atlantic Avenue Suite 2800 Boston, MA 02210-2227 Fax: (617) 824-1100 Summit Ventures III, L.P. 644,397 257,759 c/o Bruce Evans 600 Atlantic Avenue Suite 2800 Boston, MA 02210-2227 Fax: (617) 824-1100
- --------------- (2)/ Certain shares held by these individuals are subject to an escrow agreement. EX-99.11.C.3 12 METROCALL STOCKHOLDERS' VOTING AGREEMENT 1 EXHIBIT 11(C)(3) METROCALL STOCKHOLDERS VOTING AGREEMENT METROCALL STOCKHOLDERS VOTING AGREEMENT, dated as of May 16, 1996 (this "Agreement"), by and among A+ Network Inc., a Tennessee corporation ("AN"), and the stockholders identified on Annex A hereto (each, an "MC Stockholder" and collectively, the "MC Stockholders") of Metrocall, Inc., a Delaware corporation ("MC"). WHEREAS, MC and AN have entered into an Agreement and Plan of Merger of even date herewith (the "Merger Agreement"), pursuant to which the parties thereto have agreed, upon the terms and subject to the conditions set forth therein, to merge AN with and into MC (the "Merger"); WHEREAS, as of the date hereof, each of the MC Stockholders is the beneficial owner of, and has the sole right to vote and dispose of, the number of shares (the "MC Owned Shares") of the common stock, par value $.01 per share, of MC (the "MC Shares") which is set forth opposite such MC Stockholder's name in Annex A; and WHEREAS, as a condition to its willingness to enter into the Merger Agreement, AN has required that each of the MC 2 Stockholders agree to vote their MC Owned Shares as described herein. NOW, THEREFORE, in consideration of the foregoing and the agreements set forth below, the parties hereto agree as follows: 1. Representation and Warranty of the MC Stockholders. Each of the MC Stockholders, individually and not jointly, represents and warrants to AN with respect to itself that such MC Stockholder is the beneficial owner of the number of MC Shares set forth opposite such MC Stockholder's name in Annex A hereto, free and clear of any security interests, liens, charges, encumbrances, equities, claims, options (other than pledges pursuant to commercially customary brokers margin accounts) or limitations of whatever nature and free of any other limitation or restriction (including any restriction on the right to vote, sell or otherwise dispose of the MC Owned Shares), other than those arising under the Securities Act of 1933, as amended, and applicable state securities laws or as disclosed in Section 4.2 of the Merger Agreement. 2. Voter Agreement and Proxy. (a) Each MC Stockholder constitutes and appoints AN or its officers, and each of them, with full power of substitution, to be its true and lawful proxy and attorney-in-fact from the date hereof until 3 conclusion of the meeting of stockholders of MC to be called pursuant to Section 5.2 of the Merger Agreement (including any adjournment thereof) ("Meeting") to vote all MC Shares then beneficially owned by such MC Stockholder in accordance with clause (b). This proxy shall be deemed coupled with an interest, and is irrevocable during the term of this Agreement. (b) The MC Shares beneficially owned by each MC Stockholder will be voted as follows: (i) in favor of the transactions contemplated by the Merger Agreement; and (ii) against any extraordinary corporate transaction, such as a merger, rights offering, reorganization, recapitalization or liquidation involving MC or any of its subsidiaries, or the issuance of any securities of MC or any subsidiary, in each case, to the extent prohibited by the Merger Agreement. (c) In lieu of AN exercising its proxy, AN may elect to have each MC Stockholder vote its respective shares in accordance with clause (b), provided that such shares may be voted in person or by proxy. 3. Specific Enforcement. The parties hereto acknowledge that damages would be an inadequate remedy for a 4 breach of this Agreement and that the obligations of the parties hereto shall be specifically enforceable, in addition to any other remedy which may be available at law or in equity. 4. Termination. This Agreement shall terminate on the earliest of (i) the conclusion of the Meeting (including any adjournment thereof), (ii) the agreement of the parties hereto to terminate this Agreement, (iii) termination or expiration of the Offer (as defined in the Merger Agreement) without the purchase of any shares of AN pursuant thereto except in a case in which the provisions of Section 2.6 of the Merger Agreement are satisfied, and termination of the Merger Agreement pursuant to Section 7.1. 5. Successors and Assigns. This Agreement shall not be assigned by operation of law or otherwise without the prior written consent of the other parties hereto. This Agreement will be binding upon, inure to the benefit of and be enforceable by each party and such party's respective heirs, beneficiaries, executors, representatives and permitted assigns. Nothing in this Agreement shall prohibit any MC Stockholder from transferring any MC Owned Shares, provided that any shares transferred shall remain subject to this Agreement in the hands of any transferee. 5 IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by the MC Stockholders and a duly authorized officer of AN on the day and year first written above. A+ NETWORK INC. By:/s/ CHARLES A. EMLING III -------------------------------------- Name: Charles A. Emling III Title: President and Chief Executive Officer 6 ANNEX A The MC Stockholders
Number of Signature: MC Owned Shares --------------- C.G. Grefenstette and Thomas G. 14,130 Bigley, Trustees U/A/T Dated 8/28/68 for Juliet Lea Hillman C.G. Grefenstette and Thomas G. 14,130 Bigley, Trustees U/A/T Dated 8/28/68 for Audrey Hilliard Hillman C.G. Grefenstette and Thomas G. 14,130 Bigley, Trustees U/A/T Dated 8/28/68 for Henry Lea Hillman, Jr. C.G. Grefenstette and Thomas G. 14,130 Bigley, Trustees U/A/T Dated 8/28/68 for William Talbott Hillman By:/s/ C.G. GREFENSTETTE ---------------------------------- C.G. Grefenstette, Trustee By:/s/ THOMAS G. BIGLEY ---------------------------------- Thomas G. Bigley, Trustee
7 Henry L. Hillman, Elsie Hilliard 42,391 Hillman and C.G. Grefenstette, Trustees of the Henry L. Hillman Trust U/A Dated November 18, 1985 By:/s/ C.G. GREFENSTETTE ------------------------------ C.G. Grefenstette, Trustee Wilmington Securities, Inc. 1,154,185 By:/s/ DARLENE CLARK ----------------------------------- Darlene Clark /s/ WILLIAM L. COLLINS, III - -------------------------------------- 347,515 William L. Collins, III /s/ STEVEN D. JACOBY - ------------------------------------- 61,235 Steven D. Jacoby /s/ HARRY L. BROCK, JR. - ------------------------------------- 2,931,200 Harry L. Brock, Jr.
8 /s/ SUZANNE S. BROCK - ------------------------------------- 200,000 Suzanne S. Brock
9 /s/ VINCENT D. KELLY - ------------------------------------- 95,000 Vincent D. Kelly
EX-99.11.C.4 13 AGREEMENT: METROCALL/RUSSENBERGER/SINGER VOTING... 1 EXHIBIT 11(C)(4) AGREEMENT This Agreement by and among Metrocall, Inc., a Delaware corporation ("Metrocall"), Elliott H. Singer and Ray D. Russenburger is entered into as of May 16, 1996. RECITALS 1. As of the date of this Agreement, Metrocall and A+ Network have entered into an Agreement and Plan of Merger between Metrocall and A+ Network (the "Merger Agreement") pursuant to which A+ Network will be merged with and into Metrocall, with Metrocall as the surviving corporation (the "Merger"). 2. Each of Mr. Singer and Mr. Russenburger are shareholders of A+ Network, and are expected to become shareholders of Metrocall on or prior to the Effective Time of the Merger (as defined in the Merger Agreement). 3. Pursuant to and as a condition to the Merger Agreement, each of the parties to this Agreement agrees to take the actions set forth herein. In consideration of the foregoing and other good and valuable consideration, the undersigned hereby agree as follows. AGREEMENT 1. ELECTION OF MS. BROCK. Mr. Singer and Mr. Russenburger agree that, provided they are directors of Metrocall at the time of the election of directors at the first annual meeting of Metrocall occurring after the date of this Agreement, they shall vote all shares of common stock of Metrocall they own at the time of such election in favor of Suzanne S. Brock as a director. In Witness Whereof, the undersigned have executed this Agreement as of the date set forth in the first paragraph of this Agreement. Metrocall, Inc. By:/s/ WILLIAM L. COLLINS, III ------------------------------------------- William L. Collins, III President and Chief Executive Officer /s/ ELLIOTT H. SINGER ---------------------------------------------- Elliott H. Singer /s/ RAY D. RUSSENBERGER ---------------------------------------------- Ray D. Russenburger EX-99.11.C.5 14 NON-DISCLOSURE/NO CONFLICT: METROCALL/RUSSENBERGER 1 EXHIBIT 11(C)(5) NONDISCLOSURE / NO CONFLICT AGREEMENT This AGREEMENT is made and entered into as of May 16, 1996, by and between METROCALL, INC., a Delaware corporation (the "Company"), and RAY D. RUSSENBERGER ("Russenberger"). STATEMENT OF PURPOSE Russenberger has been employed as Vice Chairman of A+ Network, Inc. ("A+ Network") since October 24, 1995, and previously served as Chairman of the Board of Directors and Chief Executive Officer of Florida-Network USA, Inc. from December 1988 until October 1995. His most recent service has been pursuant to an employment agreement dated as of March 21, 1996 and effective as of November 1, 1995 between Russenberger and A+ Network (the "Employment Agreement"). Russenberger will terminate the Employment Agreement and his employment with A+ Network as of the Effective Time ("Effective Time") of the Agreement and Plan of Merger of even date herewith ("Merger Agreement") by and between A+ Network and the Company. Russenberger will agree not to compete with the Company (which will be the successor, through merger, of A+ Network) for the term described herein. AGREEMENT NOW THEREFORE, in consideration of the mutual covenants and agreements contained herein and other good and valuable consideration, the Company and Russenberger hereby agree as follows: 1. ACKNOWLEDGMENTS. Russenberger acknowledges that A+ Network's and the Company's business and services are highly specialized, that the identity and particular needs of their customers and suppliers are not generally known, and that the documents and information regarding their customers, suppliers, services, methods of operation, sales, pricing, and costs are highly confidential and constitute trade secrets. Russenberger further acknowledges that the services he has rendered to A+ Network have been of a special and unusual character that have a unique value to A+ Network and the Company, and that Russenberger has had access to trade secrets and confidential information belonging to A+ Network and the Company, the loss of which cannot adequately be compensated by damages in an action at law. 2 2. DATE AND NATURE OF TERMINATION. Russenberger's employment with A+ Network and its subsidiaries is hereby terminated as of Effective Time (the "Termination Date"), and Russenberger hereby tenders his resignation from any positions he now has with A+ Network, including as an officer, director, or member of any advisory boards or committees, all such resignations to be effective as of the Termination Date. Russenberger acknowledges and agrees that his termination shall be treated as a "voluntary resignation" as described in paragraph 4(b) of the Employment Agreement and with the effect set forth in the Employment Agreement as of March 21, 1996. This Agreement is contingent on and subject to the Closing under the Merger Agreement, and neither party shall be bound by it unless and until the Closing occurs. 3. ACCRUED BONUSES. Russenberger acknowledges that he is not entitled to any accrued but unpaid bonuses as of the date hereof. 4. PAYMENT. Subject to Russenberger's full compliance with the terms of this Agreement including the conditions set forth below, the Company shall pay to Russenberger periodic payments at a rate equal to $325,000 per year from the Termination Date until the third anniversary of the Termination Date, payable no less frequently than monthly. All amounts paid under this paragraph 4 shall be subject to and reduced by applicable federal and state withholding taxes, if any. 5. BENEFIT PLANS AND FRINGE BENEFITS. Between the Termination Date and the third anniversary of the Termination Date, Russenberger shall be entitled to participate in the life, medical, and disability benefits programs of the Company to the extent (i) (I) the Company can arrange such participation at a cost to the Company comparable to that applicable to covering a current employee and (II) the Company can obtain the agreement of its third- party insurers and stop-loss carriers and (ii) such participation is not prohibited by law or such as to call into question the otherwise applicable tax treatment for plans coverning employees. Except as provided in the foregoing sentence, as of the Termination Date, Russenberger shall not have the right to participate in or receive any benefit under any employee benefit plan of A+ Network, the Company, or any of their affiliates, any fringe benefit plan of the Company or A+ Network, or any other plan, policy, or arrangement of the Company or A+ Network providing benefits or perquisites to employees of the Company or A+ Network generally or individually. Russenberger - 2 - 3 acknowledges and agrees that any medical coverage provided hereunder shall be in lieu of and not in addition to any coverage required by Section 4980B of the Internal Revenue Code ("COBRA") (with respect to which the Company will provide Russenberger with a separate notice as required by COBRA). Notwithstanding the foregoing, Russenberger may elect the payment of benefits to which he is entitled under any 401(k) plan of A+ Network as provided under the terms of any such plan. The provision by the Company of benefits (other than the 401(k) payments) described in this paragraph are conditional upon Russenberger's compliance with all conditions to receipt of payments specified in paragraph 4 above. 6. NONCOMPETITION. From the Termination Date until Russenberger ceases to be a member of the Board of Directors of the Company (the "Board"), Russenberger will not: (a) serve as or be a consultant to or employee, officer, agent, director, or owner of more than three percent of another corporation, partnership, or other entity that competes with the paging, voicemail, telemessaging, or cellular operations of the Company; or (b) solicit for employment or endeavor in any way to entice away from employment with the Company or its affiliates any employee of the Company or its affiliates who is an officer or a manager of any department. The Company's obligations under paragraphs 4 and 5 hereof are expressly conditioned upon Russenberger's strict compliance with the provisions of this paragraph 6. 7. DISCLOSURE OF CONFIDENTIAL INFORMATION. Except as may be required by the lawful order of a court or agency of competent jurisdiction, Russenberger agrees to keep secret and confidential indefinitely all non-public information concerning A+ Network, the Company, or their affiliates that was acquired by or disclosed to Russenberger during the course of his employment by A+ Network or any of its affiliates or predecessors or during his dealings with the Company and its affiliates, including information relating to customers (including, without limitation, credit history, repayment history, financial information, and financial statements), costs and operations, financial data and plans, whether past, current or planned and not to disclose the same, either directly or indirectly, - 3 - 4 to any other person, firm, or business entity, or to use it in any way; provided, however, that the provisions of this paragraph 7 shall not apply to information that is in the public domain or that was disclosed to Russenberger by independent third parties who were not bound by an obligation of confidentiality; and provided, further, that the Company recognizes that Russenberger has, during the course of his employment with A+ Network, acquired certain general information regarding the financial condition and borrowing trends of A+ Network's customers and agrees that the provisions of this paragraph 7 shall not apply to the use of such general information provided the use thereof does not violate applicable Federal or state laws or the provisions of paragraph 6 hereof. Russenberger further agrees that he will not make any statement or disclosure that would be prohibited by applicable Federal or state laws and, for twelve months from the Termination Date, he will not make any statement or disclosure or express any opinion or interpretation regarding A+ Network or the Company or their financial condition or operations that is intended or reasonably likely to be detrimental to the Company or any of its subsidiaries or affiliates. Russenberger acknowledges that a violation of this covenant is a material breach of this Agreement. 8. REMEDIES. Russenberger hereby acknowledges that the remedies at law for any breach of the covenants and obligations contained in this Agreement will be inadequate and that, in the event of a breach or a threatened breach of any of the provisions of this Agreement, the Company shall be entitled to preliminary restraining orders, injunctions, or such equitable remedies as may be appropriate, in addition to all other remedies available to the Company. In addition, Russenberger agrees that a breach by him of any of the covenants and agreements contained herein shall be deemed a breach of all such covenants and agreements and shall entitle the Company, among other things, to cease payments under paragraph 4 hereof and take such steps as may be necessary to recover payments previously made to Russenberger under paragraph 4 hereof. Should a court of competent jurisdiction determine that the character, duration, or geographical scope of any provision of this Agreement is unreasonable in light of the circumstances as they then exist, then the Company and Russenberger intend and agree that the court shall construe this Agreement in such a manner as to impose only those - 4 - 5 restrictions on the conduct of Russenberger that are reasonable in light of the circumstances as they then exist and as are necessary to assure the Company of the intended benefit of this Agreement. If, in any judicial proceeding, a court shall refuse to enforce all of the separate covenants deemed included herein because, taken together, they are more extensive than necessary to assure the Company of the intended benefit of this Agreement, then it is expressly understood and agreed by the Company and Employee that those covenants that, if eliminated, would permit the remaining separate covenants to be enforced in such proceeding, shall, for the purpose of such proceeding, be deemed eliminated from the provision hereof. 9. GOVERNING LAW. This Agreement shall be construed in accordance with and governed by the internal laws of Delaware, without giving effect to any conflicts of law provisions. 10. BINDING EFFECT. This Agreement shall bind and inure to the benefit of A+ Network, the Company, its successors and assigns, and Russenberger and his heirs and legal representatives. Russenberger may not assign this Agreement and the rights hereunder. 11. VOLUNTARY AGREEMENT; REASONABLENESS. Russenberger hereby represents that he has carefully read and completely understands the provisions of this Agreement and that he has entered into this Agreement voluntarily. Russenberger has carefully considered the provisions hereof and consulted with counsel of his own choosing, and, having done so, agrees that the restrictions set forth in paragraphs 6 and 7 hereof (including, but not limited to, the time periods of restriction in each such paragraphs and the geographical area of restriction set forth in paragraph 6 hereof) are fair and reasonable and are reasonably required for the protection of the interests of the Company. 12. SEPARATE COVENANTS. This Agreement shall be deemed to consist of a series of separate covenants. 13. LITIGATION ASSISTANCE. Russenberger agrees to cooperate with and provide assistance to the Company and its legal counsel in connection with any litigation (including arbitration or administrative hearings) or investigation affecting A+ Network, its predecessors, the Company, or their affiliates in which -- in the reasonable judgment of the Company's counsel -- Russenberger's assistance or cooperation is needed. Russenberger shall, when - 5 - 6 the Company requests, provide testimony or other assistance and shall travel at the Company's request in order to fulfill this obligation. In connection with such litigation or investigation, the Company shall attempt to accommodate Russenberger's schedule, shall provide him with reasonable notice in advance of the times in which his cooperation or assistance is needed, and shall reimburse Russenberger for any reasonable expenses (other than legal fees) incurred in connection with such matters. 14. ADMISSIONS. Russenberger acknowledges that the Company's payment of the consideration described herein is made in good faith and shall never for any purpose be considered an admission of liability on the part of the Company, by whom liability is expressly denied, and no past or present wrongdoing on the part of the Company shall be implied by such payment. 15. ENTIRE AGREEMENT. This Agreement contains the entire agreement between the Company and Russenberger and supersedes all prior agreements relating to the subject matter hereof (including the Employment Agreement), and may be changed only by a writing signed by the parties hereto. Any and all prior representations, statements, and discussions regarding the subject matter of this Agreement have been merged into and/or replaced by the terms of this Agreement. IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement, or caused this Agreement to be duly executed by their authorized representatives, under seal and with the intent that this Agreement shall constitute a sealed instrument, as of the day and year first above written. METROCALL, INC. Date: 5/16/96 By: /s/ VINCENT D. KELLY ------------ --------------------------- Vincent D. Kelly Chief Financial Officer Date: 5/16/96 By: /s/ RAY D. RUSSENBERGER ------------ --------------------------- Ray D. Russenberger - 6 - EX-99.11.C.6 15 NON-DISCLOSURE/NO-CONFLICT: METROCALL/SINGER 1 EXHIBIT 11(C)(6) NONDISCLOSURE / NO CONFLICT AGREEMENT This AGREEMENT is made and entered into as of May 16, 1996, by and between METROCALL, INC., a Delaware corporation (the "Company"), and ELLIOTT H. SINGER ("Singer"). STATEMENT OF PURPOSE Singer has been Chairman of the Board of Directors for A+ Communications, Inc., now A+ Network, Inc. ("A+ Network") since 1985, and served as its Chief Executive Officer from 1985 to January 15, 1996. His most recent service has been pursuant to an employment agreement dated as of and effective as of November 1, 1995 between Singer and A+ Network (the "Employment Agreement"). Singer will terminate the Employment Agreement and his employment with A+ Network as of the Effective Time ("Effective Time") of the Agreement and Plan of Merger of even date herewith ("Merger Agreement") by and between A+ Network and the Company. Singer will agree not to compete with the Company (which will be the successor, through merger, of A+ Network) for the term described herein. AGREEMENT NOW THEREFORE, in consideration of the mutual covenants and agreements contained herein and other good and valuable consideration, the Company and Singer hereby agree as follows: 1. ACKNOWLEDGMENTS. Singer acknowledges that A+ Network's and the Company's business and services are highly specialized, that the identity and particular needs of their customers and suppliers are not generally known, and that the documents and information regarding their customers, suppliers, services, methods of operation, sales, pricing, and costs are highly confidential and constitute trade secrets. Singer further acknowledges that the services he has rendered to A+ Network have been of a special and unusual character that have a unique value to A+ Network and the Company, and that Singer has had access to trade secrets and confidential information belonging to A+ Network and the Company, the loss of which cannot adequately be compensated by damages in an action at law. 2 2. DATE AND NATURE OF TERMINATION. Singer's employment with A+ Network and its subsidiaries is hereby terminated as of Effective Time (the "Termination Date"), and Singer hereby tenders his resignation from any positions he now has with A+ Network, including as an officer, director, or member of any advisory boards or committees, all such resignations to be effective as of the Termination Date. Singer acknowledges and agrees that his termination shall be treated as a "voluntary resignation" as described in paragraph 4(b) of the Employment Agreement and with the effect set forth in the Employment Agreement as of November 1, 1995. This Agreement is contingent on and subject to the Closing under the Merger Agreement, and neither party shall be bound by it unless and until the Closing occurs. 3. ACCRUED BONUSES. Singer acknowledges that he is not entitled to any accrued but unpaid bonuses as of the date hereof. 4. PAYMENT FOR NONCOMPETITION. Subject to Singer's full compliance with the terms of this Agreement including the conditions set forth below, the Company shall pay to Singer periodic payments at a rate equal to $325,000 per year from the Termination Date until the third anniversary of the Termination Date, payable no less frequently than biweekly. All amounts paid under this paragraph 4 shall be subject to and reduced by applicable federal and state withholding taxes, if any. 5. BENEFIT PLANS AND FRINGE BENEFITS. Between the Termination Date and the third anniversary of the Termination Date, Singer shall be entitled to participate in the life, medical, and disability benefits programs of the Company to the extent (i) (I) the Company can arrange such participation at a cost to the Company comparable to that applicable to covering a current employee and (II) the Company can obtain the agreement of its third- party insurers and stop-loss carriers and (ii) such participation is not prohibited by law or such as to call into question the otherwise applicable tax treatment for plans coverning employees. Except as provided in the foregoing sentence, as of the Termination Date, Singer shall not have the right to participate in or receive any benefit under any employee benefit plan of A+ Network, the Company, or any of their affiliates, any fringe benefit plan of the Company or A+ Network, or any other plan, policy, or arrangement of the Company or A+ Network providing benefits or perquisites to employees of the Company or A+ Network generally or individually. Singer - 2 - 3 acknowledges and agrees that any medical coverage provided hereunder shall be in lieu of and not in addition to any coverage required by Section 4980B of the Internal Revenue Code ("COBRA") (with respect to which the Company will provide Singer with a separate notice as required by COBRA). Notwithstanding the foregoing, Singer may elect the payment of benefits to which he is entitled under any 401(k) plan of A+ Network as provided under the terms of any such plan. The provision by the Company of benefits (other than the 401(k) payments) described in this paragraph are conditional upon Singer's compliance with all conditions to receipt of payments specified in paragraph 4 above. 6. NONCOMPETITION. From the Termination Date until Singer ceases to be a member of the Board of Directors of the Company (the "Board"), Singer will not: (a) serve as or be a consultant to or employee, officer, agent, director, or owner of more than three percent of another corporation, partnership, or other entity that competes with the one-way or two-way paging operations of the Company; or (b) solicit for employment or endeavor in any way to entice away from employment with the Company or its affiliates any employee of the Company or its affiliates who is an officer or a manager of any department. The Company's obligations under paragraphs 4 and 5 hereof are expressly conditioned upon Singer's strict compliance with the provisions of this paragraph 6. 7. DISCLOSURE OF CONFIDENTIAL INFORMATION. Except as may be required by the lawful order of a court or agency of competent jurisdiction, Singer agrees to keep secret and confidential indefinitely all non-public information concerning A+ Network, the Company, or their affiliates that was acquired by or disclosed to Singer during the course of his employment by A+ Network or any of its affiliates or predecessors or during his dealings with the Company and its affiliates, including information relating to customers (including, without limitation, credit history, repayment history, financial information, and financial statements), costs and operations, financial data and plans, whether past, current or planned and not to disclose the same, either directly or indirectly, to any other person, firm, or business entity, or to use it in any way; provided, however, that the provisions of this paragraph 7 shall not apply to information that is in the public domain or that was - 3 - 4 disclosed to Singer by independent third parties who were not bound by an obligation of confidentiality; and provided, further, that the Company recognizes that Singer has, during the course of his employment with A+ Network, acquired certain general information regarding the financial condition and borrowing trends of A+ Network's customers and agrees that the provisions of this paragraph 7 shall not apply to the use of such general information provided the use thereof does not violate applicable Federal or state laws or the provisions of paragraph 6 hereof. Singer further agrees that he will not make any statement or disclosure that would be prohibited by applicable Federal or state laws and, for twelve months from the Termination Date, he will not make any statement or disclosure or express any opinion or interpretation regarding A+ Network or the Company or their financial condition or operations that is intended or reasonably likely to be detrimental to the Company or any of its subsidiaries or affiliates. Singer acknowledges that a violation of this covenant is a material breach of this Agreement. 8. REMEDIES. Singer hereby acknowledges that the remedies at law for any breach of the covenants and obligations contained in this Agreement will be inadequate and that, in the event of a breach or a threatened breach of any of the provisions of this Agreement, the Company shall be entitled to preliminary restraining orders, injunctions, or such equitable remedies as may be appropriate, in addition to all other remedies available to the Company. In addition, Singer agrees that a breach by him of any of the covenants and agreements contained herein shall be deemed a breach of all such covenants and agreements and shall entitle the Company, among other things, to cease payments under paragraph 4 hereof and take such steps as may be necessary to recover payments previously made to Singer under paragraph 4 hereof. Should a court of competent jurisdiction determine that the character, duration, or geographical scope of any provision of this Agreement is unreasonable in light of the circumstances as they then exist, then the Company and Singer intend and agree that the court shall construe this Agreement in such a manner as to impose only those restrictions on the conduct of Singer that are reasonable in light of the circumstances as they then exist and as are necessary to assure the Company of the intended benefit of this Agreement. If, in any judicial proceeding, a court shall refuse to enforce all of the separate covenants - 4 - 5 deemed included herein because, taken together, they are more extensive than necessary to assure the Company of the intended benefit of this Agreement, then it is expressly understood and agreed by the Company and Employee that those covenants that, if eliminated, would permit the remaining separate covenants to be enforced in such proceeding, shall, for the purpose of such proceeding, be deemed eliminated from the provision hereof. 9. GOVERNING LAW. This Agreement shall be construed in accordance with and governed by the internal laws of Delaware, without giving effect to any conflicts of law provisions. 10. BINDING EFFECT. This Agreement shall bind and inure to the benefit of A+ Network, the Company, its successors and assigns, and Singer and his heirs and legal representatives. Singer may not assign this Agreement and the rights hereunder. 11. VOLUNTARY AGREEMENT; REASONABLENESS. Singer hereby represents that he has carefully read and completely understands the provisions of this Agreement and that he has entered into this Agreement voluntarily. Singer has carefully considered the provisions hereof and consulted with counsel of his own choosing, and, having done so, agrees that the restrictions set forth in paragraphs 6 and 7 hereof (including, but not limited to, the time periods of restriction in each such paragraphs and the geographical area of restriction set forth in paragraph 6 hereof) are fair and reasonable and are reasonably required for the protection of the interests of the Company. 12. SEPARATE COVENANTS. This Agreement shall be deemed to consist of a series of separate covenants. 13. LITIGATION ASSISTANCE. Singer agrees to cooperate with and provide assistance to the Company and its legal counsel in connection with any litigation (including arbitration or administrative hearings) or investigation affecting A+ Network, its predecessors, the Company, or their affiliates in which -- in the reasonable judgment of the Company's counsel -- Singer's assistance or cooperation is needed. Singer shall, when the Company requests, provide testimony or other assistance and shall travel at the Company's request in order to fulfill this obligation. In connection with such litigation or investigation, the Company shall attempt to accommodate Singer's schedule, shall provide him with - 5 - 6 reasonable notice in advance of the times in which his cooperation or assistance is needed, and shall reimburse Singer for any reasonable expenses incurred in connection with such matters. 14. ADMISSIONS. Singer acknowledges that the Company's payment of the consideration described herein is made in good faith and shall never for any purpose be considered an admission of liability on the part of the Company, by whom liability is expressly denied, and no past or present wrongdoing on the part of the Company shall be implied by such payment. 15. ENTIRE AGREEMENT. This Agreement contains the entire agreement between the Company and Singer and supersedes all prior agreements relating to the subject matter hereof (including the Employment Agreement), and may be changed only by a writing signed by the parties hereto. Any and all prior representations, statements, and discussions regarding the subject matter of this Agreement have been merged into and/or replaced by the terms of this Agreement. IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement, or caused this Agreement to be duly executed by their authorized representatives, under seal and with the intent that this Agreement shall constitute a sealed instrument, as of the day and year first above written. METROCALL, INC. Date: 5/16/96 By: /s/ VINCENT D. KELLY -------------- ------------------------ Vincent D. Kelly Chief Financial Officer Date: 5/16/96 By: /s/ ELLIOTT H. SINGER -------------- ------------------------ Elliott H. Singer - 6 - EX-99.11.C.7 16 EMPLOYMENT AGREEMENT: METROCALL/EMLING 1 EXHIBIT 11(C)(7) EMPLOYMENT AGREEMENT AGREEMENT ("Agreement") dated as of May 16, 1996 by and between METROCALL, INC., a Delaware corporation (the "Company"), and Charles A. Emling, III ("Emling"). W I T N E S S E T H: WHEREAS, the Company desires to employ Emling, and Emling desires to be employed by the Company, upon the terms and conditions hereinafter set forth; NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained, the parties hereto hereby agree as follows: 1. Employment and Duties. (a) General. The Company hereby employs Emling beginning with the Effective Time and Emling agrees upon the terms and conditions herein set forth to serve as President of the Company in the Southeast Region, and in such capacity Emling agrees to perform such duties as his supervisor or the officers of the Company may from time to time assign to him. In such capacity, Emling shall report to the Chief Executive Officer of the Company. Emling will be responsible for all aspects of the day to day operations in the Southeast Region of the Company and will be part of the Company's executive management team. Emling's principal place of employment will be Pensacola, Florida (or any other office the Company may establish in its discretion for its Southeast Region operations after the third anniversary of the Effective Date); provided, however, that Emling understands and agrees that he will be required to travel from time to time for business reasons. (b) Exclusive Services. For so long as the Company employs Emling, he shall, except as a duly authorized officer of the Company may otherwise agree from time to time in writing, devote substantially all of his business time and attention to the performance of his duties hereunder, shall faithfully serve the Company, shall in all respects conform to and comply with the lawful and good faith 2 directions and instructions given to him by the Company, and shall use his best efforts to promote and serve the interests of the Company. (c) No Other Employment and No Conflicts of Interest. Except for services disclosed on Exhibit A hereto, for so long as the Company employs Emling, he shall not, directly or indirectly, render services to any other person or organization for which he receives compensation (except, at the direction of the Company, as part of a joint venture between the Company and another entity) or otherwise engage in activities that would interfere significantly with his faithful performance of his duties hereunder without the written consent of a duly authorized officer. Emling may perform inconsequential services without direct compensation therefor in connection with the management of personal investments, provided that such activity does not contravene the provisions of Section 6 hereof. Emling confirms that he has fully disclosed to the Company all circumstances in respect of which, to the best of his knowledge, there are, or there might be, a material conflict of interest between the Company (or any affiliate or subsidiary thereof) and Emling or Emling's spouse, children, relatives, or any of such persons' spouses, children, or relatives, and Emling agrees to fully disclose to the Company any such circumstances that may arise during the Term (as hereinafter defined). Except with the express written consent of the Company or pursuant to the terms of lease arrangements disclosed in Schedule 3.15 to the Agreement and Plan of Merger of even date herewith ("Merger Agreement") by and between A+ Network, Inc. and the Company, neither Emling nor the relatives listed in the foregoing sentence shall be entitled to receive or obtain, directly or indirectly, any discount, rebate, commission, or other benefit in respect of any business transacted (whether or not by Emling) by or on behalf of the Company or any affiliated company, and, if he, such relatives, or any company or business entity in which he or they are interested shall, directly or indirectly, obtain any such discount, rebate, commission, or other benefit, he shall immediately pay the Company or its affiliate an amount equal to the amount received or the value of the benefit so obtained. Employment Agreement with Charles A. Emling, III Page 2 3 (d) No Payments to Government Officials. Emling shall neither pay nor permit payment of remuneration to or on behalf of any governmental official other than payments required by applicable law. (e) Travel and Other Business-Related Expenses; Reimbursements. The Company shall reimburse Emling for reasonable travel and other business-related expenses Emling incurs in fulfilling his duties hereunder. All requests for payment of third parties or reimbursements under this Agreement, whether as business expenses or compensation, require itemization and substantiation, and requests for reimbursement must be submitted within 60 days after the expense is incurred. 2. Term of Employment. The Company shall retain Emling and Emling shall serve in the employ of the Company for the period commencing as of the Effective Time ("Effective Time") under the Merger Agreement (such Effective Time being referred to herein as the "Effective Date") and ending at 11:59 p.m. EST on the first anniversary of the Effective Date (the "Initial Term"). Unless notice is given by either party to the other no less than 90 days before each anniversary of the Effective Date, the term shall be extended an additional year (together collectively with the Initial Term, constituting the "Term"). This Agreement is contingent on and subject to the Closing under the Merger Agreement, and neither party shall be bound by it unless and until the Effective Time occurs. 3. Compensation and Other Benefits. Subject to the provisions of this Agreement, the Company shall pay and provide the following compensation and other benefits to Emling during the Term as compensation for services rendered hereunder: (a) Salary. For services rendered, the Company shall pay to Emling an annual salary (the "Salary") from the Effective Date at the rate of $200,000 per annum, payable in accordance with the Company's payroll practices as established from time to time. (b) Employee Benefits. The Company shall provide Emling with medical and life insurance and business travel accident insurance under the terms of the Company's plans, programs, and policies (as these arrangements may be amended from time to time). Employment Agreement with Charles A. Emling, III Page 3 4 (c) Vacation. Emling shall accrue paid vacation at a rate of four weeks each year of employment during the Term but cannot take more than two consecutive weeks of vacation. 4. Termination of Employment. Subject to the provisions of this Section 4, the Company shall have the right to terminate Emling's employment, and Emling shall have the right to resign from his employment with the Company, at any time. (a) Termination for Cause; Resignation Without Good Reason. (i) If, before the expiration of the Term, the Company terminates Emling's employment for Cause, as defined in Section 4(a)(ii) hereof, or if Emling resigns from his employment hereunder, other than for Good Reason, as defined in Section 4(a)(iii) hereof, Emling shall be entitled to payment of the pro rata portion of his Salary under Section 3(a) through and including the date of termination or resignation. Within 45 days after termination for Cause or resignation other than for Good Reason, the Company shall reimburse Emling for any expenses incurred but not theretofore reimbursed. Except to the extent required by applicable law or by Section 3(b), Emling shall have no right under this Agreement or otherwise to receive any other compensation, or to participate in any other plan, arrangement, or benefit, after such termination or resignation of employment with respect to the year of such termination or resignation and later years. (ii) Termination by the Company of Emling's employment for "Cause" shall mean termination because of (A) any act or omission that constitutes a material breach, as determined, in good faith, by the Board of Directors of the Company (the "Board") by Emling of his obligations or agreements under this Agreement or the failure or refusal of Emling to satisfactorily perform any material duties reasonably required hereunder (other than by reason of the incapacity of Emling due to physical or mental illness), (B) the commission by Emling of a felony (other than a felony resulting Employment Agreement with Charles A. Emling, III Page 4 5 from a traffic violation), or the perpetration by Emling of a dishonest act or common law fraud resulting in material harm to the Company or to any affiliate or subsidiary thereof, or (C) Emling's being absent (and not traveling on business) for more than 30 consecutive days for reasons not related to illness, disability, sick leave, or vacation. Before termination for "Cause" pursuant to Section 4(a)(ii)(A) above, the Company shall specify in writing to Emling the nature of the act, omission, refusal, or failure, and give Emling the opportunity to correct such act, omission, refusal, or failure (and thus avoid termination for "Cause") within 30 days after his receipt of such written specification. (iii) Resignation by Emling of his employment for "Good Reason" shall mean his resignation after (A) an act or omission by the Company that is a material breach of this Agreement; (B) Emling specifies to the Company in writing the nature of such act or omission set forth in clause (A); and (C) the Company does not correct such act or omission (other than a failure to make payments to Emling provided for herein) within 30 days after its receipt of such written specification. (iv) The date of termination of employment by the Company under this Section 4(a) shall be the future date set forth in the written notice of termination the Company delivers to Emling, unless no such date is specified in such notice, in which case the date of termination shall be the date Emling receives the written notice of termination. The date of resignation under this Section 4(a) shall be 10 business days after the Company receives the written notice of resignation. (b) Termination Without Cause; Resignation for Good Reason. (i) Subject to the provisions of Section 4(b)(ii), if, before the expiration of the Term, Emling resigns from his employment hereunder for Good Reason or the Company terminates his employment without Cause, the Company shall continue to pay to Emling, at the time such payments would otherwise be due, the Salary (at the rate in effect on the date of such Employment Agreement with Charles A. Emling, III Page 5 6 termination) for one year. Within 45 days after termination without Cause or resignation for Good Reason, the Company shall reimburse him for any expenses incurred but not theretofore reimbursed. (ii) If, following a termination of employment without Cause or a resignation for Good Reason, Emling breaches the provisions of Section 5 hereof, Emling shall not be eligible, as of the date of such breach, for the payments described in this Section 4(b) (other than reimbursements for expenses), and any and all obligations and agreements of the Company with respect to such payments shall thereupon cease. (iii) The date of termination of employment by the Company under this Section 4(b) shall be the future date the Company specifies in a written notice of termination to Emling or, if no such date is specified therein, the date on which the Company gives such notice to Emling. The date of resignation under this Section 4(b) shall be 10 business days after the Company receives written notice of resignation. (c) Termination Due to Death or Disability. In the event of Emling's disability, as defined below, the Company shall be entitled to terminate his employment. Notwithstanding anything contained in this Agreement to the contrary, if Emling's employment should terminate due to death or disability, Emling shall earn no further Salary, and the Company shall pay any Salary Emling earned to the date of death or determination of disability to Emling or Emling's estate, as the case may be, within 30 days of death or such determination. Within 45 days after termination due to death or disability, the Company shall reimburse him or his estate for any expenses incurred but not theretofore reimbursed. As used in this Section, the term "disability" shall mean the inability of Emling to perform his services as President, Southeast Region of the Company as required hereunder due to physical or mental incapacity or illness for more than 60 consecutive days. (d) Emling agrees that in the event of any termination hereunder at the end of the Term, Emling shall have no claims against the Company under any law, rule, or Employment Agreement with Charles A. Emling, III Page 6 7 regulation in respect of an unfair dismissal or severance, other than such termination payment as may be provided for herein. 5. Secrecy and Noncompetition. (a) No Competing Employment. For so long as the Company employs Emling and continuing for 12 months after the termination of such employment or resignation therefrom and assuming the Company remains in compliance with terms hereof (such period being referred to hereinafter as the "Restricted Period"), Emling agrees as follows: (i) Emling shall not, directly or indirectly, promote, be employed by, participate, lend money to, invest in, or engage in any activity or business that is in competition with the one-way and two-way paging and telemessaging business of the Company, or any of its subsidiaries and affiliated companies within any Market Areas (as hereinafter defined). The foregoing prohibition includes, but is not limited to, acting, either singly or jointly or as agent for, or as an employee of or consultant to, any person or persons, firm, entity, or corporation directly or indirectly (as a director, shareholder, investor, partner, lessor, lessee, proprietor, principal agent, independent contractor, representative, consultant, member, or otherwise) in such competition with the business. Ownership by Emling of 3% or less of the outstanding capital stock of any corporation that is actively publicly traded will not be a violation of this covenant. For purposes of the foregoing: (I) Market Areas (as further defined below) are locations in which A+ Network, its predecessors, the Company, or their affiliates had or have an office, sold or sell products, or delivered or deliver services to customers during the "Market Period." (II) The "Market Period" shall begin at the beginning of Emling's employment with A+ Network and its predecessors and shall run through the Restricted Period. Employment Agreement with Charles A. Emling, III Page 7 8 (III) If the location where one or more of the relevant companies has or is engaged in business is within a standard metropolitan statistical area, as designated by the federal government, the term "Market Area" shall be that standard metropolitan statistical area. In all other cases, the term "Market Area" shall mean the county where A+ Network, the Company, or their affiliates have or had an office, sell or sold products, or provide or provided services to customers. (b) No Interference. During the Restricted Period, (i) Emling agrees that he will not, directly or indirectly, whether for his own account or for the account of any other individual, partnership, firm, corporation, or other business organization (other than the Company), intentionally solicit or endeavor to entice away from the Company or its affiliates any person whom the Company or its affiliates employs or otherwise engages to perform services (including, but not limited to, any independent sales representatives or organizations); and (ii) Emling agrees that he will not, directly or indirectly, whether for his own account or for the account of any other individual, partnership, firm, corporation, or other business organization (other than the Company), intentionally solicit or endeavor to entice away from the Company or its affiliates or make any sales contact with any person or entity who is, or was within the Market Period, a customer or client of the Company or its affiliates. (c) Secrecy. Emling recognizes that the services he will perform hereunder are special, unique, and extraordinary in that, by reason of his employment hereunder, he may acquire confidential information and trade secrets concerning the operation of the Company, or its affiliates or subsidiaries, the use or disclosure of which could cause the Company or its affiliates or subsidiaries substantial loss and damages that could not be readily calculated and for which no remedy at law would be adequate. Accordingly, Emling covenants and agrees with the Company that he will not at any time, except in performance of Emling's obligations to the Company hereunder or with the prior written consent of the Employment Agreement with Charles A. Emling, III Page 8 9 Company pursuant to authority granted by a resolution of the Board, directly or indirectly, disclose any secret or confidential information that he may learn or has learned by reason of his employment under this Agreement with the Company, or any of its subsidiaries and affiliates, or use any such information in a manner detrimental to the interests of the Company. The term "confidential information" includes, without limitation, information not previously disclosed to the public or to the trade by the Company's management with respect to the Company's, or any of its affiliates' or subsidiaries', products, facilities, and methods, trade secrets and other intellectual property, software, source code, systems, procedures, manuals, confidential reports, product price lists, customer lists, financial information (including the revenues, costs, or profits associated with any of the Company's products), business plans, prospects, or opportunities but shall exclude any information already in the public domain. Emling understands and agrees that the rights and obligations set forth in this Section 5(c) shall continue for one year beyond Emling's employment hereunder; provided, however, that it shall not be applicable if and to the extent Emling is required to testify in a judicial or regulatory proceeding pursuant to an order of a judge or administrative law judge issued after Emling and his legal counsel urge that the confidential information remain confidential. (d) Exclusive Property. Emling confirms that all confidential information is and shall remain the exclusive property of the Company. All business records, business papers, and business documents kept or made by Emling in the course of Emling's employment by the Company shall be and remain the property of the Company other than personal correspondence that in no way relates to the business of the Company. Upon the termination of his employment with the Company or upon the request of the Company at any time, Emling shall promptly deliver to the Company, and shall not without the consent of the Company retain, copies of any confidential information or other materials (written or otherwise) not available to the public (except for materials made available to the public in a manner known to Emling to be unauthorized by the Company) and records and documents made by Emling or coming into his possession in the course of Emling's employment by the Company. Emling understands and agrees that the rights and obligations set Employment Agreement with Charles A. Emling, III Page 9 10 forth in this Section 5(d) are perpetual and, in any case, shall extend beyond the Restricted Period and Emling's employment hereunder. (e) Injunctive Relief. Without intending to limit the remedies available to the Company, Emling acknowledges that a breach of any of the covenants contained in this Section 5 may result in material irreparable injury to the Company or its affiliates or subsidiaries for which there is no adequate remedy at law, that it will not be possible to measure damages for such injuries precisely and that, in the event of such a breach or threat thereof, the Company shall be entitled to obtain a temporary restraining order and/or a preliminary or permanent injunction restraining Emling from engaging in activities prohibited by this Section 5 or such other relief as may be required to specifically enforce any of the covenants in this Section 5. Such injunction shall be available without the posting of any bond or other security. (f) Extension of Restricted Period. In addition to the remedies the Company may seek and obtain pursuant to Section 5(e), the Restricted Period shall be extended by any and all periods during which Emling shall be found by a court possessing personal jurisdiction over him to have been in violation of the covenants contained in this Section 5. (g) Copyright and Inventions. Emling acknowledges that all records, documents, papers (including copies and summaries thereof) and other copyright protected works made or acquired by Emling in the course of employment hereunder shall, together with all the worldwide copyright and design rights in all such works, be and at all times remain the absolute property of the Company. Emling hereby irrevocably and unconditionally waives all rights that vest in Emling (whether before, on, or after the date hereof) in connection with Emling's authorship of any copyright works in the course of Emling's employment with the Company, wherever in the world enforceable, including without limitation the right to be identified as the author of any such works and the right not to have any such works subjected to derogatory treatment. Emling recognizes that the services to be performed by Emling hereunder are deemed to be "work for hire." Employment Agreement with Charles A. Emling, III Page 10 11 6. Source of Payments. All payments provided under this Agreement, other than payments made pursuant to a plan that provides otherwise, shall be paid in cash from the general funds of the Company, and no special or separate fund shall be established, and no other segregation of assets made, to ensure payment. Emling shall have no right, title, or interest whatever in or to any investments that the Company may make to aid the Company in meeting its obligations hereunder. To the extent that any person acquires a right to receive payments from the Company hereunder, such right shall be no greater than the right of an unsecured creditor of the Company. Employment Agreement with Charles A. Emling, III Page 11 12 7. Nonassignability; Binding Agreement; Arbitration (a) By Emling. Without the prior written consent of the Company pursuant to authority granted by a resolution of the Board, Emling shall not assign or delegate this Agreement and any and all rights, duties, obligations or interests hereunder, nor shall any right of Emling (or Emling's estate or beneficiary, as the case may be) to any payment or benefit hereunder be subject to any manner of alienation or assignment. (b) By the Company. The Company may assign or delegate this Agreement and any and all of its rights, duties, obligations, or interests hereunder to any affiliate of the Company or to any business entity that at any time by merger, consolidation, or otherwise acquires all or substantially all of the assets of the Company or to which the Company transfers all or substantially all of its assets. Upon such assignment, delegation, or transfer, any such business entity shall be deemed to be substituted for all purposes as the Company hereunder. (c) Binding Effect. This Agreement shall be binding upon, and inure to the benefit of, the parties hereto, any successors to or assigns of the Company and Emling's heirs and the personal representatives of Emling's estate. (d) Arbitration. (i) Except for actions brought under Section 5 of this Agreement, any disputes, controversies, or claims arising out of or related to this Agreement ("Disputes") shall be resolved by binding arbitration, which shall be administered by the American Arbitration Association ("AAA"), and shall be conducted in accordance with the Commercial Arbitration Rules of the American Arbitration Association (the "Rules"), as such Rules may be amended from time to time, with the hearing locale to be Atlanta, Georgia, unless some other location and/or arbitrator are chosen by mutual consent of the Company and Emling. Employment Agreement with Charles A. Emling, III Page 12 13 (ii) A single neutral arbitrator shall preside over the arbitration and decide the Dispute (the "Decision"). The AAA shall use its normal procedures pursuant to the Rules for selection of an arbitrator. (iii) The Decision shall be binding, and the prevailing party may enforce such decision in any court of competent jurisdiction. (iv) The parties shall cooperate with each other in causing the arbitration to be held in as efficient and expeditious a manner as practicable and in this connection to furnish such documents and make available such persons as the Arbitrator may request. (v) The parties have selected arbitration in order to expedite the resolution of Disputes and to reduce the costs and burdens associated with litigation. The parties agree that the Arbitrator should take these concerns into account when determining whether to authorize discovery and, if so, the scope of permissible discovery and other hearing and pre-hearing procedures. (vi) Without limiting any other remedies that may be available under applicable law, the Arbitrator shall have no authority to award punitive damages. (vii) The Arbitrator shall render a Decision within ninety (90) days after accepting an appointment to serve as Arbitrator unless the parties otherwise agree or the Arbitrator makes a finding that a party has carried the burden of showing good cause for a longer period. (viii) Notwithstanding anything herein to the contrary, either party may seek a temporary restraining order or a preliminary injunction from any court of competent jurisdiction in order to prevent immediate and irreparable injury, loss, or damage pending the selection of an arbitrator to render a Decision on the ultimate merits of any Dispute. Employment Agreement with Charles A. Emling, III Page 13 14 (ix) All proceedings and decisions of the Arbitrator shall be maintained in confidence, to the extent legally permissible, and shall not be made public by any party or any Arbitrator without the prior written consent of all parties to the arbitration, except as may be required by law. (x) Each party shall bear its own costs and attorneys' fees, and the parties shall equally bear the fees, costs, and expenses of the Arbitrator and the arbitration proceedings; provided, however, that the Arbitrator may exercise discretion to award costs, but not attorneys' fees, to the prevailing party. 8. Severability. If the final determination of the Arbitrator or a court of competent jurisdiction declares, after the expiration of the time within which judicial review (if permitted) of such determination may be perfected, that any term or provision hereof is invalid or unenforceable, (a) the remaining terms and provisions hereof shall be unimpaired and (b) the invalid or unenforceable term or provision shall be deemed replaced by a term or provision that is valid and enforceable and that comes closest to expressing the intention of the invalid or unenforceable term or provision. 9. Amendment; Waiver. This Agreement may not be modified, amended or waived in any manner except by an instrument in writing signed by both parties hereto; provided, however, that any such modification, amendment or waiver on the part of the Company shall have been previously approved by the Board. The waiver by either party of compliance with any provision of this Agreement by the other party shall not operate or be construed as a waiver of any other provision of this Agreement or of any subsequent breach by such party of a provision of this Agreement. 10. Tax and Tax-Related Withholding. Payments to Emling of all compensation contemplated under this Agreement shall be subject to all applicable legal requirements with respect to the withholding of taxes and social security contributions, and such payments will be offset by any obligations of Emling to the Company or its predecessor referenced in the letter attached as Exhibit B hereto. Employment Agreement with Charles A. Emling, III Page 14 15 11. Governing Law. All matters affecting this Agreement, including the validity thereof, are to be governed by, and interpreted and construed in accordance with, the laws of the State of Florida applicable to contracts executed in and to be performed in that State. 12. Notices. Any notice hereunder by either party to the other shall be given in writing by personal delivery or certified mail, return receipt requested. If addressed to Emling, the notice shall be delivered or mailed to Emling to 605 Chesapeake Drive, Gulf Breeze, Florida 32501, or if addressed to the Company, the notice shall be delivered or mailed to Metrocall, Inc., 6910 Richmond Highway, Alexandria, VA 22306, Attn: William L. Collins, III, with a copy to George P. Stamas and John B. Watkins, Wilmer, Cutler & Pickering, 2445 M Street, NW, Washington, DC 20037, or such other address as the Company or Emling may designate by written notice at any time or from time to time to the other party. A notice shall be deemed given, if by personal delivery, on the date of such delivery or, if by certified mail, on the date shown on the applicable return receipt. 13. Supersedes Previous Agreements. Subject to Section 2, this Agreement supersedes any prior oral or written employment agreements between Emling and the Company or A+ Network (including that certain employment agreement between Emling and A+ Network dated as of March 20, 1996), and all prior or contemporaneous negotiations, commitments, agreements, and writings with respect to the subject matter hereof; all such other negotiations, commitments, agreements, and writings will have no further force or effect; and the parties to any such other negotiation, commitment, agreement, or writing will have no further rights or obligations thereunder. 14. Counterparts. Either of the parties hereto may execute this Agreement in counterparts, each of which shall be deemed to be an original, but all such counterparts shall together constitute one and the same instrument. 15. Headings. The headings of sections herein are included solely for convenience of reference and shall not control the meaning or interpretation of any of the provisions of this Agreement. Employment Agreement with Charles A. Emling, III Page 15 16 IN WITNESS WHEREOF, the Company has caused the Agreement to be signed by its officer pursuant to the authority of its Board, and Emling has executed this Agreement, as of the day and year first written above. METROCALL, INC. 5/16/96 By /s/ WILLIAM L. COLLINS, III ---------------- ------------------------------ Date William L. Collins, III President and CEO 5/16/96 /s/ CHARLES A. EMLING, III ---------------- ------------------------------ Date Charles A. Emling, III [___] Company's Copy [___] Emling's Copy Employment Agreement with Charles A. Emling, III Page 16 17 EXHIBIT A Services Rendered by Emling None. Employment Agreement with Charles A. Emling, III Page 17 18 EXHIBIT B That certain letter agreement by and among Metrocall, A+ Network, and Emling dated as of May 15, 1996 relating to withholding on option exercises Employment Agreement with Charles A. Emling, III Page 18 EX-99.11.C.8 17 OPINION OF WHEAT, FIRST SECURITIES 1 EXHIBIT 11(c)(8) [WHEAT FIRST BUTCHER SINGER LETTERHEAD] May 14, 1996 CONFIDENTIAL The Board of Directors Metrocall, Inc. 6677 Richmond Highway Alexandria, Virginia 22306 Members of the Board: It is our understanding that Metrocall, Inc. ("Metrocall") and A+ Network, Inc. ("A+ Network") have entered into an Agreement and Plan of Merger (the "Agreement") which provides for the acquisition pursuant to a tender offer (the "Offer") by Metrocall of up to 2,140,526 shares of common stock, par value $.01 per share, of A+ Network (the "A+ Network Common Stock"), at a price of $21.10 per share, in cash, subject to there being tendered in the Offer, and not withdrawn, 2,140,526 shares of A+ Network Common Stock. Simultaneously with the closing of the Offer, Metrocall will purchase for cash from the principal shareholders of A+ Network the number of shares of A+ Network Common Stock provided for in the A+ Shareholders' Option and Sale Agreement (the "Shareholders Agreement"), to be followed by a merger of A+ Network with and into Metrocall (the "Merger"). In the Merger, each shares of A+ Network Common Stock issued and outstanding at the Effective Time will be converted into the right to receive (a) the number of shares of common stock, par value $.01 per share, of Metrocall (the "Metrocall Common Stock") determined by dividing $21.10 by the average of the last reported closing price per Metrocall share for the 50 consecutive trading days ending on the trading day that is five trading days prior to the transaction closing date (the "Average Share Price"), provided that the Average Share Price shall not exceed $21.88 or be less than $17.90, and rounding the result to the nearest 1/100,000 of a share; plus (b) Indexed Variable Common Rights issued by Metrocall ("VCRs") in an amount equal to the number of shares to be received pursuant to clause (a) which, as more fully described in the Agreement, entitles the holder to consideration in certain circumstances in the form of cash or shares of Metrocall Common Stock, the form of which consideration may be determined by Metrocall (the Metrocall Common Stock and VCRs to be issued in the Merger being collectively referred to as the "Merger Consideration"). The terms set forth in the preceding two sentences are referred to in this letter as the "Financial Terms of the Acquisition." Wheat, First Securities, Inc. ("Wheat"), as part of its investment banking business, is regularly engaged in the valuation of businesses and their securities in connection with mergers and 2 acquisitions, negotiated underwritings, competitve biddings, secondary distributions of listed and unlisted securities, private placements and valuations for estate, corporate and other purposes. In the ordinary course of our business as a broker-dealer, we may, from time to time, have a long or short position in, and buy or sell, debt or equity securities of Metrocall or A+ Network for our own account or for the accounts of our customers. Wheat has acted as financial advisor to the Board of Directors of Metrocall in connection with this transaction and will receive a fee for such services. Wheat will also receive a fee from Metrocall for rendering this opinion. In arriving at the Opinion, we, among other things: (1) reviewed the financial and other information contained in A+ Network's Annual Reports to Shareholders and Annual Reports on Form 10-K for the fiscal years ended December 31, 1995, December 31, 1994, and December 31, 1993, and certain interim reports to Shareholders and Quarterly Reports on Form 10-Q; (2) reviewed the financial and other information contained in Metrocall's Annual Reports to Shareholders and Annual Reports on Form 10-K for the fiscal years ended December 31, 1995, December 31, 1994 and December 31, 1993, and certain interim reports to Shareholders and Quarterly Reports on Form 10-Q; (3) reviewed the audited consolidated balance sheet of Metrocall as of December 31, 1995, and the audited consolidated statement of earnings, stockholders' equity, and cash flows for the fiscal year then ended, together with the notes thereto; (4) conducted discussions with members of senior management of A+ Network and Metrocall concerning their respective business and prospects; (5) took into account certain long-term strategic benefits expected to occur from the Acquisition, both operational and financial, that were described to us by Metrocall and A+ Network senior management; (6) reviewed certain publicly available information with respect to historical market prices and trading activity for A+ Network Common Stock and Metrocall Common Stock and for certain publicly traded companies which we deemed relevant; (7) compared the results of operations of A+ Network and Metrocall with those of certain publicly traded companies which we deemed relevant; (8) compared the proposed Financial Terms of the Acquisition with the financial terms of certain other mergers and acquisitions which we deemed to be relevant; (9) performed a discounted cash flow analysis of A+ Network based upon estimates of projected financial performance prepared by A+ Network and Metrocall; (10) evaluated the pro forma financial impact of consummation of the Agreement on Metrocall; 2 3 (11) reviewed other financial information concerning the business and operations of A+ Network and Metrocall, including certain internal financial analyses and forecasts for A+ Network and Metrocall prepared by the senior management of each entity, as well as certain pro forma financial projections for the combined company prepared by the senior management of Metrocall; (12) reviewed the Agreement (including the Annexes thereto) and the Shareholders Agreement; and (13) reviewed such other financial studies and analyses and performed such other investigations and took into account such other matters as we deemed necessary. In rendering our opinion, we have assumed and relied upon the accuracy and completeness of all information supplied or otherwise made available to us by Metrocall and A+ Network, and we have not assumed any responsibility for independent verification of such information or any independent valuation or appraisal of any of the assets of Metrocall or A+ Network. We have relied upon the management of Metrocall and A+ Network as to the reasonableness and achievability of their financial and operational forecasts and projections, and the assumptions and bases therefor, provided to us, and we have assumed that such forecasts and projections reflect the best currently available estimates and judgements of such management and that such forecasts and projections will be realized in the amounts and in the time periods currently estimated by such management. This opinion does not address the Financial Terms of the Acquisition in the Offer and in the Merger independent of each other. We express no opinion as to what the value of the Merger Consideration actually will be when issued to A+ Network shareholders pursuant to the Merger or the price at which the Metrocall Common Stock or the VCRs will trade subsequent to the Merger. Our opinion is necessarily based upon market, economic and other conditions as they exist and can be evaluated on the date hereof and the information made available to us through the date hereof. Our opinion, in any event, is directed only to the fairness, from a financial point of view, of the Financial Terms of the Acquisition and does not constitute a recommendation to any shareholder as to how such shareholder should vote with respect to the Merger. Our opinion does not address the relative merits of the Merger as compared to any alternative business strategies that might exist for Metrocall, nor does it address the effect of any other business combination in which Metrocall might engage. Our advisory services and the opinion expressed herein are provided solely for the use of Metrocall's Board of Directors in evaluation the Merger and are not on behalf of, and are not intended to confer rights or rememdies upon A+ Network, any stockholder or Metrocall or A+ Network or any person other than Metrocall's Board of Directors. It is understood that this opinion letter is for the information on the Board of Directors of Metrocall and, without our prior written consent, is not to be quoted or referred to, in whole or in part, in connection with the offering or sale of securities, nor shall this letter be used for any other purpose, but may be referred to in, and filed as an exhibit to, the Tender Offer Statement on Schedule 14D-1 and any amendments thereto to be filed by Metrocall with the Securities and Exchange Commission in connection with the Merger and the respective proxy statement of A+ Network and the proxy statement/prospectus of Metrocall relating to the Merger and any Registration Statement of which any such proxy statement or proxy statement/prospectus forms a part. 3 4 On the basis of, and subject to the foregoing, we are of the opinion that as of the date hereof the Financial Terms of the Acquisition are fair, from a financial point of view, to Metrocall and to its shareholders. Very truly yours, WHEAT, FIRST SECURITIES, INC. By: /s/ Wayne L. Hunter -------------------------------- Managing Director 4 -----END PRIVACY-ENHANCED MESSAGE-----