July 7, 2000
Mr. William A. McKell
President and Chief Executive Officer
Horizon Personal Communications, Inc.
68 East Main Street
Chillicothe, Ohio 45601-0480
Mr. Peter M. Holland
Director and Chief Financial Officer
Horizon Personal Communications, Inc.
68 East Main Street
Chillicothe, Ohio 45601-0480
RE: $225 MILLION SENIOR SECURED CREDIT FACILITY FOR HORIZON PERSONAL
COMMUNICATIONS, INC.
Gentlemen:
We understand that Horizon Personal Communications, Inc. (the
"Borrower") intends to finance the direct costs of the construction and
operation of a regional digital wireless telecommunications network on the
Sprint PCS system (collectively, the "Build-out"). We also understand that the
Borrower will enter into a Credit Agreement (the "Bank Credit Facility") for the
purposes of financing the Build-out having substantially the terms set forth on
the summary of terms and conditions attached hereto (the "Term Sheet") with
certain financial institutions (the "Lenders") for an aggregate amount of up to
$225 million which shall be in the form of a term loan and a revolving credit
facility. The Build-out and the transaction described in the foregoing sentence
are hereinafter referred to collectively as the "Transactions."
Based upon and subject to the foregoing and to the terms and conditions
set forth below and in the Term Sheet, First Union National Bank ("First Union")
is pleased to confirm its commitment (the "Commitment") to provide the Bank
Credit Facility to the Borrower. First Union's obligation to provide the Bank
Credit Facility pursuant to this Commitment is subject to (i) the Borrower's
written acceptance of a letter from First Union to the Borrower of even date
herewith (the "Fee Letter") pursuant to which the Borrower agrees to pay to
First Union certain fees in connection with the Bank Credit Facility as more
particularly set forth therein, (ii) the completion of a definitive credit
agreement and related documentation for the Bank Credit Facility in form and
substance satisfactory to First Union, (iii) completion of all documentation
relating to the Build-out (including, without limitation, all contracts and
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other documentation), in form and substance satisfactory to First Union, (iv)
compliance with all applicable laws and regulations (including compliance of
this Commitment and the transactions described herein with all applicable
federal banking laws, rules and regulations), (v) the determination of First
Union and FUSI (as defined below) that, prior to and during the primary
syndication of the Bank Credit Facility, there shall have been no competing
issuance of debt (excluding, for purposes hereof, the issuance of high yield
indebtedness in an aggregate amount of up to $125,000,000 in net proceeds),
securities (excluding, for purposes hereof, the initial public offering of the
common stock of Horizon PCS, Inc. in an aggregate amount of not less than
$100,000,000 in net proceeds) or commercial bank facilities of the Borrower
being offered, placed or arranged, without the prior written consent of First
Union and FUSI (vi) the completion by First Union of its legal, financial and
business due diligence in form and substance satisfactory to First Union and
(vii) the satisfaction of all other conditions described herein, in the Term
Sheet and in such definitive credit documentation. Further, First Union's
Commitment is subject to there not having occurred any material adverse
disruption or other change in the financial, banking or capital markets that has
had or could have a material adverse effect on the syndication of the Bank
Credit Facility. In addition, whether before or after the closing of the Bank
Credit Facility, First Union shall be entitled, after consultation with the
Borrower, to change the pricing (provided, however that it is agreed that the
applicable percentages referred to in the Term Sheet will not be increased by
more than 2.0% above the rate stated therein if First Union shall have reached a
hold level of $100,000,000 or less), structure or terms of the Bank Credit
Facility (including, without limitation, the individual amounts of the
facilities but not the aggregate amount of the Bank Credit Facility) if First
Union determines that such changes are advisable in order to ensure a successful
pre-closing or post-closing syndication or an optimal credit structure of the
Bank Credit Facility, such right to continue until the completion of such
syndication notwithstanding the termination of the Commitment.
It is agreed that First Union will act as the sole administrative agent
(the "Administrative Agent") for any other Lenders under the Bank Credit
Facility. First Union, through its affiliate, First Union Securities, Inc.
("FUSI" or the "Arranger"), will also serve as sole manager of the syndication
effort. In connection with such syndication effort, First Union will manage all
aspects of the syndication, including without limitation making decisions as to
the selection and number of institutions to be approached and when such
institutions will be approached, when commitments will be accepted, which
institutions will participate, the allocations of commitments among syndicate
Lenders and the amount and distribution of fees payable to syndicate Lenders. As
a part of this process, First Union will consult with the Borrower regarding the
selection and number of institutions to be approached.
First Union reserves the right, prior to or after the execution of
definitive documentation with respect to the Bank Credit Facility, and as part
of any syndication thereof or otherwise, to arrange for the assignment of a
portion of this Commitment, in accordance with the Term Sheet, to one or more
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mutually acceptable financial institutions that will become Lenders and be party
to such definitive documentation. In addition, in connection with any such
syndication, the Borrower acknowledges that First Union may allocate a portion
of the fees payable under the Fee Letter to such other Lenders. It is agreed,
however, that no Lender will receive compensation from or on behalf of the
Borrower outside the terms contained herein and in the Fee Letter in order to
obtain its commitment to participate in the Bank Credit Facility.
The Borrower understands that First Union intends to commence the
syndication efforts immediately and intends to complete such syndication prior
to closing. In connection therewith, the Borrower agrees to assist First Union
in promptly completing a mutually satisfactory syndication. The syndication will
be accomplished by a variety of means including direct contact during the
syndication between senior management of the Borrower and First Union and their
respective affiliates and advisors. First Union reserves the right to engage the
services of FUSI and other of its affiliates in furnishing the services to be
performed by First Union as contemplated herein and to allocate (in whole or in
part) to any such affiliates any fees payable to it in such manner as it and its
affiliates may agree in their sole discretion. The Borrower agrees that First
Union may share with any of its affiliates and advisors any information related
to the Transactions or any other matter contemplated hereby, on a confidential
basis.
The Borrower agrees to afford First Union and its affiliates an
opportunity to offer proposals to provide, arrange, underwrite or administer (i)
any interest rate caps, currency swaps or other hedging transactions to be
entered into by the Borrower or any of its affiliates, (ii) any cash management,
funds transfer, trade, corporate trust and securities services to be obtained by
the Borrower or any of its affiliates and (iii) any public or private debt or
equity instruments or securities to be issued by the Borrower or any of its
affiliates.
You hereby represent, warrant and covenant that (i) all information,
other than the Projections (as defined below), which has been or is hereafter
made available to First Union or the Lenders by you or any of your
representatives in connection with the transactions contemplated hereby
("Information") is and will be complete and correct in all material respects and
does not and will not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements contained therein not
misleading and (ii) all financial projections concerning the Borrower and its
subsidiaries that have been or are hereafter made available to First Union or
the Lenders by you or any of your representatives (the "Projections") have been
or will be prepared in good faith based upon reasonable assumptions. You agree
to furnish us with such Information and Projections as we may reasonably request
and to supplement the Information and the Projections from time to time until
the closing date for the Bank Credit Facility so that the representation and
warranty in the preceding sentence is correct on such date. In arranging and
syndicating the Bank Credit Facility First Union will be using and relying on
the Information and the Projections without independent verification thereof.
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The Borrower agrees to reimburse First Union, FUSI and their affiliates
for all of their reasonable fees and out-of-pocket expenses (including
reasonable attorneys' fees and expenses) incurred in connection with the
transactions described herein. The Borrower also agrees to indemnify and hold
harmless First Union, FUSI and their affiliates and their respective directors,
officers, employees and agents (collectively, the "Indemnified Parties") from
and against any and all actions, suits, losses, claims and liabilities to third
parties unaffiliated with the Indemnified Parties of any kind or nature, joint
or several, to which such Indemnified Parties may become subject, related to or
arising out of any of the transactions contemplated herein, including without
limitation the execution of definitive credit documentation, the syndication and
closing of the Bank Credit Facility and the closing of the other Transactions,
and will reimburse the Indemnified Parties for all reasonable out-of-pocket
expenses (including reasonable attorneys' fees and expenses) on demand as they
are incurred in connection with the investigation of, preparation for, or
defense of any pending or threatened claim or any action or proceeding arising
therefrom; provided, that no Indemnified Party shall have any right to
indemnification for any of the foregoing to the extent resulting primarily from
the gross negligence or willful misconduct of any Indemnified Party or from any
material breach hereof. This Commitment is addressed solely to the Borrower, and
neither First Union and FUSI, on the one hand, nor the Borrower, on the other
hand, shall be liable to the other or any other person for any consequential
damages that may be alleged as a result of this Commitment or any of the
transactions referred to herein. In the event that the closing of the Bank
Credit Facility fails to occur for any reason, the provisions of this paragraph
shall survive any termination of this Commitment.
Until such time as the Borrower has accepted this Commitment in writing
as provided below, the Borrower is not authorized to show or circulate this
Commitment or the Term Sheet, or disclose the contents thereof, to any other
person or entity (other than to its directors, officers and legal and financial
counsel; provided that (i) each of such persons shall agree to be bound by the
confidentiality provisions hereof and (ii) the Borrower shall be liable for any
breach of such confidentiality provisions by any such person), except as may be
required by law or applicable judicial process.
This Commitment shall terminate at 5:00 p.m. on July 7, 2000, unless
such Commitment is accepted by the Borrower in writing prior to such time and,
if accepted prior to such time, shall expire at the earlier of the occurrence of
any event that has, or could be expected to have, a material adverse effect on
the business, properties, prospects, operations or condition (financial or
otherwise) of the Borrower, and (iv) 5:00 p.m. on August 15, 2000, if the
closing of the Bank Credit Facility shall not have occurred by such time.
This Commitment and the Fee Letter shall be governed by and construed
in accordance with the internal laws of the state of North Carolina, and
together constitute the entire agreement between the parties relating to the
subject matter hereof and thereof and supersede any previous agreement, written
or oral, between the parties with respect to the subject matter hereof and
thereof. This Commitment supersedes any prior or contemporaneous agreement or
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understanding between any parties hereto with respect to the subject matter
hereof. This Commitment may not be assigned without the prior written consent of
First Union.
If the Borrower is in agreement with the foregoing, please sign the
enclosed copy of this Commitment and return it to First Union and FUSI, together
with an executed copy of the Fee Letter and payment of that portion of the any
fee referenced in the Fee Letter which is payable upon acceptance of this
Commitment, by no later than 5:00 p.m. on July 7, 2000.
Sincerely,
FIRST UNION NATIONAL BANK
By: /s/ W.A. Luther
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Name: William A. Luther
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Title: SVP
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FIRST UNION SECURITIES, INC.
By: /s/ Rob Johnson
------------------------------------------------
Name: Rob Johnson
----------------------------------------------
Title: MD
---------------------------------------------
Agreed to and accepted this day of ______________, 2000.
HORIZON PERSONAL COMMUNICATIONS, INC.
By: /s/ Pete Holland
--------------------------------------------------
Name: Pete Holland
------------------------------------------------
Title: Chief Financial Officer
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BRIGHT PCS, LLC
By: /s/ Steven P. Burkhardt
--------------------------------------------------
Name: Steve Burkhardt
------------------------------------------------
Title: Assistant Secretary
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HORIZON PERSONAL COMMUNICATIONS, INC.
PROPOSED SUMMARY OF TERMS AND CONDITIONS
JULY 7, 2000
BORROWERS: Horizon Personal Communications, Inc. ("Horizon") and Bright PCS,
LLC ("Bright") (each, individually, a "Borrower" and
collectively, the "Borrowers").
GUARANTORS: Horizon PCS, Inc. (the "Parent") and all material direct and
indirect subsidiaries of Horizon PCS, Inc.
ADMINISTRATIVE
AGENT: First Union National Bank ("First Union" or the "Administrative
Agent") or applicable affiliate designated thereby.
ARRANGER: First Union Securities, Inc. (the "Arranger").
LENDERS: First Union and a syndicate of lenders (the "Lenders") arranged
by the Arranger and satisfactory to the Borrowers.
FACILITIES: $75,000,000 Revolving Credit Facility (the "Revolver"; together
with the Term Loan A and the Term Loan B, the "Facilities") with
a $10,000,000 sublimit for the issuance of standby Letters of
Credit and a $10,000,000 sublimit for Swingline borrowings.
Letters of Credit issued under the Revolver shall have a term of
no more than one year (not to extend beyond the maturity date of
the Revolver).
$150,000,000 Term Loan (to be comprised of a Term Loan A ("Term
Loan A") and a Term Loan B ("Term Loan B") in amounts to be
determined). The Term Loan A and the Term Loan B, together with
the Revolver, shall be each individually referred to as a
"Facility" and collectively, as the "Facilities". The Term Loan A
shall be drawn on a delayed basis (not to exceed a period
eighteen months after closing of the Facilities) according to a
schedule to be determined. Amounts allocated to the Term Loan B
may be subject to call protection of 102% and 101% in years 1 and
2, respectively.
Provided the Facilities referred to above are fully drawn, the
Borrower may borrow up to an additional $50,000,000 (the
"Additional Facility") upon Required Lender approval so long as
(a) the terms are no more favorable to the Borrower than the
terms and conditions of the Term Loan B; (b) such Additional
Facility has a final maturity date no earlier than December 31,
2008; (c) each Lender under the Credit Agreement is offered the
opportunity (but is not obligated) to issue a commitment for its
pro rata share of such Additional Facility; and (d) the
Additional Facility will constitute obligations under the Loan
Agreement and shall rank pari passu with the other obligations.
________________________________________________________________________________
FIRST UNION-PROPOSAL Strictly Confidential
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MATURITY: The Revolver shall mature eight years from the closing date. The
Term Loan A shall mature eight years from the closing date. The
Term Loan B shall mature eight and one-half years from the
closing date.
PURPOSE: To finance (i) the direct cost of the construction and operation
of a regional digital wireless telecommunications network on the
Sprint PCS System; (ii) transaction costs and expenses; and (iii)
working capital and other general corporate purposes.
SECURITY: The Facility shall be secured by the grant of a first priority
lien in favor of the Administrative Agent, for the ratable
benefit of itself and the Lenders, on all now owned or hereafter
acquired tangible and intangible assets of the Borrowers and
their subsidiaries (excluding, for purposes hereof, shares of
Horizon Telcom, Inc. owned by Horizon), including but not limited
to:
(i) all assets associated with the Borrowers' wireless
communications network, including without limitation
certifications, licenses (to the extent permitted by applicable
law), franchise rights, rights-of-way, and material contracts
(including, without limitation, the assignment of all agreements
and/or licenses with Sprint Corp. (collectively, the "Sprint
Agreement") which shall have been consented to by Sprint Corp.);
(ii) accounts receivable and notes receivable;
(iii) real estate owned or leased by the Borrowers and their
subsidiaries, supported by landlord waivers, estoppel letters and
other real estate security documents;
(iv) any intercompany loans; and
(v) 100% of the capital stock or other equity interests of
any present and future domestic subsidiaries of the Borrowers.
In addition, the Facilities shall be secured by the pledge of
100% of the capital stock, partnership interests or other
ownership interests of the Parent in the Borrowers in favor of
the Administrative Agent, for the ratable benefit of itself and
the Lenders.
INTEREST RATE
OPTIONS: The Borrowers' option of:
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FIRST UNION-PROPOSAL Strictly Confidential
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(1) Base Rate: The Base Rate plus the Applicable Base Rate
Margin, as set forth in the pricing grid attached hereto as
Exhibit I. Loans bearing interest at the Base Rate shall be
for a minimum amount of $500,000 and $250,000 increments in
excess thereof.
The Base Rate means the greater of (i) the Administrative
Agent's Prime Rate or (ii) the overnight federal funds rate
plus 0.50%. The Prime Rate is an index or base rate and
shall not necessarily be its lowest or best rate charged to
its customers or other banks.
(2) LIBOR Rate: LIBOR plus the Applicable LIBOR Margin as set
forth in the pricing grid attached hereto as Exhibit I.
Loans bearing interest at the LIBOR Rate shall be for a
minimum amount of $2,000,000 and $500,000 increments in
excess thereof.
LIBOR shall mean reserve adjusted LIBOR as set forth on
Telerate Page 3750 or as determined by the Administrative
Agent if such information is not available. The LIBOR Rate
Option is available for Interest Periods of 1, 2, 3, or 6
months. No more than six (6) Interest Periods may be in
effect at any time.
LIBOR Rate interest, Base Rate interest based on the
overnight federal funds rate and all fees shall be
calculated on a 360 day basis, while Base Rate interest
based on the Administrative Agent's Prime Rate shall be
calculated on a 365/66 day basis.
LOANS UNDER THE
CREDIT
FACILITY: Borrowings may be requested upon three business days notice for
LIBOR Loans and same business day notice for Base Rate Loans.
Notice must be given to the Agent by 11:00 a.m., Charlotte, North
Carolina time, on the day on which such notice is required.
INTEREST
PAYMENTS: Interest on Base Rate Loans will be due and payable quarterly in
arrears. Interest on LIBOR Rate Loans will be due and payable at
the end of each applicable Interest Period or, in the case of a 6
month LIBOR Rate Loan, every 3 months.
DEFAULT
DATE: Upon the occurrence and during the continuance of an Event of
Default, (i) the Borrowers shall no longer have the option to
request LIBOR Rate Loans, (ii) all amounts due and payable with
respect to LIBOR Rate Loans shall bear interest at a rate per
annum two percent (2%) in excess of the rate then applicable to
such Loans until the end of the applicable Interest Period and
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FIRST UNION-PROPOSAL Strictly Confidential
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thereafter at a rate equal to two percent (2%) in excess of the
rate then applicable to Base Rate Loans and (iii) all amounts due
and payable with respect to Base Rate Loans, and all fees and
other amounts due and payable, shall bear interest at a rate per
annum equal to two percent (2%) in excess of the rate then
applicable to Base Rate Loans.
LETTER OF
CREDIT
FEES: Letter of Credit Fee: An amount equal to the Applicable LIBOR
Margin on a per annum basis multiplied by the face amount of each
Letter of Credit, payable to the Administrative Agent, for the
account of the Lenders, quarterly in arrears.
Fronting Fee: An amount equal to 0.125% per annum multiplied by
the face amount of each Letter of Credit, payable to the
Administrative Agent (as Issuing Lender), for its own account,
quarterly in arrears.
COMMITMENT
FEE: The Borrowers shall pay to the Administrative Agent for the
account of the Lenders a Commitment Fee at a rate per annum
reflected on the attached Exhibit II on the unused portion of the
Facilities, payable quarterly in arrears.
MANDATORY
COMMITMENT
REDUCTIONS: The aggregate commitment of the Lenders under the Facilities
shall be permanently reduced quarterly according to the annual
percentages set forth below:
----------------- ---------------------- -----------------------
Term Loan A Commitment Term Loan B Commitment
Reductions Reductions
----------------- ---------------------- -----------------------
Year 1 0% 0%
-----------------
Year 2 0% 0%
-----------------
Year 3 0% 0%
-----------------
Year 4 ___% 1%
-----------------
Year 5 ___% 1%
-----------------
Year 6 ___% 1%
-----------------
Year 7 ___% 1%
-----------------
Year 8 ___% 1%
-----------------
Year 9 (six 95%
months)
----------------- ------------------------- --------------------
MANDATORY
PREPAYMENTS/
PERMANENT FACILITY
REDUCTIONS: Outstandings under the Facilities will be required to be prepaid
and the aggregate commitment amount thereunder will be
permanently reduced as follows: (i) 100% of the net proceeds of
any debt issuance (excluding the initial issuance of high yield
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FIRST UNION-PROPOSAL Strictly Confidential
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notes or high yield bridge notes by the Parent in an aggregate
amount of up to $125,000,000 in net proceeds) completed by the
Parent, the Borrowers or their subsidiaries, (ii) 50% of the net
proceeds of any equity offering completed by the Parent
(excluding the initial public offering of common equity of the
Parent in an aggregate amount of not less than $100,000,000 in
net proceeds), the Borrowers or their subsidiaries, provided that
such net proceeds may be used to (A) redeem up to 35% of any
subordinated debt subject to equity clawbacks and (B) acquire
additional telecommunications assets within eighteen (18) months
of the receipt of such net proceeds (subject to limitations on
acquisitions to be determined), (iii) 100% of the net proceeds
from asset sales, other than in the ordinary course of business,
unless reinvested in replacement assets within 180 days, (iv)
100% of insurance proceeds not reinvested within 180 days and (v)
50% of Excess Cash Flow (to be defined as Consolidated EBITDA of
the Borrowers and their subsidiaries minus the sum of capital
expenditures plus repayments of principal plus working capital
plus cash interest expense plus taxes) for each fiscal year
commencing with the fiscal year ending December 31, 2003.
OPTIONAL
PREPAYMENTS: Base Rate Loans may be prepaid at any time without penalty. LIBOR
Rate Loans may be prepaid at the end of the applicable Interest
Period without penalty. Prepayment of the LIBOR Rate Loans prior
to the end of the applicable Interest Period is subject to
payment of any funding losses.
CONDITIONS
PRECEDENT TO
INITIAL
BORROWING: Customary for facilities of this nature, including, but not
limited to, completion of financial due diligence and final
credit approval in form and substance satisfactory to the
Arranger; credit documentation satisfactory to the Lenders;
receipt of a minimum $225 million in aggregate net proceeds from
a combination of an initial public offering, the issuance of high
yield or high yield bridge notes and/or a private equity
issuance, provided that not less than $100 million of such net
proceeds shall be received from the issuance of public or private
equity, to be contributed to Horizon on or prior to the initial
extension of credit under the Facilities, in each case on terms
and conditions satisfactory to the Lenders; receipt of business
plans with respect to the buildout of the wireless network each
in form and substance satisfactory to the Lenders; all
governmental, shareholder, corporate and third party consents and
approvals shall have been obtained; modification of key vendor
contracts to, among other things, subordinate the lien thereof to
the Facilities on terms and conditions satisfactory to the
Lenders; no material adverse change including no material pending
or threatened litigation, bankruptcy or other proceeding;
satisfactory review of all corporate documentation, material
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FIRST UNION-PROPOSAL Strictly Confidential
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agreements and other legal due diligence; satisfactory completion
of business due diligence by the Lenders; and payment of all fees
and expenses due to the Administrative Agent, the Arranger and
their counsel.
CONDITIONS PRECEDENT
TO EACH
BORROWING: Delivery of a borrowing notice, accuracy of all representations
and warranties, absence of defaults and compliance on a pro forma
basis with all covenants.
REPRESENTATIONS
AND
WARRANTIES: Customary for facilities of this nature, including, but not
limited to, corporate existence; corporate and governmental
authorization; enforceability; financial information; no material
adverse changes; compliance with laws and agreements (including
environmental laws); compliance with all applicable
communications laws and regulations (including FCC and state PUC
regulations and orders); compliance with ERISA; no material
litigation; payment of taxes; financial condition; and full
disclosure.
INTEREST RATE
PROTECTION: Within 60 days after closing, the Borrowers shall have fixed or
hedged at least 50% of their debt obligations for a period of not
less than 3 years on terms acceptable to the Administrative
Agent.
AFFIRMATIVE
COVENANTS: Customary for facilities of this nature, including, but not
limited to, receipt of financial information (including budgets
and business plans to be in form and substance satisfactory to
the Administrative Agent); notification of litigation,
investigations and other adverse changes; payment and performance
of obligations; conduct of business; maintenance of existence;
maintenance of property and insurance (including hazard and
business interruption coverage); maintenance of records and
accounts; inspection of property and books and records (including
periodic field audits), in each case at the Borrowers' expense;
compliance with laws (including environmental laws); compliance
with all applicable communications laws and regulations
(including FCC and state PUC regulations and orders); maintenance
of all communications licenses and franchises issued or granted
by any governmental authority; payment of taxes; and ERISA.
FINANCIAL
COVENANTS: Financial covenants shall include, but not be limited to, the
following:
STAGE 1: Until Horizon has achieved Stage 2 Compliance (to be
defined as the earlier of (i) two consecutive quarters of
positive EBITDA or, (ii) [DATE TO BE DETERMINED]) covenants shall
include:
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FIRST UNION-PROPOSAL Strictly Confidential
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(1) Total Debt to Total Capitalization: As of any date of
determination, the Parent shall not permit the ratio of Total
Debt to Total Capitalization to exceed .75 to 1.00.
"Debt" means, with respect to any Person, the sum of the
following determined on a consolidated basis, without
duplication, in accordance with generally accepted accounting
principles: (a) all liabilities, obligations and indebtedness for
borrowed money, including, but not limited to, obligations
evidenced by bonds, debentures, notes or other similar
instruments, (b) all obligations to pay the deferred purchase
price of property or services, including, but not limited to, all
obligations under non-competition agreements, except trade
payables arising in the ordinary course of business not more than
ninety (90) days past due, (c) all obligations as lessee under
capital leases, (d) all Debt of any other Person secured by a
Lien on any asset of any such first Person, (e) all guaranty
obligations, (f) all obligations, contingent or otherwise,
relative to the face amount of letters of credit, whether or not
drawn and banker's acceptances, (g) all obligations to redeem,
repurchase, exchange, defease or otherwise make payments in
respect of capital stock or other securities and (h) all
termination payments which would be due and payable pursuant to
any hedging agreement.
"Total Debt" means as of any date, with respect to any Person,
all Debt of such Person and its subsidiaries determined on a
consolidated basis.
"Total Capitalization" means, with respect to any Person and its
subsidiaries determined on a consolidated basis at any date of
determination, the sum of Total Debt plus Consolidated Net Worth.
"Consolidated Net Worth" means, with respect to any Person and
its subsidiaries determined on a consolidated basis, at any date
of determination, paid-in cash equity.
(2) Senior Debt to Total Capitalization. As of any date of
determination, the Borrowers shall not permit the ratio of Senior
Debt to Total Capitalization to exceed .45 to 1.0.
"Senior Debt" means as of any date, with respect to any Person,
all Debt of such Person and its subsidiaries determined on a
consolidated basis which is not subordinated in right of payment
to the Facilities.
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FIRST UNION-PROPOSAL Strictly Confidential
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(3) Minimum Covered POPs: As of any fiscal quarter end, the Borrowers
shall maintain minimum covered POPs in amounts [TO BE
DETERMINED].
(4) Maximum EBITDA Losses/Minimum EBITDA: As of any fiscal quarter
end, the Borrowers shall not permit EBITDA losses to exceed
amounts to be determined [120%/80% OF BORROWER PROJECTIONS].
"EBITDA" means, for any period, the sum of the following
determined on a consolidated basis, without duplication, for the
Borrowers and their subsidiaries in accordance with generally
accepted accounting principles: (a) net income for such period
plus (b) the sum of the following to the extent deducted in
determining net income: (i) income and franchise taxes, (ii)
interest expense, (iii) amortization, depreciation and other
non-cash charges less (c) interest income and any extraordinary
gains.
(5) Minimum Total Revenues: [80% OF BORROWERS' PROJECTIONS].
(6) Minimum Subscribers: [TO BE DETERMINED].
(7) Maximum Capital Expenditures: [TO BE DETERMINED].
STAGE 2: Once Horizon has achieved Stage 2 Compliance, the Stage 1
covenants shall cease to be effective and the following covenants
shall be applicable:
(1) Total Debt/EBITDA: As of any fiscal quarter end, the Parent shall
not permit the ratio of (a) Total Debt on such date to (b) EBITDA
for the most recently ended six month period times two (2) (the
"Parent Leverage Ratio"), to be greater than [______] to 1.00,
with stepdowns to be determined.
(2) Senior Debt/EBITDA: As of any fiscal quarter end, the Borrowers
shall not permit the ratio of (a) Senior Debt on such date to (b)
EBITDA for the most recently ended six month period times two (2)
(the "Borrower Senior Leverage Ratio"), to be greater than [___]
to 1.0, with stepdowns to be determined.
(3) Minimum Interest Coverage: As of any fiscal quarter end, the
Borrowers shall not permit the ratio of (a) EBITDA for the most
recently ended six month period to (b) Interest Expense for the
most recently ended six month period to be less than [___] to
1.00, with stepups to be determined.
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"Interest Expense" means, for any period, total interest expense
(including, without limitation, interest expense attributable to
capital leases) determined on a consolidated basis, without
duplication, for the Borrowers and their subsidiaries in
accordance with generally accepted accounting principles.
(4) Minimum Fixed Charge Coverage: As of any fiscal quarter end, the
Borrowers shall not permit the ratio of (a) EBITDA for the most
recently ended six month period times two (2) to (b) Fixed
Charges for the period of four (4) consecutive fiscal quarters
ending on or immediately prior to such date to be less than [___]
to 1.00, with stepups to be determined.
"Fixed Charges" means, for any period, the sum of the following
determined on a consolidated basis, without duplication, for the
Borrowers and their subsidiaries in accordance with generally
accepted accounting principles: (a) scheduled principal and
interest payments, (b) capital expenditures, (c) cash taxes, and
(d) cash dividends.
(5) Maximum Capital Expenditures: [TO BE DETERMINED].
NEGATIVE
COVENANTS: Customary for facilities of this nature, including, but not
limited to, restrictions and limitations on: other indebtedness;
liens; dividends and distributions (provided that dividends to
the Parent in amounts necessary to pay interest obligations in
respect of the high yield indebtedness shall be permitted so long
as no default or event of default shall have occurred or be
continuing); asset sales; guaranty obligations; changes in
business; consolidations and mergers; acquisitions [CARVE OUT TO
BE DETERMINED]; loans and investments; transactions with
affiliates; sale and leaseback transactions; optional prepayments
of and material amendments to indebtedness (including, without
limitation, optional prepayment of any subordinated debt);
restrictive agreements; and changes in fiscal year or accounting
method.
EVENTS OF
DEFAULT: Customary for facilities of this nature, including but not
limited to: failure to pay any interest, principal or fees under
the Facilities when due; failure to perform any covenant or
agreement; inaccurate or false representation or warranties;
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FIRST UNION-PROPOSAL Strictly Confidential
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loss, termination or revocation of any communications licenses
and franchises issued or granted by any governmental authority;
cross defaults (including cross-defaults to other material
contracts); insolvency or bankruptcy; ERISA; judgment defaults;
change in control; and any other events of default deemed
reasonably necessary by the Administrative Agent and the Lenders
in the context of the proposed transaction.
ASSIGNMENTS &
PARTICIPATION: Assignments in minimum amounts of $5,000,000 shall be permitted
subject to the consent of the Administrative Agent and subject
(so long as no default or event of default has occurred and is
continuing) to consent of the Borrowers, such consents not to be
unreasonably withheld or delayed. Participations shall be
permitted in minimum amounts of $5,000,000. Assignment fee of
$3,500 shall be payable to the Administrative Agent by the
issuing Lender.
INCREASED COSTS
CHANGE OF
CIRCUMSTANCES: Provisions customary in facilities of this type protecting the
Lenders in the event of unavailability of funding, illegality,
capital adequacy requirements, increased costs, withholding taxes
and funding losses.
REQUIRED
LENDERS: On any date of determination, those Lenders who collectively hold
at least 66 2/3% of outstandings, or if no outstandings, those
Lenders who collectively hold at least 66 2/3% of the aggregate
commitment of the Lenders.
WAIVER OF JURY
TRIAL,
GOVERNING
LAW: Waiver of jury trial, submission to jurisdiction in Charlotte,
North Carolina and mandatory binding arbitration in Charlotte,
North Carolina. North Carolina law (without reference to choice
of law provisions) to govern.
COUNSEL TO
ADMINISTRATIVE
AGENT: Moore & Van Allen, PLLC.
MISCELLANEOUS: This summary of terms and conditions does not purport to
summarize all the conditions, covenants, representations,
warranties and other provisions which would be contained in
definitive credit documentation for the Facilities contemplated
hereby.
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EXHIBIT I
Prior to Horizon achieving Stage 2 Compliance (and thereafter at any time the
Borrowers fail to maintain Stage 2 Compliance), the following pricing grid will
be applicable:
Revolver/Term Revolver/Term
Loan A Loan A Term Loan B Term Loan B
Applicable LIBOR Applicable Base Applicable LIBOR Applicable Base
Margin Rate Margin Margin Rate Margin
-------------------------------------------------------------------------------
3.50% 2.50% 4.00% 3.00%
Once Horizon has reached Stage 2 Compliance and thereafter as long as the
Borrowers maintain such compliance, the following pricing grid will be
applicable:
Revolver/Term Revolver/Term Term Term Loan B
Loan A Loan A Loan B Applicable
Total Consolidated Applicable Applicable Applicable Base
Debt/EBITDA Base Rate Base Rate LIBOR Margin Rate Margin
----------- --------- --------- ------------ -----------
> 10.0 to 1.0 3.25% 2.25% 4.00% 3.00%
> 8.0 to 1.0 but < 10.0 3.00% 2.00% 4.00% 3.00%
to 1.0
> 7.0 to .10 but < 8.0 2.75% 1.75% 4.00% 3.00%
to 1.0
> 6.0 to .10 but < 7.0 2.50% 1.50% 4.00% 3.00%
to 1.0
> 5.0 to .10 but < 6.0 2.25% 1.25% 4.00% 3.00%
to 1.0
< 5.0 to 1.0 2.00% 1.00% 4.00% 3.00%
EXHIBIT II
Drawn Portion Commitment Fee
------------------------- ----------------------
<33% 1.375%
<66% 1.125%
>66% 0.75%
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