SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended DECEMBER 31, 1997
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission File No. 1-10682
PAGE AMERICA GROUP, INC.
(Exact name of registrant as specified in its charter)
NEW YORK 13-2865787
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
c/o Bariston Associates, Inc.
ONE INTERNATIONAL PLACE, BOSTON, MA 02110
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (617) 330-8950
--------------
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Common Stock, $.10
par value
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
As of March 1, 1998, the aggregate market value of the voting stock held by
non-affiliates of the registrant, based on the closing price, was approximately
$800,000.
As of March 1, 1998, the registrant had 16,025,087 shares of Common Stock
outstanding.
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
<PAGE>
Item 1. BUSINESS
On July 1, 1997, Page America Group, Inc. (the "Company" or "Page America")
sold (the "Sale") substantially all of its assets to Metrocall, Inc.
("Metrocall") pursuant to the provisions of an Amended and Restated Asset
Purchase Agreement dated as of January 30, 1997, as amended (the "Sale
Agreement"). As the result of the Sale, Page America discontinued all its
operations and, as discussed below, no longer engages in the paging business.
Metrocall paid a purchase price (as adjusted) of approximately $60.7 million
including the assumption of $2.2 million of liabilities. Page America received
$24.8 million in cash, $15 million of Series B Junior Convertible Preferred
Stock of Metrocall and $18.7 million of Common Stock of Metrocall, inclusive of
a post-closing working capital adjustment resulting in the Company's returning
85,602 shares of common stock of Metrocall. Certain shares of Metrocall common
stock with a fair market value of $4.0 million at the date of Sale are held in
escrow until April 1, 1998 pursuant to the Sale Agreement. Excluded from the
sale were cash, assets related to the employee benefit plans and to the Florida
and California operations which had been previously sold, liabilities under the
Company's credit facility with its lenders (the "Credit Facility"), subordinated
notes (the "Subordinated Notes"), NEC America leasing contract, obligations with
respect to federal, state and local taxes and certain other liabilities. The
Company has recognized a gain from the sale of assets to Metrocall of
approximately $22.9 million, net of expenses related to the sale of
approximately $1.5 million. Through December 31, 1997, the Company has sold an
aggregate of 248,200 shares of Metrocall common stock and realized a net gain of
$627,000. At December 31, 1997, the Company held 3,663,656 shares of common
stock of Metrocall.
In connection with the Sale, the Company adopted a plan of complete
liquidation and dissolution which became effective with the completion of the
Sale. Accordingly, on July 1, 1997, the Company changed from the going concern
basis of accounting to the liquidation basis of accounting. The value of the
assets to be available for payment of its liabilities and distribution to the
Page America shareholders upon liquidation cannot be ascertained at this time
and will depend among other things, on the total amount of its liabilities, the
number of shares of Metrocall Common Stock available to Page America from the
escrow, the market value of the Metrocall Common Stock, and the value of the
Metrocall Preferred Stock. Pursuant to the plan of liquidation, the Company will
continue in existence for the sole purpose of winding up its affairs and will
not engage in any business activities other than activities related to
implementation of the plan of liquidation.
Concurrently with the Sale, the Company's Credit Facility was amended.
Among other things, the amendment provided for an extension of the maturity date
to December 31, 1998 and a waiver of all existing covenant defaults. In
addition, the Company was required to use $20.5 million of the cash proceeds
from the Sale to reduce the debt by approximately $18.4 million and pay accrued
interest of $2.0 million and certain closing expenses. On September 30, 1997,
pursuant to the amended agreement, the Company paid a reinstatement fee of
$350,000 originally due on November 30, 1996. Pending payment in full of the
Credit Facility, the Company will not be permitted to make any payments to the
holders of Subordinated Notes or to its stockholders. Any amounts received from
the sale of securities of Metrocall in excess of appropriate cash reserves must
be paid in reduction of amounts outstanding under the Credit Facility.
The holders of Subordinated Notes and the Company entered into a
Forbearance Agreement ( the "Forbearance Agreement") pursuant to which the
holders have agreed to forbear from collecting on such Subordinated Notes until
the earlier of December 31, 1998 or the occurrence of certain events relating to
Page America, as described in the Forbearance Agreement. During the forbearance
period, the holders of the Subordinated Notes will not initiate any action,
exercise any remedy or make any claim against the Company with respect to the
Subordinated Notes. In consideration of such forbearance, and in complete
satisfaction of all amounts of principal and interest due, after all amounts
have been paid in full under the Credit Facility, the holders of the
Subordinated Notes will be entitled to receive 70% of cash available for
distribution to the Subordinated Noteholders and the shareholders of the
Company, up to an aggregate distribution to Subordinated Noteholders of $19
million, with the remaining 30% to be distributed to the shareholders of Page
America. After the holders of Subordinated Notes have indefeasibly received a
total of $19 million, any remaining amounts available for distribution to the
Subordinated Noteholders and the shareholders of the Company will be made 50% to
the holders of the Subordinated Notes and 50% to the shareholders of Page
America. Interest will continue to accrue on the Subordinated Notes until the
full amount of principal and interest due thereunder shall have been paid in
full or the obligations thereunder shall have been otherwise satisfied in
accordance with the terms and provisions of the Forbearance Agreement.
Pursuant to the Forbearance Agreement, Page America's obligation to
repurchase the warrants held by the holders of the Subordinated Notes was
terminated. Under the Forbearance Agreement, Page America is not permitted to
enter into transactions with its stockholders, officers or directors or conduct
any business or incur any debt other than in connection with the satisfaction of
its obligations under the Credit Facility, payment of other permitted
liabilities and the implementation of its plan of liquidation.
The holders of Page America's Preferred Stock have agreed that 30% of any
distributions otherwise payable to them will respect to their liquidation
preference will be distributed to the holders of Page America's Common Stock. In
addition, holders of the Preferred Stock waived their rights to receive accrued
dividends of $4,295,000 and their rights to future dividends.
Page America was incorporated in 1976 under the laws of the State of New
York. The Company's principal executive offices are located c/o Bariston
Associates, Inc., One International Place, Boston, Massachusetts 02110 and its
telephone number is 617-330-8950.
EMPLOYEES
At March 1, 1998, Page America had one employee.
ITEM 2. PROPERTIES
The Company does not lease any material real estate or own any real
property. The Company presently leases an office in New Jersey, but otherwise
uses the facilities of Bariston Associates, Inc.
ITEM 3. LEGAL PROCEEDINGS
The Company is involved in various lawsuits and proceedings arising in the
normal course of business. In the opinion of management of the Company, the
ultimate outcome of these other lawsuits and proceedings will not have a
material adverse effect on the Company's net assets in liquidation.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
PRICE RANGE OF COMMON STOCK
The Common Stock of the Company was delisted from the American Stock
Exchange ("AMEX") in April 1996 due to the Company's inability to comply with
the financial guidelines of the AMEX from a listed exchange for continued
listing. The last available price quotation for the Common Stock was April 16,
1996 and, therefore, current price quotations are not available. However, the
Common Stock is currently being traded over-the-counter by some market makers.
<PAGE>
HIGH LOW
1996
First Quarter $0.3125 $0.1875
Second Quarter 0.75 0.1875
Third Quarter ---- ----
Fourth Quarter ---- ----
There were approximately 2,000 shareholders of record of Common Stock as of
March 1, 1998. This number does not include beneficial owners holding shares
through nominee or "street" names.
DIVIDEND POLICY
The Company has never declared or paid cash dividends on its Common Stock
and does not anticipate paying cash dividends to the holders of its Common Stock
in the foreseeable future. The payment of dividends on Common Stock and
Preferred Stock is also restricted pursuant to the provisions of the Company's
Credit Facility and Forbearance Agreement.
ITEM 6. SELECTED FINANCIAL DATA
<PAGE>
<TABLE>
<CAPTION>
Period from
Years Ended December 31, January 1 to
1993 1994(3) 1995(1) 1996 July 1, 1997(4)
Consolidated Statement of Operations Data: (In thousands, except per share and pager data)
Revenues
Expenses related to corporate, finance and
other activities
<S> <C> <C> <C> <C> <C>
General and administrative $2,183 $2,295 $2,579 $1,403 $671
Interest 4,032 5,102 6,248 6,141 3,078
Other 1,453 362 2,785 573 106
----- ------ ----- --- ---
Net loss before discontinued operations (7,668) (7,759) (11,612) (8,117) (3,855)
Discontinued operations
Net income (loss) from operations of
discontinued business 1,123 731 (763) 7 (307)
(Loss) gain on sale of discontinued businesses - - (718) - 22,903
-------- ----- --------- ------- --------
1,123 731 (1,481) 7 22,596
Net (loss) income (6,545) (7,028) (13,093) (8,110) 18,741
Preferred stock dividend requirements (3,268) (3,023) (2,863) (2) (2,864) (1,432)
------- ------- -------- ------- -------
Net (loss) income applicable to common shares ($9,813) ($10,051) ($15,956) ($10,974) $17,309
======= ======== ======== ======== =======
Net loss before discontinued operations applicable
to common shares ($10,936) ($10,782) ($14,475) ($10,981) ($5,287)
======== ======== ======== ======== ========
Net income (loss) from discontinued operations
applicable to common shares $1,123 $731 ($1,481) $7 $22,596
====== ==== ======= == =======
Basic and diluted (loss) income per common share ($2.55) ($1.55) ($2.01) ($0.88) $1.08
====== ====== ====== ====== =====
Basic and diluted loss before discontinued
operations per common share ($2.84) ($1.66) ($1.82) ($0.88) ($0.33)
====== ====== ====== ====== ======
Basic and diluted income (loss) from discontinued
operations per common share(5) $0.29 $0.11 ($0.19) -- $1.41
===== ===== ====== =====
Weighted average shares outstanding 3,847 6,464 7,936 12,498 16,033
===== ===== ===== ====== ======
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Years Ended December 31,
Consolidated Balance Sheet Data(6): 1993(5) 1994(2) 1995(1)(2) 1996 July 1, 1997(4)
<S> <C> <C> <C> <C> <C>
Working capital (deficiency) ($2,053) ($9,541) ($52,444) ($58,409) (14,146)
Total assets 75,193 70,229 44,003 39,561 36,622
Long-term debt, less current maturities 57,850 56,953 69 37 --
Accumulated Deficit (68,980) (78,989) (94,945) (105,919) (83,876)
Shareholders' equity (deficit) 9,096 439 (11,222) (20,746) 1,293
- -------------------------
(1) In July, 1995, the Company sold its California and
Florida paging assets. Concurrently with the sale, the Company amended
its Credit Facility and Subordinated Notes providing, among other things,
for accelerated maturities. Such debt, which was classified as long term
at December 31, 1994, was in default and is classified as a current
liability at December 31, 1995 and 1996 and July 1, 1997. See Note C of
Notes to Financial Statements.
(2) In August, 1994 and March, 1995, the Company issued shares of its Common
Stock as full payment of fiscal year 1994 dividends on Series One
Convertible Preferred Stock. On June 30, 1995, in exchange for the waiver
of the dividend payment on Series One Convertible Preferred Stock, the
accrued dividends were added to the liquidation value. In June, 1996, the
Company issued shares of its Common Stock in payment of accrued dividends
at December 31, 1995 on Series One Convertible Preferred Stock. See Note
G of Notes to Consolidated Financial Statements.
(3) On December 30, 1993, the Company acquired Crico and refinanced its
senior and subordinated debt and redeemable Preferred Stocks.
(4) On July 1, 1997, the Company sold its remaining operations and adopted a
plan of complete liquidation. Accordingly, there are no operations
subsequent to July 1, 1997. (See Note B of Notes to Financial Statements).
Operating results for the businesses sold have been reclassified to
discontinued operations for all years presented.
(5) The Company has never paid any cash dividends on its Common Stock.
(6) The Company's net assets in liquidation at December 31, 1997 is
comprised of the following ($ in thousands):
Cash and cash equivalents $ 1,382
Other assets 287
Equity investments 33,890
Accounts payable and accrued expenses (1,655)
Debt (33,045)
----------
Net assets in liquidation $ 859
===========
</TABLE>
<PAGE>
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Results of Operations
The following table presents certain items in the Consolidated Statement of
Operations.
<TABLE>
<CAPTION>
Period from
January 1 to
July 1, Years Ended December 31
1997 1996 1995
(Dollar amounts in thousands)
<S> <C> <C> <C>
Revenues -- -- --
Expenses related to corporate, finance and
other activities
General and administrative $671 $1,403 $2,579
Interest 3,078 6,141 6,248
Other 106 573 2,785
-------- ------- ---------
Net loss before discontinued operations (3,855) (8,117) (11,612)
Discontinued operations
Net (loss) income from operations of
discontinued businesses (307) 7 (763)
Gain (loss) on sale of discontinued
businesses 22,903 -- (718)
Net income (loss) $18,741 ($8,110) ($13,093)
========== ========== ==========
</TABLE>
<PAGE>
YEAR ENDED DECEMBER 31, 1997 (for the period January 1, through July 1,1997)
COMPARED WITH YEAR ENDED DECEMBER 31, 1996
GENERAL AND ADMINISTRATIVE EXPENSES on an annualized basis remained
relatively constant in 1997 as compared to 1996.
INTEREST EXPENSE on an annualized basis remained relatively constant in
1997 as compared to 1996.
OTHER EXPENSES on an annualized basis decreased approximately $361,000
(63.0%) in 1997. The decrease was principally due to banking fees of $450,000
associated with the modification of the senior credit facility incurred in the
second quarter of 1996.
NET LOSS FROM DISCONTINUED OPERATIONS excluding the gain on sale of
discontinued businesses ($22.9 million) was $614,000 on an annualized basis for
1997, as compared to a net profit of $7,000 in the year ended December 31, 1996.
Operating results were negatively impacted during 1997 by the lack of available
operating capital.
YEAR ENDED DECEMBER 31, 1996 COMPARED WITH YEAR ENDED DECEMBER 31, 1995
GENERAL AND ADMINISTRATIVE EXPENSES decreased by $1.2 million (45.6%)
primarily due to a reduction in personnel and a decrease in professional fees.
INTEREST EXPENSE remained relatively constant in 1996 as compared to 1995.
OTHER EXPENSES decreased approximately $2.2 million (79.4%) in 1996. The
decrease was primarily due to the following special charges in 1995: a
write-down of deferred financing costs related to the senior debt and
subordinated debt amounting to $1.6 million and costs associated with the debt
restructuring in the amount of $726,000. Fiscal year 1996 included banking fees
of $450,000 associated with the modification of the senior credit facility.
NET INCOME FROM DISCONTINUED OPERATIONS in 1996 was $7,000 as compared to a
net loss of $1.5 million in 1995. The decrease in net loss was primarily due to
the loss on sale, in 1995, of the Company's Florida and California operations
($.7 million) and cost reductions in the Company's remaining operations.
<PAGE>
FINANCIAL CONDITION
CHANGES IN NET ASSETS IN LIQUIDATION
CASH AND CASH EQUIVALENTS
Cash and cash equivalents were $1.4 million at December 31, 1997. On July
1, 1997 the Company sold substantially all of its assets to Metrocall. Page
America received cash proceeds of $24.8 million which were used as follows:
$19.3 million to repay current maturities of long-term debt, $2.7 million to pay
accrued interest and accounts payable, $654,000 for transaction costs and the
remainder for working capital purposes. During the six month period ended
December 31, 1997, the Company received $1.8 million from the sale of 248,200
shares of Metrocall common stock. During the third and fourth quarters, the
Company paid $1.1 million of principal on the senior credit facility, interest
on the senior debt of $919,000, additional expenses related to the sale of
$489,000 and estimated income taxes of $439,000.
OTHER ASSETS
In August 1997, the Company received $326,000 which represents the final
escrow payment from the sale of its Florida and California operations. This was
applied to pay down the principal of the senior credit facility. Dividends of
$279,000 on the Series B Preferred Stock of Metrocall have been accrued for one
and one-half months ended December 31, 1997.
EQUITY INVESTMENTS
At the closing of the sale on July 1, 1997, the Company received 1,500
shares ($15 million) of Series B Junior Convertible Preferred Stock of Metrocall
and 3,997,458 ($19 million) of Common Stock of Metrocall. During the six month
period ended December 31, 1997, the Company sold 248,200 shares of Metrocall
common stock and realized a net gain of $627,000. In October, 1997, the Company
returned 85,602 shares of Metrocall common stock in connection with the final
determination of the value of the Company's actual working capital at June 30,
1997. On November 15, 1997, the Company received 79 shares ($790,000) of Series
B Junior Convertible Preferred Stock of Metrocall in payment of dividends
accrued from July 1 to November 15, 1997 on the Series B Preferred it received
from the sale. On December 31, 1997, the Company revalued its remaining
Metrocall common stock of 3,663,656 shares based on a closing price of $4.9375
and recorded an unrealized gain of $727,000.
ACCRUED EXPENSES
On September 30, 1997, pursuant to the amended credit facility, the Company
paid a reinstatement fee of $350,000 which was originally due on November 30,
1996. The Company paid estimated income taxes of $439,000 on the gain on the
sale of discontinued businesses. During the six month period ended December 31,
1997, the Company accrued interest on the subordinated notes of $1.3 million.
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
Pursuant to an Amended and Restated Asset Purchase Agreement dated January
30, 1997, as amended (the "Agreement"), on July 1, 1997, the Company sold
substantially all of its assets to Metrocall, Inc. ("Metrocall") for
consideration consisting of $24.8 million in cash, 1,500 shares of Series B
Junior Convertible Preferred Stock of Metrocall having a value upon liquidation
or redemption of $15 million and 3,997,458 shares ($19.2 million) of Common
Stock of Metrocall. Of the shares of the Common Stock of Metrocall received by
the Company, 832,250 shares ($4 million) were placed in escrow pursuant to the
provisions of the escrow agreement. In October, 1997, in connection with the
final determination of the value of the Company's actual working capital at June
30, 1997, the Company returned 85,602 shares of Metrocall common stock. The
Company has recognized a gain from the sale of assets to Metrocall of
approximately $22.9 million, net of expenses related to the sale of
approximately $1.5 million. During the six month period ended December 31, 1997,
the Company sold 248,200 shares of Metrocall common stock and realized a net
gain of $627,000. At December 31, 1997, the Company held 3,663,656 shares of
common stock of Metrocall.
On November 15, 1997, the Company received 79 shares ($790,000) of Series B
Junior Convertible Preferred Stock of Metrocall in payment of dividends accrued
from July 1 to November 15, 1997 on the 1,500 shares of Preferred Stock it
received from the sale. On September 1, and December 1, 1997, $3.75 million of
the Metrocall Preferred Stock became convertible into 567,644 and 641,026 shares
of common stock, respectively. In addition, $197,500 of the Metrocall Preferred
Stock received on November 15, 1997, became convertible on each of September 1
and December 1, 1997, into 29,895 and 33,760 shares of common stock,
respectively. Additional shares of Preferred Stock will be convertible at the
rate of $3.75 million on each of March 1, 1998 and June 1, 1998.
The cash proceeds of $24.8 million were used as follows: $19.3 million to
repay current maturities of long-term debt, $2.7 million to pay accrued interest
and accounts payable, $654,000 for transaction costs and the remainder for
working capital purposes.
In connection with the Agreement, the Company adopted a plan of complete
liquidation and dissolution of corporate entity which became effective with the
completion of the Metrocall sale. Accordingly, on July 1, 1997, the Company
changed from the going concern basis of accounting to the liquidation basis of
accounting. The cash received by the Company from this sale was not sufficient
for the Company to pay in full in cash its outstanding obligations under the
Credit Facility or under the Subordinated Notes or to pay its other outstanding
liabilities. Page America will pay the balance of its obligations from
proceeds generated by the sale or redemption of Metrocall Common Stock and
Series B Preferred Stock.
In connection with the transaction, Page America renegotiated its Credit
Facility such that the remaining outstanding balance of $15,271,831 is due and
payable on or prior to December 31, 1998. In August and October, 1997, the
Company paid $326,484 and $750,000, respectively, of the Credit Facility
reducing the balance to $14,195,347. Any amounts outstanding under the Page
America Credit Agreement will bear interest payable monthly at prime plus 2% to
4% depending on the principal amount outstanding thereunder from time to time.
In accordance with the amended Agreement, Page America paid $350,000 in cash to
such lenders on September 30, 1997, which represents a reinstatement fee
originally due on November 30, 1996. Until payment in full of the balance due
under the Credit Facility, Page America will not be permitted to make any
payments to the holders of the Subordinated Notes or its common or preferred
stockholders, but it will be permitted to pay accounts payable, claims, expenses
and liabilities incurred in connection with its liquidation. Subject to payment
of such accounts, claims, expenses and liabilities, any amounts received by the
Company from the sale or redemption of any Metrocall securities in excess of
appropriate cash reserves must be paid in reduction of amounts outstanding
under the Credit Facility. Page America is required to maintain a ratio of face
amount of Series B Preferred Stock and value of Metrocall Common Stock,
excluding 832,250 shares held in escrow, to amounts outstanding under the Credit
Facility of at least 1.5 to 1.
On July 1, 1997, concurrent with the sale of the Company's assets, the
holders of Subordinated Notes have agreed to forbear from collecting on such
Subordinated Notes until the earlier of December 31, 1998 or the occurrence of
certain events relating to Page America, as described in the Forbearance
Agreement. During the forbearance period, the holders of the Subordinated Notes
will not initiate any action, exercise any remedy or make any claim against the
Company with respect to the Subordinated Notes. In consideration of such
forbearance, and in complete satisfaction of all amounts of principal and
interest due, after all amounts have been paid in full under the Credit
Facility, the holders of the Subordinated Notes will be entitled to receive 70%
of cash available for distribution to the Subordinated Note Holders and the
Preferred and Common Shareholders, up to an aggregate amount of $19 million,
with the remaining 30% to be distributed to the Preferred and Common
shareholders of Page America. After the holders of Subordinated Notes have
indefeasibly received a total of $19 million, any remaining amounts available
for distribution to the Subordinated Note Holders and the Preferred and Common
Shareholders will be made 50% to the holders of the Subordinated Notes and 50%
to the Preferred and Common shareholders of Page America. Interest will continue
to accrue on the Subordinated Notes until the full amount of principal and
interest due thereunder shall have been paid in full or the obligations
thereunder shall have been otherwise satisfied in accordance with the terms and
provisions of the Forbearance Agreement.
Pursuant to the Forbearance Agreement, Page America's obligations to
repurchase the warrants held by the holders of the Subordinated Notes have been
terminated. Page America is not permitted to enter into transactions with its
stockholders, officers or directors or conduct any business or incur any debt
other than in connection with the satisfaction of its obligations under the
Credit Facility, payment of other permitted liabilities and the implementation
of the Plan of Liquidation.
The holders of Page America's Series One Preferred Stock have agreed that
30% of any distributions otherwise payable to them with respect to their
liquidation preference will be distributed to the holders of Page America's
Common Stock.
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The Financial Statements and supplementary data required by Part II, Item
8, are included in Part IV, as indexed at Item 14(a)(1).
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The executive officers and directors of the Company are as follows:
DIRECTOR OR
NAME AGE POSITION WITH COMPANY OFFICER SINCE
David A. Barry 51 Chairman of the Board and 1988
Chief Executive Officer
Martin H. Neidell 51 Secretary 1983
Jack Kadis 49 Director 1996
The Directors are presently elected for one year terms which expire at the
next annual meeting of shareholders. Executive officers are elected annually by
the Board of Directors to hold office until the first meeting of the Board
following the next annual meeting of shareholders and until their successors are
chosen and qualified.
Mr. Barry has been President of Bariston Associates, Inc. since April 1986.
He has been acting as Chairman of the Board and Chief Executive Officer of the
Company since August 1, 1995. Mr. Barry was Managing Director and Principal of
Winthrop Financial Associates from September 1982 to April 1986. Prior thereto,
Mr. Barry was a Managing Director of PaineWebber Incorporated.
Mr. Neidell has been Secretary of the Company since 1983. For more than the
past five years, Mr. Neidell has been a partner of Stroock & Stroock & Lavan
LLP, counsel to the Company.
Mr. Kadis has been a director since 1996. He has been Executive Vice
President of Bariston for more than the past 10 years.
The Company's Directors do not receive any fees.
ITEM 11. EXECUTIVE COMPENSATION
The following table sets forth information concerning compensation paid to
each of the most highly compensated executive officers of the Company whose
salary and bonus for 1997 exceeded $100,000. The Chief Executive Officer of the
Company does not receive any compensation for service in such capacity.
<PAGE>
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
====================================================================================================================================
ANNUAL COMPENSATION Long Term
Compensation
Name and Year
Principal All Other
Position Compensation(2)
($)
---------------------------------------------------------------------------------------------
Salary Bonus Other Options
($) ($) Annual (#)
Comp. ($)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
KATHLEEN C. PARRAMORE 1997 $ 99,634 $ 4,603 $141,848
President (1)
--------------------------------------------------------------------------------------------------------
1996 $165,000 $25,000 $ 2,807
--------------------------------------------------------------------------------------------------------
1995 $160,673 150,000 $ 4,957
- ------------------------------------------------------------------------------------------------------------------------------------
MARTIN KATZ 1997 $ 84,807 $12,071 $76,177
Vice President (1)
--------------------------------------------------------------------------------------------------------
1996 $150,000 $20,000 $ 2,045
--------------------------------------------------------------------------------------------------------
1995 $102,692 75,000 $ 1,038
- ------------------------------------------------------------------------------------------------------------------------------------
RICHARD A. CONTRERA 1997 $ 57,612 $50,000 $ 720
Vice President (1)
--------------------------------------------------------------------------------------------------------
1996 $110,140 $10,000 $ 1,377
--------------------------------------------------------------------------------------------------------
1995 $110,039 $5,173
====================================================================================================================================
(1) Effective July 1, 1997, these persons resigned as officers of the Company.
(2) Consists of Company matching contributions under the Company's Stock
Purchase Plan, and in 1997 $140,000 of severance pay to Ms. Parramore,
$75,000 of severance pay to Mr. Katz and $325 in premiums paid on an
insurance policy on the life of Ms. Parramore under which she designates
the beneficiary.
</TABLE>
In order to assist Page America in consummating the Sale and retaining key
members of management pending the closing, Page America entered into employment
arrangements with its three senior executive officers, Kathleen C. Parramore,
Martin Katz and Richard A. Contrera.
The agreement with Ms. Parramore provided that she would continue her
employment with Page America through the Sale. Upon the closing of the Sale, Ms.
Parramore became entitled to receive a severance payment of $165,000 (her then
annual salary), payable in twelve equal monthly installments commencing after
the closing. Subsequent to the closing of the Sale the $165,000 payable to Ms.
Parramore was reduced to $140,015. Upon closing of the Sale, Ms. Parramore
received a cash bonus of $4,603.
Page America entered into a similar agreement with Martin Katz. Upon
closing of the Sale, Mr. Katz became entitled to a six month severance payment
of $75,000, payable in six equal monthly installments commencing after the
closing. Upon closing of the Sale, Mr. Katz received a cash bonus of
approximately $12,000.
Page America also entered into an employment arrangement with Richard
Contrera. Page America paid a cash bonus of $10,000 to Mr. Contrera at the end
of his employment with Page America and an additional $10,000 at the end of each
of the four months following termination of his employment with Page America.
STOCK OPTION GRANTS AND EXERCISES
No stock options were granted or exercised in 1997. At December 31, 1997,
no stock options were held by any officers or directors of the Company.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information with respect to
beneficial ownership of Common Stock at February 1, 1998 by (i) each person
known by the Company to beneficially own more than five percent of outstanding
Common Stock, (ii) each Director of the Company, (iii) each of the most highly
compensated executive officers of the Company and (iv) all Directors and
executive officers of the Company as a group. Except as noted below, each person
or entity has sole voting and investment power with respect to all shares listed
as owned by such person or entity.
NAME AND ADDRESS NUMBER(1) PERCENT OF CLASS
David A. Barry(2) 8,104,950 33.6%
One International Place
Boston, MA 02110
Jack Kadis(2) 8,069,113 33.5%
One International Place
Boston, MA 02110
Bariston Paging Partners, L.P.(2) 7,781,837 32.7%
c/o Bariston Associates, Inc.
One International Place
Boston, MA 02110
T. Rowe Price
Associates, Inc.(3) 2,515,986 14.9%
100 East Pratt Street
Baltimore, MD 21202
Sandler Mezzanine General Partnership(4) 1,053,019 6.4%
767 Fifth Avenue
New York, NY 10153
Revy Investment Co., Inc.(5) 1,022,724 6.0%
1300 S.W. Fifth Avenue
Portland, Oregon 10153
Richard Contrera(6) 18,108 *
Kathleen Parramore(7) 13,985 *
Martin Katz (8) 4,468 *
Directors and executive officers as a group 50,364 *
(3 persons)(9)
* Less than one percent.
(1) Assumes exercise of options or warrants to purchase shares of Common Stock
and conversion of shares of Series One Convertible Preferred Stock into
shares of Common Stock.
(2) David A. Barry and Jack Kadis are directors of the Company elected by the
holders of the Company's Series One Convertible Preferred Stock. Mr. Barry
and Mr. Kadis are the general partners of BHI Associates VI, L.P., which
is the sole general partner of Bariston Paging Partners, L.P. ("Bariston
Paging"). Messrs. Barry and Kadis are the controlling shareholders of
Bariston Holdings, Inc., which is the sole shareholder of Bariston
Associates, Inc. ("Bariston") and Bariston Securities, Inc. The total
number of shares listed above include 156,242 shares of Series One
Convertible Preferred Stock owned by Bariston Paging, 2,254 shares of
Series One Convertible Preferred Stock owned by Bariston and 378 shares of
Series One Convertible Preferred Stock owned by Mr. Barry, which are
convertible into an aggregate of 3,530,180 shares of Common Stock, 125,778
shares of Common Stock issuable upon exercise of warrants owned by BHI
Associates VI, L.P., 41,672 shares of Common Stock issuable upon exercise
of warrants owned by Bariston, 4,310,140 shares of Common Stock owned by
Bariston Paging, 69,742 shares of Common Stock owned by Bariston and 27,428
shares of Common Stock owned by Mr. Barry. Messrs. Barry and Kadis disclaim
beneficial ownership of the portion of the foregoing shares in which they
have no actual pecuniary interest.
(3) These securities are owned by various individual and institutional
investors including T. Rowe Price High Yield Fund. Inc., which T. Rowe
Price Associates, Inc. ("Price Associates") serves as investment adviser
with power to direct investments and/or sole power to vote the securities.
For purposes of the reporting requirements of the Securities Exchange Act
of 1934, Price Associates is deemed to be a beneficial owner of such
securities; however, Price Associates expressly disclaims that it is, in
fact, the beneficial owner of such securities. Consists of
20,000 shares of Series One Convertible Preferred Stock convertible into an
aggregate of 444,400 shares of Common Stock, and 1,128,624 shares of Common
Stock owned by T. Rowe Price High Yield Fund and 18,560 shares of Series
One Convertible Preferred Stock convertible into an aggregate of 412,403
shares of common stock and 530,559 shares of common stock owned by Price
Associates.
(4) Sandler Mezzanine General Partnership is the investment General Partner of
each of Sandler Mezzanine T-E Partners, L.P. ("TE"), Sandler Mezzanine
Partners, L.P. ("SM") and Sandler Mezzanine Foreign Partners, L.P. ("FP").
Each of MJM Media Corp., which is controlled by Michael J. Marocco, ARPH
Media Corp., which is controlled by Harvey Sandler, EMEBE Media Corp.,
which is controlled by Barry Lewis, and Kornreich Media Corp., which is
controlled by John A. Kornreich, is a General Partner of Sandler Mezzanine
General Partnership. Consists of 5,390, 12,020 and 2,590 shares of Series
One Convertible Preferred Stock owned by TE, SM, and FP, respectively,
which are convertible into an aggregate of 444,400 shares of Page America
Common Stock; and 164,022, 365,782 and 78,815 shares of Page America Common
Stock owned by TE, SM and FP, respectively. Messrs. Marocco, Sandler, Lewis
and Kornreich disclaim beneficial ownership of the portion of the foregoing
shares in which they have no actual pecuniary interest.
(5) Includes 551,729 shares of Common Stock and 20,000 shares of Series One
Convertible Preferred Stock convertible into an aggregate of 444,400 shares
of Common Stock.
(6) Includes 10,758 shares of Common Stock vested under the Company's Stock
Purchase Plan.
(7) Includes 9,886 shares of Common Stock vested under the Company's Stock
Purchase Plan.
(8) Consists of shares of Common Stock vested under the Company's Stock
Purchase Plan.
(9) Includes 378 shares of Series One Convertible Preferred Stock which are
convertible into 8,399 shares of Common Stock.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
Directors, executive officers and holders of more than 10% of its Common Stock
to file with the Securities and Exchange Commission initial reports of ownership
and reports of changes in ownership of Common Stock and other equity securities
of the Company. The Company believes that during the fiscal year ended December
31, 1997, its officers, directors and holders of more than 10% of its Common
Stock complied with all Section 16(a) filing requirements.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Bariston Associates, Inc. ("Bariston") has been engaged by the Company to
provide investment banking functions for which it presently receives a fee of
$9,087 per month during the Company's liquidation, plus reimbursement for
expenses incurred by it in connection therewith. This agreement will terminate
upon the earlier to occur of Bariston and its affiliates ceasing to control a
majority of the Series One Convertible Preferred Stock (or Common Stock issued
upon conversion thereof) or Bariston and its affiliates owning less than 20
percent of the Company's full diluted shares of Common Stock. Upon consummation
of the Sale, Bariston was paid $288,565 which was due and owing to it under such
agreement.
<PAGE>
Holders of a majority of Series One Convertible Preferred Stock, as a
class, have the right to elect two directors of the Company. Bariston Paging
Partners, L.P. holds a majority of the Series One Convertible Preferred Stock.
Mr. Barry and Mr. Kadis are the directors elected by the holders of Series One
Convertible Preferred Stock. The holders of a majority of the Series One
Convertible Preferred Stock have agreed that as long as they continue to own a
majority of such stock they will vote for a nominee designated by the holders of
a majority of such stock.
David A. Barry and Jack Kadis, directors of the Company, are affiliated
with Bariston Securities, Inc. and Bariston.
All of the terms and provisions of the foregoing transactions were
determined on an arms length basis. The Company believes that the terms of these
transactions were no less favorable to the Company than those which could have
been obtained from unaffiliated third parties.
PART IV
ITEM 14. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
(a)(1). Financial Statements. The consolidated financial
statements of Page America Group, Inc. and Subsidiaries, required by Part
II, Item 8, are included in Part IV of this report.
Report of Independent Auditors
Financial Statements Subsequent to Adoption of Plan of Liquidation
Consolidated Statement of Net Assets in liquidation at December
31, 1997.
Consolidated Statement of changes in Net Assets in liquidation
for the period from July 2, 1997 to December 31, 1997.
Financial Statements Prior to Adoption of Plan of Liquidation
Consolidated Balance Sheet at December 31, 1996.
Consolidated statements of Operations for the period from
January 1, 1997 to July 1, 1997 and for the years ended
December 31, 1996 and December 31, 1995.
Consolidated Statements of Cash Flows for the period from
January 1, 1997 to July 1, 1997 and for the two years ended
December 31, 1996 and December 31, 1995.
Consolidated Statement of Stockholders' Equity (Deficit) for the
period from January 1, 1997 to July 1, 1997 and for the years
ended December 31, 1996 and December 31, 1995.
Notes to Consolidated Financial Statements.
(a)(2). Financial Statement Schedule.
Schedule II - Valuation and Qualifying Accounts
All other financial statement schedules are omitted because they are not
applicable, or not required, or because the required information is
included in the consolidated financial statements or notes thereto.
<PAGE>
EXHIBITS
(a)(3) Exhibits:
EXHIBIT NO.
3.1 Restated Certificate of Incorporation of the Registrant, as amended.
Incorporated by reference to Exhibit 3.1 to Annual Report on Form 10-K
for the fiscal year ended December 31, 1993 ("1993 10-K").
3.2 By-Laws of the Registrant. Incorporated by reference to Exhibit 3.2 to
Registration Statement on Form S-1 (File No. 33-46333).
10.1 Amended and Restated Asset Purchase Agreement dated as of January 30,
1997, as amended, by and among Metrocall, Inc., Page America Group, Inc.
and various subsidiaries of Page America Group, Inc. Incorporated by
reference to Exhibits 2.2 and 2.3 to Registration Statement on Form S-4
filed by Metrocall (No. 333-21231).
10.2 Amended and Restated Credit Agreement dated as of July 1, 1997 by and
among Page America Group, Inc., its subsidiaries and NationsBank of
Texas, N.A., individually and as agent, and the lenders party thereto.
10.3 Subordinated Promissory Note, Preferred Stock, Common Stock and Warrant
Purchase Agreement dated as of December 30, 1993, by and among Page
America Group, Inc., its subsidiaries and various purchasers parties
thereto. Incorporated by reference to Exhibit 10.4 to 1993 10-K.
10.4 Second Amended and Restated Registration Rights Agreement dated as of
December 30, 1993. Incorporated by reference to Exhibit 10.5 to 1993
10-K.
10.5 Subordinated Promissory Note Registration Rights Agreement dated as of
December 30, 1993. Incorporated by reference to Exhibit 10.6 to 1993
10-K.
10.6 Series One Convertible Preferred Stock Voting Agreement dated as of
December 30, 1993. Incorporated by reference to Exhibit 10.7 to 1993
10-K.
10.7 Investment Banking Agreement dated December 30, 1993 between Bariston
Associates, Inc. and Page America Group, Inc. Incorporated by reference
to Exhibit 10.8 to 1993 10-K.
10.8 Asset Purchase Agreement dated as of February 24, 1995 by and among
Paging Network of Florida, Inc., Page America Group, Inc. and various
subsidiaries of Page America Group, Inc. Incorporated by reference to
Exhibit 10.10 to 1994 10-K.
10.9 Indenture dated as of June 30, 1994 among Page America Group, Inc., its
subsidiaries, and American Stock Transfer and Trust Company, as Trustee.
Incorporated by reference to Exhibit 4 to Registration Statement on Form
S-4 (File No. 33-77832).
10.10 Amendment dated as of July 28, 1995 to Indenture dated as of June 30,
1994 by and among Page America Group, Inc., its subsidiaries, and
American Stock Transfer and Trust Company, as Trustee. Incorporated by
reference to Exhibit 10.14 to 1995 10-K.
10.11. Forbearance Agreement dated as of July 1, 1997 among the holders of
Subordinated Notes, Page America Group, Inc., and its subsidiaries.
21. Subsidiaries of the Registrant. Incorporated by reference to Exhibit 21
to 1994 10-K.
27. Financial Data Schedule
<PAGE>
(b) Reports on Form 8-K
None
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
PAGE AMERICA GROUP, INC.
April 6, 1998
By:/S/ David A. Barry
David A. Barry
Chairman of the Board and
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
NAME TITLE DATE
/s/ David A. Barry Chairman of the Board and
David A. Barry Chief Executive Officer April 6, 1998
/s/ Jack Kadis
Jack Kadis Director April 6, 1998
<PAGE>
PAGE AMERICA GROUP, INC. AND SUBSIDIARIES
The accompanying notes are an integral part of these statements
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
PAGE
Report of Independent Auditors F-2
Financial Statements Subsequent to Adoption
of Plan of Liquidation
Consolidated Statement of Net Assets
in Liquidation at December 31, 1997 F-3
Consolidated Statement of Changes in
Net Assets in Liquidation for the period
from July 2, 1997 to December 31, 1997 F-4
Financial Statements Prior to Adoption of
Plan of Liquidation
Consolidated Balance Sheet at December 31, 1996 F-5
Consolidated Statements of Operations for the period
from January 1, 1997 to July 1, 1997 and for the years
ended December 31, 1996 and December 31, 1995 F-7
Consolidated Statements of Cash Flows for the period
from January 1, 1997 to July 1, 1997 and for the years
ended December 31, 1996 and December 31, 1995 F-8
Consolidated Statement of Shareholders' Equity (Deficit)
for the period from January 1, 1997 to July 1, 1997 and
for the years ended December 31, 1996 and December 31, 1995 F-10
Notes to Consolidated Financial Statements F-11
REPORT OF INDEPENDENT AUDITORS
Shareholders and Board of Directors
Page America Group, Inc.
We have audited the accompanying statement of net assets in liquidation of
Page America Group, Inc. and subsidiaries as of December 31, 1997 and the
related statement of changes in net assets in liquidation for the period from
July 2, 1997 to December 31, 1997. In addition, we have audited the accompanying
consolidated balance sheet as of December 31, 1996 and the related consolidated
statements of operations, shareholders' equity (deficit) and cash flows for the
period from January 1, 1997 to July 1, 1997 and each of the two years in the
period ended December 31, 1996. Our audit also included the financial statement
schedule listed in the Index at Item 14(a). These financial statements and
schedule are the responsibility of the Company's management. Our responsibility
is to express an opinion on these financial statements and schedule based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
As described in Note B to the consolidated financial statements, the
stockholders of Page America Group, Inc. approved a plan of liquidation on July
1, 1997, and the Company commenced liquidation shortly thereafter. As a result,
the Company has changed its basis of accounting for periods subsequent to July
1, 1997 from the going-concern basis to a liquidation basis.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the net assets in liquidation of Page
America Group, Inc. and subsidiaries at December 31, 1997 and the changes in
their net assets in liquidation for the period from July 2, 1997 to December 31,
1997, and the consolidated financial position as of December 31, 1996 and the
consolidated results of their operations and their cash flows for the period
from January 1, 1997 to July 1, 1997 and each of the two years in the period
ended December 31, 1996 in conformity with generally accepted accounting
principles applied on the bases described in the preceding paragraph. Also, in
our opinion, the related financial statement schedule, when considered in
relation to the basic financial statements taken as a whole, presents fairly in
all material respects the information set forth therein.
ERNST & YOUNG LLP
Hackensack, New Jersey
April 2, 1998
<PAGE>
PAGE AMERICA GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF NET ASSETS IN LIQUIDATION
DECEMBER 31, 1997
($ IN THOUSANDS)
ASSETS
Cash and cash equivalents $ 1,382
Other assets 287
Equity investments 33,890
--------
35,559
LIABILITIES
Accounts payable and accrued expenses 1,655
Senior credit facility 14,195
Subordinated notes payable 18,850
--------
34,700
Net assets in liquidation $ 859
=========
The accompanying notes are an integral part of these statements
<PAGE>
PAGE AMERICA GROUP, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENT OF CHANGES IN NET ASSETS IN
LIQUIDATION FOR THE PERIOD FROM JULY 2, 1997 TO
DECEMBER 31, 1997
($ In Thousands)
<S> <C>
Net assets at July 1, 1997 (Date Plan of Liquidation adopted) $ 854
-----------
Changes in net assets in liquidation attributed to:
Interest expense (2,259)
Dividend income on preferred stock 1,069
Gain on sale of equity investments 627
Unrealized gain on equity investments held for sale 727
General and administrative expenses (159)
----------
Net change in net assets in liquidation 5
----------
Net assets in liquidation at December 31, 1997 $ 859
==========
Changes in the components of net assets in liquidation for the period from July
2, 1997 to December 31, 1997
Decrease in cash and cash equivalents $ (1,234)
Decrease in prepaid expenses and other (152)
Net increase in equity investments 323
Decrease in senior credit facility 142
Decrease in accrued expenses 926
----------
Net change in net assets in liquidation $ 5
=========
</TABLE>
The accompanying notes are an integral part of these statements
<PAGE>
PAGE AMERICA GROUP, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEET
(GOING CONCERN BASIS)
DECEMBER 31, 1996
($ IN THOUSANDS)
ASSETS
Current assets
<S> <C>
Cash and cash equivalents $ 290
Accounts receivable, net of allowance for
doubtful accounts of $278 899
Prepaid expenses and other current assets 672
------
Total current assets 1,861
Equipment, less accumulated depreciation
and amortization 5,382
Other assets
Certificates of authority,
net of accumulated amortization of $3,821 20,363
Customer lists, net of accumulated
amortization of $8,537 3,232
Other intangibles, net of accumulated
amortization of $3,472 8,220
Deposits and other non-current assets 503
-------
32,318
$39,561
========
</TABLE>
The accompanying notes are an integral part of these statements
<PAGE>
PAGE AMERICA GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET (CONTINUED)
(GOING CONCERN BASIS)
DECEMBER 31, 1996
($ IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current liabilities
<S> <C>
Current maturities of long-term debt $ 51,814
Accounts payable and accrued expenses 3,807
Dividends payable 2,864
Other current liabilities 1,785
-----------
Total current liabilities 60,270
Long-term debt, less current maturities 37
Shareholders equity (deficit)
Series one convertible preferred stock, 10% cumulative $.01 par value,
authorized--310,000 shares; issued and outstanding--286,361 shares;
liquidation value--
$105 per share 30,068
Common stock--$.10 par value, authorized--100,000,000
shares; issued and outstanding--16,037,095 shares 1,604
Paid-in capital 53,501
Accumulated deficit (105,919)
---------
(20,746)
----------
$ 39,561
==========
</TABLE>
The accompanying notes are an integral part of these statements
<PAGE>
PAGE AMERICA GROUP, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF OPERATIONS
(GOING CONCERN BASIS)
($ IN THOUSANDS, EXCEPT PER SHARE DATA)
Period from Years Ended
January 1, 1997 to December 31,
July 1, 1997 1996(a) 1995(a)
------------ ------- -------
<S> <C> <C> <C>
Revenues - - -
Expenses related to corporate, finance and other activities
General and administrative $ 671 $ 1,403 $ 2,579
Interest 3,078 6,141 6,248
Other 106 573 2,785
------------- ------------- -----------
Net loss before discontinued operations (3,855) (8,117) (11,612)
Discontinued operations
Net (loss) income from operations of
discontinued businesses (307) 7 (763)
Gain (loss) on sale of discontinued businesses (less applicable 22,903 - (718)
income taxes of $439) ------------ ------------ ----------
Net income (loss) 18,741 (8,110) (13,093)
Dividends on preferred stock (1,432) (2,864) (2,863)
------------ ------------ -----------
Net income (loss) applicable to common stock $ 17,309 $ (10,974) $ (15,956)
=========== =========== ==========
Net loss before discontinued operations
applicable to common stock $ (5,287) $ (10,981) $ (14,475)
============= =========== ==========
Net income (loss) from discontinued operations
applicable to common stock $ 22,596 $ 7 $ (1,481)
============ =============== ===========
Basic and diluted income (loss) applicable to
common stock, per share $ 1.08 $ (0.88) $ (2.01)
============= ============= ============
Basic and diluted loss before discontinued operations
applicable to common stock, per share $ (.33) $ (0.88) $ (1.82)
============== ============= ===========
Basic and diluted income (loss) from discontinued
operations applicable to common stock, per share $ 1.41 - $ (.19)
============ ============= =============
Weighted average number of shares outstanding 16,032,849 12,497,800 7,936,410
============ ============= =========
(a) - Reclassified to reflect businesses sold in 1997 as discontinued operations.
</TABLE>
The accompanying notes are an integral part of these statements
<PAGE>
PAGE AMERICA GROUP, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CASH FLOWS
(GOING CONCERN BASIS)
($ IN THOUSANDS)
Period from Years Ended
January 1, 1997 to December 31,
July 1, 1997 1996 1995
------------ ---- ----
<S> <C> <C> <C>
Net income (loss) $ 18,741 $(8,110) $(13,093)
Adjustments to reconcile net income (loss)
to net cash (used in) provided by operating activities:
Depreciation and amortization 2,321 6,253 9,690
Write-off of deferred financing costs - - 1,584
Net book value of pagers sold 379 1,164 1,596
Provision for losses on accounts receivable 307 908 710
Provision for lost pagers 95 238 249
Issuance of promissory notes to satisfy interest on
subordinated debt 975 1,950 1,950
(Gain) Loss on disposal of assets (22,903) 91 657
Other 52 492 578
Change in assets and liabilities:
(Increase) decrease in accounts receivable (81) (790) 374
(Increase) decrease in prepaid expenses and other
assets (97) 170 279
Decrease in accounts payable (357) (293) (1,759)
(Decrease)increase in accrued expenses (189) 671 (219)
(Decrease) increase in customer deposits and
deferred revenue (62) 244 (532)
--------- -------- ----------
Net cash provided by (used in) operating activities (819) 2,988 2,064
--------- --------- ----------
Cash flows from investing activities:
Capital expenditures (1,109) (3,523) (5,938)
Licensing costs (14) - (206)
Net proceeds from disposal of assets 23,946 616 17,473
-------- -------- --------
Net cash provided by (used in) investing activities 22,823 (2,907) 11,329
-------- -------- --------
Cash flows from financing activities:
Proceeds from issuance of debt 87 1,337 116
Principal payments on debt (19,765) (1,562) (13,077)
Costs related to financing of debt - (129) (741)
Costs related to sale of assets - (188) -
Cost related to issuance of preferred and common stock - - (68)
--------- --------- --------
Net cash used in financing activities (19,678) (542) (13,770)
-------- -------- ---------
Net increase (decrease) in cash and cash equivalents 2,326 (461) (377)
Cash and cash equivalents at beginning of period 290 751 1,128
--------- -------- ----------
Cash and cash equivalents at end of period $2,616 $ 290 $ 751
======= ======= =========
</TABLE>
The accompanying notes are an integral part of these statements
<PAGE>
PAGE AMERICA GROUP, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
(Going Concern Basis)
($ In Thousands)
Period from Years Ended
January 1, 1997 December 31,
to July 1, 1997 1996 1995
--------------- ---- ----
Supplemental schedule of noncash investing and financing activities:
<S> <C> <C> <C>
Dividends accrued on preferred stock $1,432 $2,864 $1,432
Dividends added to the liquidation value of preferred shares - - 1,432
Common stock issued in connection with acquisition - - 1,471
Common stock issued to employee stock purchase plan - 22 16
Common stock issued as payment on preferred stock - 1,432 1,445
Capital expenditures in accounts payable and accrued expenses 611 31 94
Capital expenditures financed 94 989 1,287
Reversal of preferred dividends 4,295 - -
Equity investments received on disposal of assets 33,700
</TABLE>
The accompanying notes are an integral part of these statements
<PAGE>
PAGE AMERICA GROUP, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (DEFICIT)
(Going Concern Basis)
($ In Thousands)
Series One Series C Paid-in
PREFERRED STOCK PREFERRED STOCK COMMON STOCK Capital Accumulated
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT AMOUNT DEFICIT TOTAL
---------------- ------------- --------------- ------ ------- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1995 288,881 $ 28,888 - - 7,101,868 $ 710 $ 49,830 $ (78,989) $ 439
Issuance of Common Stock:
To employee stock purchase plan and trust 20,912 2 14 16
For dividends on Preferred Stock-Series One 437,629 44 1,401 1,445
Purchase price adjustment related
to an acquisition 435,903 43 1,427 1,470
Conversion of Preferred Stock (2,520) (252) 55,993 6 246 0
Dividends added to the liquidation
value of Preferred Stock 1,432 1,432
Expenses related to issuance of Common Stock (68) (68)
Dividends declared on Preferred Stock (2,863) (2,863)
Net loss (13,093) (13,093)
--------- ---------- ------- ------ ----------- ----- ---------- ------ --------
Balance at December 31, 1995 286,361 30,068 0 $ 0 8,052,305 805 52,850 (94,945) (11,222)
Issuance of Common Stock:
To employee stock purchase plan and trust 85,200 9 13 22
For dividends on Preferred Stock - Series One 7,899,590 790 642 1,432
Expenses related to issuance of Common Stock (4) (4)
Dividends declared on Preferred Stock (2,864) (2,864)
Net loss (8,110) (8,110)
---------- ----------- ------ ------ ----------- ----- -------- --------- --------
Balance at December 31, 1996 286,361 30,068 0 0 16,037,095 1,604 53,501 (105,919) (20,746)
Adjustment of Common Stock issued to employee
stock purchase plan and trust (12,008) (1) (3) (4)
Dividends declared on Preferred Stock (1,432) (1,432)
Net Income for the period ended July 1, 1997 - - 18,741 18,741
Reversal of accrued dividends on preferred stock 4,295 4,295
--------- ----------- ------ ------ ---------- ------ -------- --------- --------
Balance at July 1, 1997 286,361 $30,068 0 $ 0 16,025,087 $1,603 $57,793 ($88,610) $ 854
======== ======= ====== ====== ========== ======= ======= ======== ========
</TABLE>
The accompanying notes are an integral part of these statements
<PAGE>
PAGE AMERICA GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
DESCRIPTION OF BUSINESS -- Through July 1, 1997, the Company was a radio
paging company which marketed and provided over-the-air messaging information,
products and services in the New York and Chicago metropolitan area markets
through facilities which owned it and operated as a radio common carrier ("RCC")
under licenses from the Federal Communications Commission.
BASIS OF PRESENTATION -- As a result of the sale of substantially all of
the Company's assets to Metrocall, Inc. and the adoption of a plan of complete
liquidation and dissolution, the Company changed its basis of accounting from
the going concern basis to the liquidation basis in accordance with generally
accepted accounting principles, effective July 1, 1997. Consequently, assets
have been valued at estimated net realizable value and liabilities are presented
at their estimated settlement amounts. Amounts included in the prior year
statements of operations related to the businesses sold have been reclassified
to discontinued operations.
PRINCIPLES OF CONSOLIDATION -- The consolidated financial statements
include the accounts of the Company and its subsidiaries. Significant
intercompany accounts and transactions have been eliminated in consolidation.
USE OF ESTIMATES -- The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. The valuation of assets in liquidation are
based upon management's best estimates of their value at December 31, 1997.
Such values could differ substantially from amounts ultimately realized in the
future as the Company completes its plan of liquidation.
CASH AND CASH EQUIVALENTS -- The Company considers all highly liquid debt
instruments purchased with a maturity of three months or less, at date of
acquisition, to be cash equivalents.
EQUIPMENT -- Equipment was stated at cost less accumulated depreciation and
amortization and included pagers held for sale or lease. Depreciation was
computed by the declining balance method for pager equipment and the
straight-line method for all other equipment in amounts sufficient to allocate
the cost of depreciable assets to operations over their estimated useful lives.
Leasehold improvements were amortized over the shorter of the life of the
respective lease or service life of the improvement. Depreciation expense was
$1,658 for the period from January 1, 1997 to July 1, 1997 and $4,297 and $5,235
in 1996 and 1995, respectively.
CERTIFICATES OF AUTHORITY -- The costs of certificates of authority related
to the conduct of RCC operations were amortized on a straight-line basis
principally over periods of 40 years.
<PAGE>
PAGE AMERICA GROUP, INC. AND SUBSIDIARIES
CUSTOMER LISTS -- Customer lists generally consisted of a portion of the
cost of business acquisitions assigned to the value of customer accounts and
were amortized on a straight-line basis over the various estimated lives of
those customers.
OTHER INTANGIBLES -- Other intangibles included the excess of the purchase
price over the fair market value of the net assets acquired and were amortized
on a straight-line basis principally over 40 year periods. The Company routinely
evaluated the carrying value of all of its intangibles for impairment.
EQUITY INVESTMENTS -- Equity investments included in the consolidated
statement of Net Assets in Liquidation are stated at estimated net realizable
value.
INTEREST RATE PROTECTION -- On December 30, 1993, the Company entered into
a new senior credit facility with certain banks. On February 15, 1994, the
Company entered into an interest rate cap agreement which protected the Company
against increases in interest rates on $25 million of this debt. The cost of
this agreement was fully amortized as of December 31, 1996.
EARNINGS/LOSS PER SHARE -- Net income (loss) per share is computed based
upon the weighted average number of common shares outstanding during the periods
presented and is computed after giving effect to preferred stock dividend
requirements. In 1997, the Company adopted SFAS No. 128 "Earnings per Share."
Implementation of this pronouncement did not change reported net income (loss)
per share for the periods reported. Stock options, warrants and the assumed
conversion of the convertible preferred stock have not been included in the
calculation, since their inclusion would be anti-dilutive for each of the
periods presented.
EMPLOYEE STOCK BASED COMPENSATION -- The Company followed Accounting
Principles Board Statement No. 25 with regard to the accounting for stock issued
as compensation for employees.
NOTE B - SALE OF ASSETS AND PLAN OF LIQUIDATION
On July 1, 1997, the Company sold substantially all of its assets to
Metrocall, Inc. ("Metrocall") for a sale price (as adjusted) of approximately
$60.7 million including the assumption of $2.2 million of liabilities. Page
America received $24.8 million in cash, $15 million of Series B Junior
Convertible Preferred Stock of Metrocall and $18.7 million of Common Stock of
Metrocall, inclusive of a post-closing working capital adjustment resulting in
the Company returning 85,602 shares of common stock to Metrocall. Certain shares
of Metrocall common stock with a fair market value of $4.0 million at the date
of sale are held in escrow until April 1, 1998 pursuant to the sale agreement.
Excluded from the sale were cash, assets related to the employee benefit plans
and to the Florida and California operations which had been previously sold,
liabilities under the Credit Facility, subordinated debt agreement and NEC
America leasing contract, obligations with respect to federal, state and local
taxes and certain other liabilities. The Company recognized a gain from the sale
of assets to Metrocall of approximately $22.9 million, net of expenses related
to the sale of approximately $1.5 million. During the six month period ended
December 31, 1997, the Company sold 248,200 shares of Metrocall common stock and
realized a net gain of $627,000. At December 31, 1997, the Company held
3,663,656 shares of common stock of Metrocall.
In connection with the sale discussed above, the Company adopted a plan of
complete liquidation and dissolution of the corporate entity which became
effective with the completion of the Metrocall sale. Accordingly, on July 1,
1997, the Company changed from the going concern basis of accounting to the
liquidation basis of accounting. The value of the assets to be available for
payment of its liabilities and distribution to the Page America shareholders
upon liquidation cannot be ascertained at this time and will depend among other
things, on the total amount of its liabilities, the number of shares of
Metrocall Common Stock available to Page America from the escrow, the market
value of the Metrocall Common Stock, and the value of the Preferred Stock.
Concurrent with the sale of substantially all of the Company's assets, the
Company's Credit Facility was amended (See Note C).
On July 1, 1997, the holders of Subordinated Notes and the Company entered
into a Forbearance Agreement (the "Forbearance Agreement") pursuant to which the
holders have agreed to forbear from collecting on such Subordinated Notes until
the earlier of December 31, 1998 or the occurrence of certain events relating to
Page America, as described in the Forbearance Agreement (See Note C).
NOTE C - SENIOR CREDIT FACILITY AND SUBORDINATED NOTES PAYABLE
Debt is as follows: December 31,
1997 1996
---- ----
($ in Thousands)
Bank credit facility $14,195 $33,948
Subordinated notes (including deferred interest) 18,850 16,900
Other - 1,003
----------- ----------
33,045 51,851
Less current maturities 33,045 51,814
-------- --------
Long term portion $ 0 $ 37
========== =========
On December 30, 1993, the Company entered into a senior secured credit
facility with certain banks with an original final maturity of March 31,
2000. Payments on the Credit Facility initially were to be interest only with
mandatory principal payments due quarterly beginning on September 30, 1995.
On July 28, 1995, concurrent with the sale of the Company's Florida and
California paging assets, the Credit Facility was amended. Among other things,
the amendment provided for an acceleration of the maturity to December 29, 1995
and modified the financial covenants so that the Company would no longer be in
default as of the amendment date. The Company used the net proceeds from the
sale of its Florida and California operations to reduce the debt by $11.8
million and prepay interest at the LIBOR rate from August 1, 1995 through
December 29, 1995. In the third fiscal quarter of 1995, the Company recorded a
charge of approximately $1.8 million related to the amended agreement which
included the write-down of deferred financing costs of approximately $1.1
million. On April 26, 1996, the Company's Credit Facility was again modified to
provide for a revolving credit loan of $750,000, a waiver of all existing
defaults on certain financial and other covenants, the omission of financial
covenants effective April 30, 1996 and an extension of the maturity date to the
earlier of November 30, 1996 or the completion of the sale of the Company's
assets to Metrocall, Inc.
<PAGE>
PAGE AMERICA GROUP, INC. AND SUBSIDIARIES
On July 1, 1997, concurrent with the sale of substantially all of the
Company's assets, the Company's Credit Facility was further amended. Among other
things, the amendment provided for an extension of the maturity date to December
31, 1998 and a waiver of all existing covenant defaults. In addition, the
Company was required to use part of the cash proceeds to reduce the debt by
approximately $18.4 million. Any amounts outstanding under the Credit Agreement
will bear interest payable monthly at prime plus 2% to 4% depending on the
principal amount outstanding thereunder from time to time. At December 31, 1997,
the interest rate was prime of 8.5% plus 4%.
On September 30, 1997, pursuant to the amended agreement, the Company paid
a reinstatement fee of $350,000 originally due on November 30, 1996. Until
payment in full of the balance due under the Credit Facility, Page America will
not be permitted to make any payments to the holders of the Subordinated Notes
or its common or preferred stockholders, but it will be permitted to pay
accounts payable, claims, expenses and liabilities incurred in connection with
its liquidation. Subject to payment of such accounts, claims, expenses and
liabilities, any amounts received by the Company from the sale or redemption of
any Metrocall securities must be paid in reduction of amounts outstanding under
the Credit Facility. In August and October, 1997, the Company paid down $326,484
and $750,000 of the Credit Facility, respectively, reducing the balance to
$14,195,347. All Metrocall Series B Preferred Stock and Common Stock, excluding
832,250 shares of Metrocall common stock held in escrow, are held as collateral
against the Senior Credit Facility. Page America is required to maintain a ratio
of face amount of Series B Preferred Stock and value of Metrocall Common Stock,
excluding 832,250 shares held in escrow, to amounts outstanding under the Credit
Facility of at least 1.5 to 1.
On December 30, 1993, the Company sold $13 million aggregate principal
amount of 12 percent Subordinated Notes originally due 2003, with warrants,
pursuant to a Note Purchase Agreement. Payments on the Subordinated Notes
initially were to be interest only with mandatory principal payments of $1.3
million due semi-annually beginning on June 30, 1999. All payments on the notes
are subordinated to the prior payment in full of all amounts outstanding under
the Credit Facility. The notes are governed by certain financial covenants. In
July, 1994, the Company exchanged the notes for identical notes which were
registered under the Securities Act of 1933.
On July 28, 1995, the subordinated notes were modified to provide for a
final maturity of six months subsequent to the final maturity of the Credit
Facility and to defer the cash payment of interest until maturity. Commencing
January 1, 1995, interest was increased from 12 to 15 percent per annum,
compounded semi-annually and is satisfied by the issuance of additional
promissory notes with terms substantially identical to the subordinated notes,
as amended. In 1995 the Company recorded a charge of approximately $500,000
related to the modified agreement, which included the write-down of deferred
financing costs of approximately $479,000. The subordinated notes were due on
December 31, 1996 and had not been paid. The Company was in default on payment
of the subordinated notes.
On July 1, 1997, concurrent with the sale of the Company's assets to
Metrocall, the holders of Subordinated Notes and the Company entered into a
Forbearance Agreement (the "Forbearance Agreement") pursuant to which the
holders have agreed to forbear from collecting on such Subordinated Notes until
the earlier of December 31, 1998 or the occurrence of certain events relating to
the Company, as described in the Forbearance Agreement. During the forbearance
period, the holders of the Subordinated Notes will not initiate any action,
exercise any remedy or make any claim against the Company with respect to the
Subordinated Notes. In consideration of such forbearance, and in the complete
satisfaction of all amounts of principal and interest due, after all amounts
have been paid in full under the Credit Facility, the holders of the
Subordinated Notes will be entitled to receive 70% of cash available for
distribution to the Subordinated Note Holders and the Preferred and Common
Shareholders, up to an aggregate amount of $19 million, with the remaining 30%
to be distributed to the Preferred and Common shareholders of Page America.
After the holders of Subordinated Notes have indefeasibly received a total of
$19 million, any remaining amounts available for distribution to the
Subordinated Note Holders and the Preferred and Common Shareholders will be made
50% to the holders of the Subordinated Notes and 50% to the Preferred and Common
shareholders of Page America. Interest will continue to accrue on the
Subordinated Notes until the full amount of principal and interest due
thereunder shall have been paid in full or the obligations thereunder shall have
been otherwise satisfied in accordance with the terms and provisions of the
Forbearance Agreement.
Pursuant to the Forbearance Agreement, Page America's obligations to
repurchase the warrants held by the holders of the Subordinated Notes were
terminated. Page America is not permitted to enter into transactions with its
stockholders, officers or directors or conduct any business or incur any debt
other than in connection with the satisfaction of its obligations under the
Credit Facility, payment of other permitted liabilities and the implementation
of the Plan of Liquidation.
Interest payments for fiscal years 1997, 1996 and 1995 were $2.9 million,
$3.3 million and $4.5 million, respectively.
NOTE D - EQUITY INVESTMENTS
The Company's equity investments at December 31, 1997, are as follows ($ in
Thousands):
<TABLE>
<CAPTION>
Net appreciation
(depreciation) in
Fair Value Cost Fair Value
----------- ------ ------------------
<S> <C> <C> <C>
Metrocall Series B Junior Convertible Preferred Stock $15,790 $15,790 --
Metrocall Common Stock 18,090 17,363 727
Other Marketable Securities 10 10 --
-------- --------- -------
$33,890 $33,163 $727
======== ========= ========
</TABLE>
The Series B Junior Convertible Preferred Stock has a 14% dividend rate
payable semi-annually in arrears on May 15 and November 15. Payment of dividends
may be made in cash or in kind. The Series B Preferred Stock may be redeemed by
Metrocall at any time and must be redeemed by Metrocall on July 1, 2009 if not
previously redeemed or converted by that date. On November 15, 1997, the Company
received 79 shares ($790,000 fair value ) of Series B Junior Convertible
Preferred in payment of dividends accrued from July 1 to November 15, 1997. On
each of September 1, and December 1, 1997, $3.75 million of the Preferred Stock
became convertible into 567,644 and 641,026 shares of common stock of Metrocall,
respectively. In addition, $395,000 of the Preferred Stock received on November
15, 1997, became convertible on September 1 and December 1, 1997, into 29,895
and 33,760 shares of common stock of Metrocall, respectively. On March 1, 1998,
$3.75 million of the Metrocall Series B convertible Preferred Stock became
convertible into 581,395 shares of Common Stock; and $197,500 of the Preferred
Stock on November 15, 1997 became convertible into 30,620 shares of Common
Stock. The remaining Preferred Stock of $3.75 million will be convertible on
June 1, 1998. All Preferred shares issued as dividends are convertible 25% on
September 1, December 1, March 1, and June 1. In the opinion of management, the
estimated fair value of the Metrocall Series B Junior Convertible Preferred
Stock approximates its face value.
The estimated fair value of the Metrocall Common Stock is based on the
closing price of $4.9375 per share on December 31, 1997. The fair value of other
marketable securities has been determined through information obtained from
quoted market sources. Realized gains and losses on the sale of these Securities
and net unrealized gains or losses on these securities available for sale have
been reflected in the statement of changes in net assets in liquidation.
<PAGE>
PAGE AMERICA GROUP, INC. AND SUBSIDIARIES
NOTE E - ASSET AND LIABILITY CLASSIFICATIONS ($ IN THOUSANDS)
<TABLE>
<CAPTION>
Other current assets comprise the following:
December 31,
1997 1996
<S> <C> <C>
Dividend receivable $ 279 $ -
Current portion of escrow amount from the
sale of Florida and California assets - 502
Other current assets 8 170
--------- -----------
$ 287 $ 672
======= ==========
Equipment at December 31, 1996 consists of the following:
Pagers $ 6,510
Radio common carrier equipment 13,282
Office equipment 3,939
Leasehold improvements 614
Building and land 64
-----------
24,409
Less accumulated depreciation and amortization (19,027)
$ 5,382
=========
Accounts payable and accrued expenses and other liabilities
comprise the following:
December 31,
1997 1996
Accounts payable $ 3 $ 1,620
Interest 1,139 751
Taxes 292 768
Salaries and bonuses 77 132
Professional services 67 116
Other 77 420
-------- ----------
$1,655 $ 3,807
====== =========
</TABLE>
NOTE F - SALE OF FLORIDA AND CALIFORNIA OPERATIONS
On July 28, 1995, the Company sold its California and Florida paging assets
for a cash sale price of $19.4 million. Part of the proceeds was used to reduce
the Company's senior debt by $11.8 million and to prepay interest of $1.2
million through December 29, 1995. In connection with this sale, the Company
incurred a loss of approximpately $718,000.
NOTE G - SHAREHOLDERS' EQUITY
Capital stock outstanding as of December 31, 1997 consists of the following:
Series One
Preferred Common
Stock Stock
Par value $ .01 $ .01
Shares authorized 310,000 100,000,000
Shares issued and outstanding 286,361 16,025,087
SERIES ONE CONVERTIBLE PREFERRED STOCK -- The Series One Convertible Preferred
Stock has a liquidation value of $105 per share and a 10 percent dividend,
payable semi-annually in arrears and is convertible into Common Stock at $4.50
per share, subject to certain anti-dilution provisions. Payment of dividends
could be made in cash or in Common Stock of the Company. On August 11, 1994 and
March 8, 1995, the Company issued 406,220 shares and 437,629 shares of its
Common Stock, respectively, to the holders of Series One Convertible Preferred
Stock, as full payment of dividends for the year ended December 31, 1994. On
June 30, 1995, the Preferred shareholders waived their right to receive the
dividend payment of $1,432,000 due on the same date. In exchange, this amount
was added to the liquidation value of the shares. On June 12, 1996, the Company
issued 7,899,590 shares of its Common Stock as full payment of the dividends
accrued at December 31, 1995. Dividends in arrears aggregated $4,295,000, or
$15.00 per preferred share, at June 30, 1997. On July 1, 1997, concurrent with
the sale of assets to Metrocall, the Preferred shareholders waived their rights
to receive the dividend payment of $4,295,000 and their rights to future
dividends. The amount of dividend waived has been credited to paid-in capital.
Pursuant to the Company's Plan of Liquidation, the holders of Page America's
Series One Preferred Stock have agreed that 30% of any distributions otherwise
payable to them with respect to their liquidation preference will be distributed
to the holders of Page America's Common Stock.
WARRANTS - In connection with the issuance of the Subordinated Notes, the
Company also issued warrants to purchase an aggregate of 1,205,556 shares of
Common Stock, at a purchase price of $3.50 per share. As part of the Forbearance
Agreement, the holders of the subordinated notes surrendered their warrants.
STOCK OPTIONS -- The Company's 1983 Stock Option Plan, as amended, provided
for the granting of options to purchase an aggregate of 235,000 shares of the
Company's Common Stock to key employees. The option prices cannot be less than
the fair market value of Common Stock at dates of grant. Options could not be
exercised until specified time restrictions have lapsed and option periods
could not exceed five years. No more options may be granted under this plan.
The Company's 1990 Stock Option Plan provided for the grant by the Company
of options to purchase not more that 555,000 shares of Common Stock to key
employees and directors. The exercise price per share is the fair market value
of a share of Common Stock for options granted after December 29, 1992, and the
greater of (i) the fair market value of a share of Common Stock or (ii) $7.00,
for options granted on or before December 29, 1992. Options granted under
the 1990 Stock Option Plan could not be exercised prior to one year from the
date of grant and options could be exercised 20 percent per year thereafter.
Option activities under the Incentive Plans are detailed in the following table:
<TABLE>
<CAPTION>
Weighted
Average Option
1990 PLAN 1983 PLAN PRICE PER SHARE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Outstanding at January 1, 1995 288,708 106,000 5.03
Granted 225,000 - .75
FORFEITED/CANCELED (267,008) (101,000) 4.90
- ---------------------------------------------------------------------------------------------------------------------
Outstanding at December 31, 1995 246,700 5,000 1.39
FORFEITED/CANCELED (11,700) - 7.00
- ---------------------------------------------------------------------------------------------------------------------
Outstanding at December 31, 1996 235,000 5,000 1.12
FORFEITED/CANCELED (235,000) (5,000) 1.12
- ---------------------------------------------------------------------------------------------------------------------
Outstanding at December 31, 1997 - - -
=====================================================================================================================
EXERCISABLE AT DECEMBER 31, 1997 - - -
- ---------------------------------------------------------------------------------------------------------------------
EXERCISABLE AT DECEMBER 31, 1996 54,000 5,000 2.13
- ---------------------------------------------------------------------------------------------------------------------
EXERCISABLE AT DECEMBER 31, 1995 18,700 3,750 6.80
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
Had the Company been accounting for its employee stock options under the
fair value method of SFAS No. 123, there would not have been a material impact
on the Company's net loss or net loss per common share during 1995, 1996, and
1997.
NOTE H -- INCOME TAXES
The Tax Reform Act of 1986 enacted a complex set of rules limiting the
utilization of net operating loss and tax credit carryforwards to offset future
taxable income following a corporate "ownership change". In general, an
ownership change occurs if the percentage of stock of a loss corporation owned
(actually, constructively and, in some cases, deemed ownership) by one or more
"5 percent shareholders" has increased by more than 50 percentage points over
the lowest percentage of such stock owned by those persons during a three year
testing period. If an ownership change occurs it would limit the utilization of
the net operating loss carryforwards for federal income tax purposes. The
Company has determined that there has been an ownership change as of December
31, 1993. As of December 31, 1997 the Company had net operating losses of
approximately $65 million for federal income tax purposes which will expire at
various dates between 1998 and 2012. Net operating losses of $52.6 million are
subject to the aforementioned limitations. In addition, the Company has
investment tax credit carryforwards of approximately $621,000 which expire
principally in 1998 through 2000, which are also subject to limitation.
<TABLE>
<CAPTION>
The effects of temporary differences that gave rise to deferred tax assets
and liabilities are as follows:
December 31, 1997 December 31, 1996
($ In Thousands) ($ In Thousands)
<S> <C> <C>
Deferred tax assets: -- $ 32
FCC License amoritization
Commission expense -- 1,351
Investment tax credit carryforwards $ 621 670
Net operating loss carryforwards 25,044 30,937
Other -- 163
------------- -----------
Total deferred tax assets 25,655 33,153
Less: Valuation allowance (25,385) (32,729)
-------------- ------------
Net deferred tax assets 280 424
Deferred tax liabilities:
Depreciation -- 424
Other 280 --
-------------- ------------
Total Deferred tax liabilities 280 424
-------------- ------------
Net deferred tax asset/liability $ 0 $ 0
============== ============
</TABLE>
The Company's valuation allowance decreased by approximately $7,344,000 to
$25,385,000 as of December 31, 1997 due principally to the utilization of net
operating losses and reversal of net deferred tax assets.
The reconciliation of income taxes computed at the U.S. federal
statutory tax rate to income tax expense is $ In Thousands:
<TABLE>
<CAPTION>
Period from Period from Year Ended December 31,
July 2, 1997 January 1,
to December 31, 1997 to July 1,
1997 1997 1996 1995
<S> <C> <C> <C> <C>
Tax (benefit) at U.S. statutory rates $ 2 $ 6,521 ($2,757) ($4,429)
State income taxes, net of federal benefit - 39 (278) (487)
Reversal of deferred tax assets - 1,475 - -
Valuation allowance 252 (7,596) 3,017 4,315
Dividend exclusion (254) - - -
Other - - 18 601
----------- ---------- -------- ---------
0 $ 439 $ 0 $ 0
============ ========== ========= =========
Cash paid for taxes totalled $459,000 in 1997.
</TABLE>
NOTE I -- CONTINGENCIES
The Company is involved in various lawsuits and proceedings arising in the
normal course of business. In the opinion of management of the Company, the
ultimate outcome of these lawsuits and proceedings will not have a material
effect on the financial position, results of operations or cash flows of the
Company.
NOTE J -- RELATED PARTY TRANSACTIONS
A company (the "Related Company") whose president is a Director of the
Company acted as a placement agent in connection with the sale by the Company of
shares of Series One Convertible Preferred Stock and subordinated notes and the
entering into of the bank credit facility.
The Related Company has been engaged to provide investment banking
functions for which it presently receives a fee of $9,087 per month during the
Company's liquidation and will be reimbursed for expenses incurred by it in
connection therewith. This agreement will terminate if the Related Company
ceases to control a majority of the Series One Convertible Preferred Stock (or
Common Stock issued upon conversion thereof) or owns less than 20% of the
Company's fully diluted shares of Common Stock. Investment banking fees were
$109,038, $109,038 and $106,643 in 1997, 1996 and 1995, respectively. At
December 31, 1997 and 1996, investment banking and other fees accrued but unpaid
were $0 and $288,000, respectively.
In conjunction with the purchase of Series A and Series A-2 Preferred Stock
and the issuance of subordinated note from 1990 to 1992, the Related Company was
issued warrants to purchase 167,696 shares of the Company's Common Stock at
an aggregate exercise price of $843,900.
NOTE K -- RENTALS
Rental expense for the fiscal years 1997, 1996, and 1995 was approximately
$1,190,000, $2,383,000, and $3,062,000, respectively.
All leases that existed on July 1, 1997 have been assumed by Metrocall as
part of the sale transaction. On October 1, 1997, the Company entered into a new
lease commitment for office space at a rate of $1,000 per month. The lease term
expires on May 31, 1998.
NOTE L - EMPLOYEE BENEFIT PLAN
The Company had a 401(K) plan covering substantially all of its employees.
All employees who completed ninety days of service were eligible to participate.
Employees may contribute 1% to 4% of compensation to the plan on an after-tax
basis and also defer additional amounts of compensation in 1% increments on a
pre-tax basis, subject to limits established by the Internal Revenue Code. The
Company matched 100% of after-tax and 25% of pre-tax contributions with shares
of its common stock until March 15, 1996, after which matching contributions
were paid in cash. The total cost of the plan amounted to $11,700, $43,900, and
$69,400 in 1997, 1996, and 1995, respectively.
The plan was terminated on June 30, 1997. Upon approval from the Internal
Revenue Service, all assets in the plan will be distributed to the participants
after which the plan will be dissolved.
<TABLE>
<CAPTION>
Page America Group, Inc. and Subsidiaries
SCHEDULE II-VALUATION AND QUALIFYING ACCOUNTS
($ In Thousands)
Column A Column B Column C Column D Column E
- ---------- ---------- ---------- ---------- ---------
Additions
Balance at- charged to Balance at
beginning costs and Deductions- end of
Description of period expenses describe period
- ----------- ------------ ------------ ------------- ------------
<S> <C> <C> <C> <C>
Year ended December 31, 1995
Allowance for
doubtful accounts $439 $710 $872(a) $277
==== ==== ==== ====
Year ended December 31, 1996
Allowance for
doubtful accounts $277 $908 $907(a) $278
==== ==== ==== ====
For the period January 1, 1997
to July 1, 1997
Allowance for
doubtful accounts $278 $307 $585(b) $ 0
==== ==== ==== ====
(a) accounts written off as uncollectible.
(b) accounts written off or acquired by Metrocall as part of sale transaction
on July 1, 1997.
</TABLE>
EXHIBIT 10.2
AMENDED AND RESTATED CREDIT AGREEMENT
THIS AMENDED AND RESTATED CREDIT AGREEMENT is dated as of the 1st day of
July, 1997 among PAGE AMERICA GROUP, INC., a New York corporation, PAGE AMERICA
OF ILLINOIS, INC., an Illinois corporation, PAGE AMERICA COMMUNICATIONS OF
INDIANA, INC., an Indiana corporation, PAGE AMERICA OF NEW YORK, INC., a New
York corporation, PAGE AMERICA COMMUNICATIONS OF CALIFORNIA, INC., a California
corporation, PAGE AMERICA COMMUNICATIONS OF FLORIDA, INC., a Florida
corporation, PAGE AMERICA OF PENNSYLVANIA, INC., a Pennsylvania corporation, and
ADIRONDACK RADIO TELEPHONE CO., INC., a New York corporation (each a "Company,"
and collectively the "Companies"), the Lenders from time to time party hereto
(as defined below), and NATIONSBANK OF TEXAS, N.A., a national banking
association, individually and as Administrative lender (in such latter capacity,
the "Administrative Lender").
WITNESSETH:
WHEREAS, the Companies are currently obligated to the Lenders for loans in
the unpaid principal amount of $33,697,498 plus accrued and unpaid interest
thereon, made by the Lenders to the Companies pursuant to that certain Credit
Agreement dated as of December 30, 1993, as amended (the "Original Credit
Agreement");
WHEREAS, pursuant to the Metrocall Agreement (hereinafter defined), the
Companies have agreed to sell substantially all of their assets in exchange for
certain cash, stock, and other consideration, which sale requires the consent of
the Lenders;
WHEREAS, the Lenders have agreed to provide their consent to such sale and,
in connection therewith, the Companies, the Administrative Lender, and the
Lenders have agreed to reduce, restructure, extend, and renew the indebtedness
under the Original Credit Agreement to provide for an extension, renewal and
rearrangement of a portion of the principal amount outstanding pursuant to the
Original Credit Agreement in the amount of $15,271,830.75;
NOW, THEREFORE, for valuable consideration hereby acknowledged, the parties
hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 DEFINITIONS. As used in this Agreement, the following terms
have the respective meanings indicated below (such meanings to be applicable
equally to both the singular and plural forms of such terms):
"ADMINISTRATIVE LENDER" means NationsBank of Texas, N.A., a national
banking association, in its capacity as the Administrative Lender hereunder, or
any successor Administrative Lender appointed pursuant to Section 8.6 hereof.
"ADVANCE" means an advance made by a Lender to any Company pursuant to
Section 2.1 hereof.
"AFFILIATE" of any Person means (i) any director (or Person holding the
equivalent position) or officer (or Person holding the equivalent position) of
such Person or of any Affiliate of such Person, (ii) any other Person which,
directly or indirectly through one or more intermediaries, controls or is
controlled by or under common control with such Person (excluding any trustee
under, or any committee with responsibility for administering, any Plan),
including, without limitation, if such other Person possesses, directly or
indirectly, power to vote 10% or more of the securities having ordinary voting
power, or if not having ordinary voting power, having at the time voting power,
for the election of directors of such Person or to direct or cause the direction
of management and policies of such Person whether by contract or otherwise,
including any general partner and (iii) any other Person who is a member of the
immediate family of such person or is the executor, administrator or other
personal representative of such Person, but not a holder of Subordinated Debt.
"AGREEMENT" means this Amended and Restated Credit Agreement, as hereafter
amended, modified or supplemented in accordance with its terms.
"APPLICABLE LAW" means (i) in respect of any person, all provisions of
constitutions, statutes, rules, regulations and orders of governmental bodies or
regulatory agencies applicable to such Person, and all orders and decrees of all
courts and arbitrators in proceedings or actions to which the Person in question
is a party, including applicable Environmental law and (ii) in respect of
contracts made or performed in the State of Texas, "Applicable Law" shall also
mean the laws of the United States of America, including, without limiting the
foregoing, 12 USC Sections 85 and 86(a), as amended to the date hereof and as
the same may be amended at any time and from time to time hereafter, and any
other statute of the United States of America now or at any time hereafter
prescribing the maximum rates of interest on loans and extensions of credit, and
the laws of the State of Texas, including, without imitations, Articles
5069-1.04 and 5069-1.07(a), Title 79, Revised Civil Statutes of Texas, 1925, as
amended ("Art. 1.04"), and any other statute of the State of Texas now or at any
time thereafter prescribing maximum rates of interest on loans and extensions of
credit; provided however, that pursuant to Article 5069-15.10(b), Title 79,
Revised Civil Statutes of Texas, 1925, as amended, each Company agrees that the
provision of Chapter 15, Title 79, Revised Civil Statutes of Texas, 1925, as
amended, shall not apply to the Advances hereunder.
"APPLICABLE MARGIN" means the respective amount set forth below opposite
the relevant Total Principal Debt amount, until the first Business Day after
receipt by the Lenders from the Companies of a principal payment which reduces
the Total Principal Debt to an amount so that another Applicable Margin shall be
applied; provided that if a Default or an Event of Default shall occur and be
continuing, the applicable Margin shall be three percent (3%) in excess of the
respective amounts set forth below in this definition.
TOTAL PRINCIPAL DEBT APPLICABLE MARGIN
Greater than or equal to 4%
$10,000,000
Greater than or equal to 3%
$5,000,000 but less than
$10,000,000
Less than $5,000,000 2%
"ART. 1.04" shall have the meaning given to such term in the definition
herein of "Applicable Law."
"ASSIGNMENT AND ACCEPTANCE AGREEMENT" means an agreement in substantially
the form of EXHIBIT C hereto, executed by an assigning Lender in accordance with
the terms and provisions of Section 9.4 hereof.
"AUDITOR" means Ernst & Young or other independent certified public
accountants of nationally recognized standing.
"AUTHORIZATIONS" means all filings, recordings and registrations with, and
all validations or exemptions, approvals, order, authorizations, consents,
licenses, certificates and permits from, the FCC, public utilities and other
applicable Tribunals, including, without limitation, any License.
"BASE RATE" means a fluctuating rate per annum as shall be in effect from
time to time equal to the lesser of (a) the Highest Lawful Rate and (b) the
Applicable Margin plus the higher of (i) the rate of interest announced publicly
by NationsBank of Texas, N.A. in Dallas, Texas from time to time as its U.S.
dollar prime commercial lending rate (such rate may or may not be the lowest
rate of interest charged by NationsBank of Texas, N.A. from time to time) and
(ii) the sum of the Federal Funds Rate plus 1/2 of 1%. The Base rate shall be
adjusted automatically as of the opening of business on the effective date of
each change in the prime rate to account for such change.
"BUSINESS DAY" means a day of the year on which banks are not required or
authorized to close in Dallas, Texas, or New York, New York.
"CAPITALIZED LEASE OBLIGATIONS" means, with respect to the Companies and
the Subsidiaries, the amount of the obligations of the Companies and the
Subsidiaries under Capital Leases which would be shown as a liability on a
balance sheet of the Companies prepared in accordance with GAAP.
"CAPITAL LEASES" means capital leases and subleases, as defined in the
Financial Accounting Standards Board Statement of Financial Accounting Standards
No. 13, dated November 1976, as amended.
"CAPITAL STOCK" means, as to any Person, the equity interests in such
Person, including, without limitation, the shares of each class of capital stock
of any Person that is a corporation and partnership interests (general and
limited) in any Person that is a partnership.
"CASH EQUIVALENTS" means investments (directly or through a money market
fund) in (a) certificates of deposit, repurchase agreements, and other interest
bearing deposits or accounts with United States commercial banks having a
combined capital and surplus of at least $100,000,000, or with insurance
companies whose debt obligations have one of the three highest ratings
obtainable from Standard & Poor's Corporation or Moody's Investors Services,
Inc., which certificates, repurchase agreements, deposits, and accounts mature
within one year from the date of investment, (b) obligations issued or
unconditionally guaranteed by the United States government, or issued by an
agency thereof and backed by the full faith and credit of the United States
government, which obligations mature within one year from the date of
investment, (c) direct obligations issued by any state or political subdivision
of the United States, which mature within one year from the date of investment
and have the highest rating obtainable from Standard & Poor's Corporation or
Moody's Investors Services, Inc. on the date of Investment, and (d) commercial
paper which has one of the three highest ratings obtainable from Standard &
Poor's Corporation or Moody's Investors Services, Inc.
"CHANGE IN CONTROL" means (a)(i) the acquisition of all or substantially
all assets of PAG by any Person or affiliated group of Persons after the
consummation of the Metrocall Sale, or (ii) the acquisition by any person (as
"person" is defined in section 13(d) of the Securities Exchange Act of 1934, as
amended), in a single transaction or series of transactions, of the beneficial
ownership of 50% or more of the outstanding voting stock of PAG, or (b) any
change of control as described and set forth in Section 1.04 of the Subordinated
Series B Notes and any change of control provision in the Subordinated Notes and
Agreements.
"CLOSING DATE" means the date hereof.
"CODE" means the Internal Revenue Code of 1986, as amended, reformed or
otherwise modified form time to time.
"COLLATERAL" has the meaning ascribed thereto in Section 2.7 hereof.
"COLLATERAL COVERAGE REPORT" means a report of a Responsible Officer in the
form of EXHIBIT D hereto, certifying that the Companies are in compliance with
Section 5.9 hereof.
"COMMUNICATIONS ACT" means, collectively, the Communications Act of 1934,
as amended, and the rules and regulations promulgated thereunder, as from time
to time in effect.
"COMPANIES" means collectively, Page America Group, Inc., a New York
corporation, Page America of Illinois, Inc., an Illinois corporation, Page
America Communications of Indiana, Inc., an Indiana corporation, Page America of
New York, Inc., a New York corporation, Page America Communications of
California, Inc., a California corporation, Page America Communications of
Florida, Inc., a Florida corporation, Page America of Pennsylvania, Inc.,, a
Pennsylvania corporation, and Adirondack Radio Telephone Co., Inc., a New York
corporation, and "COMPANY" means any one of them as appropriate.
"COMPLIANCE CERTIFICATE" means a certificate of a Responsible Officer in
the form of EXHIBIT B hereto, certifying that such individual has no knowledge
that a Default or Event of Default has occurred and is continuing.
"CONTINGENT LIABILITY" means, as to any Person, any obligation, contingent
or otherwise of such Person guaranteeing or having the economic effect of
guaranteeing any Debt or obligation of any other Person in any manner, whether
directly or indirectly, including without limitation all letters of credit and
similar instruments and any obligation of such Person, direct or indirect, (a)
to purchase or pay (or advance or supply funds for the purchase or payment of)
such Debt or to purchase (or to advance or supply funds for the purchase of) any
security for the payment of such Debt, (b) to purchase Property or services for
the purpose of assuring the owner of such Debt of its payment, or (c) to
maintain the solvency, working capital, equity, cash flow, fixed charge or other
coverage ratio, or any other financial condition of the primary obligor so as to
enable the primary obligor to pay any Debt or to comply with any agreement
relating to any Debt or obligation, excluding any Debt or Guaranty of any
Subsidiary of any Company, but only to the extent it is in duplication of items
already included in Debt and Funded Debt.
"CONTROLLED GROUP" means all members of a controlled group of corporations
and all trades or businesses (whether or not incorporated) under common control
which, together with any Company or any Subsidiary, are treated as a single
employer under Section 414(b) or 414(c) of the Code.
"DEBT" means all obligations, contingent or otherwise, which in accordance
with GAAP should be classified on the balance sheet as liabilities, and in any
event including Capitalized Lease Obligations, Contingent Liabilities,
Guaranties and liabilities secured by any Lien on any Property, regardless of
whether such secured liability is with or without recourse.
"DEFAULT" means any event specified in Section 7.1 hereof, whether or not
any requirement in connection with such event for the giving of notice, lapse of
time, or happening of any further condition has been satisfied.
"DIVIDEND" means, as to any Person, (a) any declaration or payment of any
dividend (other than a stock dividend) on, or the setting aside or the creation
of a sinking fund with respect to, or the making of any pro rata distribution,
loan, advance or investment to or in any holder (in its capacity as a
shareholder) of, any shares of Capital Stock of such Person, or (b) any
purchase, redemption, or other acquisition or retirement for value of any shares
of Capital Stock of such Person, or the setting aside or the creation of a
sinking fund with respect thereto.
"ELIGIBLE ASSIGNEE" means (a) a commercial bank organized under the laws of
the United States of America, or any State thereof, (b) a commercial bank
organized under the laws of any other country which is a member of OECD, or a
political subdivision of any such country; PROVIDED THAT such bank is acting
through a branch or agency located in (x) the United States or the country in
which it is organized or another country which is also a member of the OECD or
(y) the Cayman Islands, (c) the central bank of any country which is a member of
the OECD, (d) a commercial finance company or finance subsidiary of the
corporation organized under the laws of the United States of America, or any
State thereof, (e) an insurance company organized under the laws of the United
States of America (or any State thereof), (f) a savings bank or savings and loan
association organized under the laws of the United States of America, or any
State thereof, (g) a pension fund or other institutional lender or investor, and
(h) any Lender party to this Agreement on the date of the initial Advance or any
Affiliate of any thereof, PROVIDED THAT no person other than a Person described
in clause (h) may be an Eligible Assignee unless it represents and warrants that
it does not engage in the same line of business as, or derive more than 5% of
its revenues in the same line of business as, the Companies.
"ENVIRONMENTAL LAWS" means any and all present and future Federal, state,
local and foreign laws, rules or regulations, and any orders or decrees, in each
case as now or hereafter in effect, relating to the regulation or protection of
human health, safety or the environment or to emissions, discharges, releases or
threatened releases of pollutants, contaminants, chemicals or toxic or hazardous
substances or wastes into the indoor or outdoor environment, including, without
limitation, ambient air, soil, surface water, ground water, wetlands, land or
subsurface strata, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
pollutants, contaminants, chemicals or toxic or hazardous substances or wastes.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the rulings and regulations issued thereunder, as from time to time
in effect.
"EVENT OF DEFAULT" means any of the events specified in Section 7.1 of this
Agreement, provided there has been satisfied any requirement in connection
therewith for the giving of notice, lapse of time, or happening of any further
condition or any combination thereof.
"FCC" means the Federal Communications Commission and any successor
thereto.
"FEDERAL FUNDS RATE" means, for any period, a fluctuating interest rate per
annum equal for each day during such period to the weighted average of the rates
on overnight federal funds transactions with members of the Federal Reserve
System arranged by federal funds brokers, as published for such day (or, if such
day is not a Business Day, for the next preceding Business Day) by the Federal
Reserve Bank of Dallas, or, if such rate is not so published for any day which
is a Business Day, the average of the quotations for such date on such
transactions received by the Administrative Lender from three federal funds
brokers of recognized standing selected by it.
"FORBEARANCE AGREEMENT" has the meaning ascribed thereto in Section 3.1(k)
hereof.
"FUNDED DEBT" means all Debt of the companies and the Subsidiaries, as the
context requires, constituting (a) Debt for borrowed money or the deferred
purchased price of property or services, and any other Debt evidenced by a
promissory note or similar instrument, including without limitation the
Obligation and the Subordinated Debt, (b) Capitalized Lease Obligations, and (c)
Debt secured by any Lien on any Lien on any Property of any Company or any
Subsidiaries, whether with or without recourse; provided, however, that such
term shall not include accounts payable and accrued liabilities incurred in the
ordinary course of business and not past due.
"GAAP" means generally accepted accounting principles applied on a
consistent basis. Application on a consistent basis shall mean that the
accounting principles observed in a current period are comparable in all
material respects to those applied in a preceding period, except for new
developments or statements promulgated by the Financial Accounting Standards
Board.
"GUARANTY" of a person means any agreement by which such Person assumes,
guarantees, endorses, contingently agrees to purchase or provide funds for the
payment of, or otherwise becomes liable upon, the obligation of any other
Person, or agrees to maintain the net worth or working capital or other
financial condition of any other Person, or otherwise assures any creditor or
such other Person against loss, including, without limitation, any agreement
which assures any creditor or such other Person payment or performance of any
obligation, or any take-or-pay contract and shall include without limitation,
the contingent liability of such Person in connection with any application for a
letter of credit (without duplication of any amount already included in Debt).
"HAZARDOUS MATERIAL" means, collectively, (a) any petroleum or petroleum
products, flammable explosives, radioactive materials, asbestos in any form that
is or could become friable, urea formaldehyde foam insulation, and transformers
or other equipment that contain dielectric fluid containing polycholorinated
biphenyls (PCB's), (b) any chemicals or other material or substances which are
now or hereafter become defined as or included in the definition of "hazardous
substances," "hazardous wastes," "restricted hazardous wastes," "toxic
substances," "toxic pollutants," "contaminants," "pollutants" or words of
similar import under any Environmental Law and (c) any other chemical or other
material or substance, exposure to which is now or hereafter prohibited, limited
or regulated under any Environmental Law.
"HIGHEST LAWFUL RATE" means at the particular time in question the maximum
rate of interest which, under Applicable Law, any Lender is then permitted to
charge on the Obligation. If the maximum rate of interest which, under
Applicable Law, any Lender is permitted to charge on the Obligation shall change
after the date hereof, the Highest Lawful Rate shall be automatically increased
or decreased, as the case may be, from time to time as of the effective time of
each change in the Highest Lawful Rate without notice to any Company. For
purposes of determining the Highest Lawful Rate under Applicable Law, the
applicable rate ceiling shall be (i) the indicated rate ceiling described in and
computed in accordance with the provisions of Section (a)(l) of Art. 1.04; or
(ii) provided notice is given as required in Section (h)(l) of Art. 1.04, either
the annualized ceiling or quarterly ceiling if permitted thereunder and computed
pursuant to Section (d) of Art. 1.04; provided, however, that at any time the
indicated rate ceiling, the annualized ceiling or the quarterly ceiling, as
applicable, shall be less than 18% per annum or more than 24% per annum, the
provisions of Sections (b)(1) and (2) of Art. 1.04 shall control for purposes of
such determination, as applicable.
"INVESTMENT" means any acquisition of all or substantially all the assets
of any Person, or any direct or indirect purchase or other acquisition of, or a
beneficial interest in, Capital Stock or other securities of any other Person,
or any direct or indirect loan, advance, or capital contribution to or
investment in any other Person, including without limitation the incurrence or
sufferance of Debt or accounts receivable of any other Person that do not arise
from sales to that other Person in the ordinary course of business.
"LAW" means any statute, law, ordinance, regulation, rule, order, writ,
injunction or decree of any Tribunal.
"LENDERS" means the Lenders listed on the signature pages hereof, and
assignees and transferees of such Lenders determined in accordance with Section
9.4 hereof, so long as any such Lender holds any part of the outstanding
Obligation.
"LICENSE" means any license, permit, certificate of need, authorization,
certification, accreditation, franchise, approval, or grant of rights by any
Tribunal or third person necessary or appropriate for any Company or any
Subsidiary to own, maintain or operate its business or Property.
"LIEN" means any mortgage, pledge, security interest, encumbrance, lien, or
charge of any kind, including without limitation any agreement to give or not to
give any of the foregoing, any conditional sale or other title retention
agreement, any lease in the nature thereof, and the filing of or agreement to
give any financing statement or other similar form of public notice under the
Laws of any jurisdiction (except for the filing of a financing statement or
notice in connection with an operating lease).
"LITIGATION" means any proceeding, claim, lawsuit, arbitration, and/or
investigation conducted or threatened by or before any Tribunal, including
without limitation proceedings, claims, lawsuits, and/or investigations under or
pursuant to any environmental, occupational, safety and health, antitrust,
unfair competition, securities, Tax, or other Law, or under or pursuant to any
contract, agreement, or other instrument.
"LOAN" means the aggregate of Advances made under the term loan by each
Lender to the Companies in the aggregate amount of $15,271,830.75 in accordance
with the provisions of Section 2.1 hereof.
"LOAN PAPERS" means this Agreement, the Notes, any Guaranty executed by any
Subsidiary or other Person guaranteeing repayment of the Obligation, each
executed and delivered Assignment and Acceptance Agreement, fee letters, all
pledge agreements and security agreements granting a lien or security interest
in the Collateral (including the pledge of the Capital Stock of the Companies
(other than PAG) and the Subsidiaries) and any other promissory notes, or other
agreements, security agreements, guaranties, mortgages, deeds of trust financing
statements, letters of credit, applications and agreements for letters of
credit, other documents and instruments related to any Collateral and/or the
transfer thereof, interest hedge agreements executed between any Company and any
one or more Lenders, and other documents, instruments, agreements, or
certificates executed or delivered by any Person in connection with this
Agreement, as security for any Company's obligations hereunder or in connection
with loans or Advances to any Company, as each such document shall, with the
consent of the Lenders or Majority Lenders, as prescribed pursuant to Section
9.1 hereof, be amended, revised, substituted or replaced from time to time.
"MAJORITY LENDERS" means any combination of the Lenders which hold at least
75% of the aggregate amount of Total Principal Debt.
"MATERIAL ADVERSE CHANGE" means any circumstance or event that (a) can
reasonably be expected to cause a Default or Event of Default, or (b) in any
manner whatsoever does or can reasonably be expected to materially and adversely
affect the validity or enforceability of any of the Loan Papers including
without limitation the priority of the liens granted to the Lenders and their
ability to realize on the Collateral.
"MATURITY DATE" means December 31, 1998, or such earlier date that the Loan
or the Obligation becomes due and payable in full or in part pursuant to this
Agreement (whether by acceleration, prepayment in full, scheduled reduction or
otherwise).
"MAXIMUM AMOUNT" means the maximum amount of interest which, under
Applicable Law, any Lender is permitted to charge on the Obligation.
"METROCALL AGREEMENT" means that certain Amended and Restated Asset
Purchase Agreement dated as of January 30, 1997, as amended March 28, 1997, by
and among Page America Group, Inc., a New York corporation, Page America of New
York, Inc., a New York corporation, Page America of Illinois, Inc., an Illinois
corporation, Page America Communications of Indiana, Inc., an Indiana
corporation, Page America of Pennsylvania, Inc., a Pennsylvania corporation and
Metrocall, Inc., a Delaware corporation, as further amended to the extent
permitted in Section 6.10.
"METROCALL COMMON STOCK" means the common capital stock, par value $0.01
per share, of Metrocall, Inc., received by the Companies in connection with the
Metrocall Sale.
"METROCALL PREFERRED STOCK" means the Series B Junior Convertible Preferred
Stock, par value $0.01 per share, of Metrocall, Inc., received by the Companies
in connection with the Metrocall Sale.
"METROCALL SALE" means the sale by certain of the Companies of
substantially all of the assets of Page America Group, Inc., Page America of New
York, Inc., Page America of Illinois, Inc., Page America Communications of
Indiana, Inc. and Page America of Pennsylvania, Inc. to Metrocall, Inc.,
pursuant to the Metrocall Agreement.
"METROCALL STOCK" means the Metrocall Common Stock and the Metrocall
Preferred Stock.
"NET PROCEEDS" means the gross proceeds received by any Company or any
Subsidiary in connection with or as a result of any disposition of any Property
of any Company or any Subsidiary, minus the sum of (a) reasonable out-of-pocket
costs and expenses incurred by such Company or such Subsidiary in connection
with such disposition plus (b) Taxes estimated by the Board of Directors of such
Company or such Subsidiary to be paid or payable by such Company or such
Subsidiary during such fiscal year as a direct result of such disposition,
taking into account all net operating losses and other Tax benefits available to
such Company or such Subsidiary, if any.
"NOTE" means each promissory note of the Companies evidencing the Loan and
obligations owing hereunder to a Lender, in substantially the form of EXHIBIT A
attached hereto, payable to the order of such Lender and in a maximum principal
amount equal to such Lender's Specified Percentage of the Loan, as each such
note may be amended, substituted, replaced, increased, decreased, renewed or
extended from time to time.
"NOTIFICATION AGENT" means PAG, or such other Company designated by PAG and
agreed to in writing by the Administrative Lender.
"OBLIGATION" means (a) all present and future obligations, indebtedness and
liabilities of the Companies and the Subsidiaries, or any of them, to the
Lenders, or any of them, arising from, by virtue of, or pursuant to this
Agreement, any other Loan Papers and any and all renewals and extensions thereof
or any part thereof, including, without limitation, all costs, expenses and fees
incurred by any Lender, all interest accruing on all or any part of such
obligations, indebtedness and liabilities, and attorneys' fees payable by the
Companies in accordance with the terms of Section 9.7 hereof, whether such
obligations, indebtedness and liabilities are direct, indirect, fixed,
contingent, joint, several, or joint and several, and (b) all present and future
obligations, indebtedness and liabilities (including without limitation all
obligations, indebtedness and liabilities for overdrafts) of the Companies, or
any of them, to NationsBank of Texas, N.A. in connection with any deposit
account of Companies or any of them, including without limitation all costs,
expenses and fees incurred by NationsBank of Texas, N.A., all interest accruing
on all or any part of such obligations, indebtedness and liabilities, and
attorneys' fees payable and other expenses incurred by NationsBank of Texas,
N.A. in the enforcement or collection thereof.
"OPERATING LEASES" means operating leases, as defined in the Financial
Accounting Standards No. 13, dated November, 1976, with an initial or remaining
noncancellable lease term in excess of one year.
"PAG" means Page America Group, Inc., a New York corporation.
"PAGENET AGREEMENT" means that certain Asset Purchase Agreement dated as of
February 24, 1995, by and among Paging Network of Florida, Inc., a Delaware
corporation, Page America Group, Inc., a New York corporation, Page America
Communications of California, Inc., a California corporation, Page America
Communications of Florida, Inc., a Florida corporation and Page America of New
York, Inc., a New York corporation, as amended to the date of the closing
contemplated thereby.
"PERMITTED LIENS" means:
(a) Liens arising under workmen's compensation Laws, unemployment insurance
Laws and old age pensions or other social security benefits or other similar
Laws;
(b) Liens imposed by Law, such as carriers', warehousemen's, mechanics',
materialmen's and vendors' liens, incurred in good faith in the ordinary course
of business with respect to obligations not then delinquent, or that are being
contested in good faith by appropriate proceedings for which adequate reserves
have been established;
(c) Liens for Taxes to the extent nonpayment thereof shall be permitted by
Section 5.8 hereof;
(d) Liens incidental to the normal conduct of the business of any Company
or any Subsidiary or the ownership of its Property (including zoning
restrictions, easements, licenses, reservations, restrictions on the use of real
property or minor irregularities incident thereto and with respect to leasehold
interests, Liens that are incurred, created, assumed or permitted to exist and
arise by, through or under or are asserted by a landlord or owner of the leased
Property, with or without consent of the lessee) that are not incurred in
connection with the incurrence of Funded Debt and which do not in the aggregate
materially impair the value or use of the Property used in the business of any
Company and the Subsidiaries taken as a whole, or the use of such Property for
the purpose for which such property is held;
(e) Liens existing on the date hereof described on SCHEDULE 4.9 attached
hereto, and any extension, renewal or replacement thereof but only if the
principal amount of Debt secured thereby is not increased and such Lien does not
extend to or cover any other Property;
(f) Liens securing the Obligation; and
(g) Liens in respect of Litigation or other similar proceedings not in
excess of $100,000 (i) the validity of which is being currently and diligently
contested on a timely basis in good faith by appropriate proceedings (provided
that the enforcement of any Liens arising out of such proceedings shall be
stayed during such proceedings) and (ii) for which adequate reserves shall have
been established.
"PERSON" means an individual, partnership, joint venture, corporation,
limited liability company, trust, estate, Tribunal, unincorporated organization,
and government, or any department, agency, or political subdivision thereof.
"PLAN OF LIQUIDATION" means the Plan of Complete Liquidation and
Dissolution described in Exhibit B to PAG's Proxy Statement dated May 9, 1997,
for a Special Meeting of Shareholders held June 12, 1997.
"PRINCIPAL DEBT" means, as to any Lender, the aggregate unpaid principal
balance of the Note due to such Lender at any date of determination.
"PRO RATA" means, as to any Lender, in accordance with its Specified
Percentage.
"PROPERTY" means all types of real, personal, tangible, intangible, or
mixed property, whether owned in fee simple or leased.
"RATABLE" means, as to any Lender, in accordance with its Specified
Percentage.
"RCRA" means the Resource Conservation and Recovery Act of 1976, as amended
by the Used Oil Recycling Act of 1980, the Solid Waste Disposal Act amendments
of 1980, and the Hazardous and Solid Waste Amendments of 1984, as amended from
time to time.
"RELEASE" means any release, spill, emission, leaking, pumping, injection,
deposit, disposal, discharge, dispersal, leaching or migration into the indoor
or outdoor environment, including without limitation, the movement of Hazardous
Materials through ambient air, soil, surface water, ground water, wetlands, land
or subsurface strata.
"RESPONSIBLE OFFICER" means the Chairman of the Board, the President or the
Chief Financial Officer of PAG, or any other officer of PAG that PAG and the
Administrative Lender may agree to in writing.
"RESTRICTED INVESTMENTS" means any Investment other than any Investment in
(i) a marketable obligation, maturing within one year after acquisition thereof,
issued or guaranteed by the United States of America or an instrumentality or
agency thereof, (ii) a certificate of deposit or other obligation, maturing
within one year after acquisition thereof, issued by a United States national or
state bank or trust company rated "A" or better by Standard & Poor's Corporation
or Moody's Investors Service, Inc. and having capital, surplus and undivided
profits of at least $250,000,000, (iii) open market commercial paper, maturing
within 270 days after acquisition thereof, which has the highest credit rating
of either Standard & Poor's Corporation or Moody's Investors Service, Inc., and
(iv) money market funds rated "A" or better by Standard & Poor's Corporation or
"A2" or better by Moody's Investors Service, Inc. that invest exclusively in the
Investments described in the foregoing clauses (i) through (iii).
"RESTRICTED PAYMENT" means:
(a) the declaration or payment of Dividends by PAG or any Company or any
Subsidiary (other than wholly-owned subsidiaries of PAG), or distribution (in
cash, Property, obligations or other securities or any combination thereof) on
account of any shares of any class of Capital Stock of any Company, or
(b) other payments or distributions (whether made by any Company or any of
the Subsidiaries and whether by reduction of capital or otherwise) on account of
any shares of any class of Capital Stock of any Company, or
(c) the setting apart of money for a sinking or other analogous fund
(whether by any Company or any of the Subsidiaries) for the purchase,
redemption, retirement or other acquisition of any shares of any class of
Capital Stock of any Company, or any warrant, option or other right to acquire
any Capital Stock of any Company or any Subsidiary, or
(d) any other payments except payments of accounts payable, expenses
incurred in connection with or incidental to the liquidation of the Companies or
in the ordinary course of business consistent with the Plan of Liquidation,
amounts paid in connection with claims and lawsuits, and other expenses of the
type included on SCHEDULE 2.3,
but in each case in (a), (b) and (c) above, excluding Dividends or other
distributions payable solely in common stock of any Company or any Subsidiary.
"RIGHTS" means rights, remedies, powers, and privileges.
"SEC" means the Securities and Exchange Commission or any regulatory body
that succeeds to the functions of the Securities and Exchange Commission.
"SECURITY AGREEMENT" means the Amended and Restated Security Agreement of
even date herewith among the Companies, the Lenders, and the Administrative
Lender, as the same may be amended or modified from time to time.
"SPECIAL COUNSEL" means the law firm of Winstead Sechrest & Minick P.C. or
any other counsel selected from time to time by the Administrative Lender.
"SPECIFIED PERCENTAGE" means, as to any Lender, the percentage indicated
beside its name on the signature pages hereof, as such percentage may be
adjusted pursuant to Section 9.20 hereof or pursuant to any assignment in
accordance with the terms and provisions of Section 9.4 hereof.
"SUBORDINATED DEBT" means unsecured Debt of certain Companies subordinated
to performance and repayment in full of the Obligation pursuant to the terms and
provisions of the Subordinated Notes and Agreements, of which at December 31,
1996, $17,338,750.00 of principal and interest was due thereunder.
"SUBORDINATED LENDERS" means T. Rowe Price High Yield Fund, Inc., Sandler
Mezzanine Partners, L.P., Sandler Mezzanine T-E Partners, L.P., Sandler
Mezzanine Foreign Partners, L.P.
"SUBORDINATED SERIES B NOTES" means those certain 15% Series B Subordinated
Promissory Notes originally due 2003, dated December 30, 1993, issued to the
Subordinated Lenders by certain Companies pursuant to the terms of the
Subordinated Purchase Agreement, in the original aggregate face amount of
$13,000,000 and evidencing the Subordinated Debt, as such notes have been
amended and which may be further amended, substituted, modified, replaced or
extended with the express prior written consent of each Lender.
"SUBORDINATED NOTES AND AGREEMENTS" means (a) those certain Subordinated
Series B Notes, (b) the Subordinated Purchase Agreement, (c) all documents and
instruments related to the Subordinated Series B Notes and the Subordinated
Purchase Agreement and (d) other subordinated notes and related agreements and
instruments, issued in exchange for the Subordinated Series B Notes, the
Subordinated Purchase Agreement and other agreements and instruments described
in subsection (c) above, so long as the new subordinated notes, agreements and
instruments contain substantially the same terms, conditions, covenants,
defaults and other provisions as the Subordinated Series B Notes, the
Subordinated Purchase Agreement and the other agreements and instruments
described in subsection (c) above, and such other provisions customarily found
in qualified indentures for registered notes, in each case, as each such note,
agreement, document or instrument may be amended, substituted, modified,
replaced or extended with the prior written consent of each Lender, and (e) the
Forbearance Agreement dated as of July 1, 1997, by and among the Companies and
the Subordinated Lenders.
"SUBORDINATED PURCHASE AGREEMENT" means that certain Subordinated
Promissory Note, Preferred Stock, Common Stock and Warrant Purchase Agreement,
dated as of December 30, 1993, among certain Companies, the Subordinated Lenders
and other parties, and all amendments, substitutions, modifications,
replacements or extensions of such agreement with the prior written consent of
each Lender.
"SUBSIDIARY" means any corporation, partnership or other Person at least
50% of whose Capital Stock having ordinary voting power (other than securities
having such power only by reason of the happening of a contingency) are owned by
any Company, or one or more Subsidiaries of any Company, or a combination
thereof.
"TAXES" means all taxes, assessments, imposts, fees, or other charges at
any time imposed by any Laws or Tribunal.
"TOTAL PRINCIPAL DEBT" means the aggregate of the Principal Debt due to all
Lenders at any date of determination.
"TRADING DAY" means a day on which the New York Stock Exchange is open for
business.
"TRANSFEREE" has the meaning ascribed thereto in Section 9.17 hereof.
"TRIBUNAL" means any state, commonwealth, federal, foreign, territorial, or
other court or government body, subdivision, agency, department, commission,
board, bureau, or instrumentality of a governmental body.
SECTION 1.2 ACCOUNTING AND OTHER TERMS. All accounting terms used in this
Agreement which are not otherwise defined herein shall be construed in
accordance with GAAP applied on a consistent basis for the Companies and the
Subsidiaries, unless otherwise expressly stated herein. References herein to one
gender shall be deemed to include all other genders.
ARTICLE II
AMOUNTS AND TERMS OF ADVANCES
SECTION 2.1 LOAN. Each Lender severally agrees, subject to the terms and
conditions hereinafter set forth, on the Closing Date to extend, renew, and
rearrange the principal portion of its Advances outstanding pursuant to the
Original Credit Agreement in the form of a Loan to the Companies, due and
payable on the Maturity Date, in the original principal amount of such Lender's
Specified Percentage of $15,271,830.75. The Companies agree, jointly and
severally, to repay the Loan in accordance with the terms of Section 2.3 hereof.
SECTION 2.2 FEES.
(a) Subject to Section 9.9 hereof, the Companies jointly and severally
agree to pay to the Administrative Lender on or before September 30, 1997, for
the Ratable account of the Lenders, the reinstatement fee in the amount of
$350,000, which was due under the Original Credit Agreement on November 30,
1996.
(b) Subject to Section 9.9 hereof, the Companies jointly and severally
agree to pay to the Administrative Lender in its capacity as administrative
lender hereunder an Administrative Lender's fee in the amount of $75,000 on each
June 30 during the term hereof. Subject to Section 9.9 hereof, all such fees for
administrative services shall be non-refundable once paid.
SECTION 2.3 PREPAYMENT AND REPAYMENT OF THE LOAN.
(a) VOLUNTARY PREPAYMENTS. The Companies may from time to time prepay the
Loan, in whole or in part, without premium or penalty upon notice to the
Administrative Lender (if telephonic, to be confirmed by telecopy or in writing
before the date of prepayment), not later than 1:00 p.m. (Dallas, Texas time)
[one Business Day before][on] the date of prepayment, which notice shall specify
the principal amount being prepaid and the amount and date of prepayment.
Prepayments on the Loan may not be reborrowed by the Companies.
(b) FINAL MATURITIES. The Companies shall, jointly and severally, repay (i)
the outstanding principal amount of the Loan, and (ii) any and all other
portions of the outstanding Obligation, on the Maturity Date.
(c) ASSET SALES. To the extent that any Company or any Subsidiary
consummates an asset sale in accordance with the provisions of Section 6.3
hereof or a sale of any Metrocall Stock, or upon the redemption of any Metrocall
Preferred Stock, the Companies, jointly and severally, agree to use the Net
Proceeds therefrom immediately (i) to prepay the Loan until the Loan has been
repaid in full, then (ii) to repay all other outstanding Obligations. Upon the
conversion of any Metrocall Preferred Stock to common stock of Metrocall, Inc.,
the Companies, shall use the Net Proceeds from the sale thereof, within ninety
(90) days of the date of such conversion, (i) to prepay the Loan until the Loan
has been repaid in full, then (ii) to repay all other outstanding Obligations.
Notwithstanding the foregoing, the Companies may from time to time use Net
Proceeds from the sale, redemption, or conversion of Metrocall Stock to pay
accounts payable, expenses incurred in connection with or incidental to the Plan
of Liquidation or in the ordinary course of business, amounts due in connection
with claims and lawsuits, and other expenses of the type described on SCHEDULE
2.3 attached hereto so long as no Default then exists or would result therefrom.
(d) RELEASES FROM ESCROW. To the extent that any Company or any Subsidiary
receives any amounts as a result of the termination of the escrow arrangement
provided for in the Metrocall Agreement or the PageNet Agreement, the Companies,
jointly and severally, agree to immediately apply such amounts to prepay the
Loan until the Loan has been repaid in full, and then to repay all other
outstanding Obligations.
(e) GENERAL. Each prepayment and repayment hereunder shall be accompanied
by all interest accrued on the principal amount being prepaid and any fees owing
in connection with the prepayment. All telephonic notices under this Section
shall be made to NationsBank of Texas, N.A., Attn.: Patricia Cascante, telephone
(214) 508-3076, facsimile (214) 508-2515, or such other person as the
Administrative Lender may from time to time specify.
SECTION 2.4 INTEREST ON ADVANCES.
(a) Subject to Section 9.9 hereof, the Loan shall bear interest at the Base
Rate in effect from time to time. Accrued interest shall be due and payable on
the last Business Day of each calendar month commencing on August 31, 1997, and
on the Maturity Date. If not paid in full on the Maturity Date, all past due
principal, past due interest and other amounts owing under the Loan Papers
shall, without notice or other action of any kind, bear interest at a rate per
annum equal to the lesser of (i) the Highest Lawful Rate and (ii) the Base Rate
plus 3%, due and payable on demand.
(b) If the amount of interest payable for the account of any Lender on any
interest payment date would exceed the Maximum Amount, the amount of interest
payable on such interest payment date shall be automatically reduced to the
Maximum Amount. If the amount of interest payable for the account of any Lender
in respect of any interest computation period is reduced pursuant to the
immediately preceding sentence and the amount of interest payable for its
account in respect of any subsequent interest computation period would be less
than the Maximum Amount, then the amount of interest payable for its account in
respect of such subsequent interest computation period shall be automatically
increased to such Maximum Amount; provided that at no time shall the aggregate
amount by which interest paid for the account of any Lender has been increased
pursuant to this sentence exceed the aggregate amount by which interest paid for
its account has theretofore been reduced pursuant to the immediately preceding
sentence.
SECTION 2.5 COMPUTATIONS AND MANNER OF PAYMENTS.
(a) The Companies shall make each payment hereunder and under the other
Loan Papers not later than 11:00 a.m. (Dallas, Texas time) on the day when due
in same day funds to the Administrative Lender, for the Ratable account of each
Lender and as such Lender's agent unless otherwise specifically provided herein,
at the Administrative Lender's office at 901 Main Street, 67th Floor, Dallas,
Texas 75202, wire instructions NationsBank of Texas, N.A. ABA # 111000025, Attn:
Commercial Loans, for further credit to the account of the Companies. No later
than the end of each day when each payment hereunder is made, the Notification
Agent shall notify NationsBank of Texas, N.A., Attn.: Patricia Cascante,
telephone (214) 508-3076, facsimile (214) 508-2515, or such other person as the
Administrative Lender may from time to time specify. The Administrative Lender
shall remit to each Lender such Lender's Pro Rata portion of any such payment
made by the Companies in same day funds, unless received by the Administrative
Lender after 11:00 a.m., in which case the Administrative Lender shall remit
such payment in next day funds.
(b) Unless the Administrative Lender shall have received notice from the
Notification Agent prior to the date on which any payment is due hereunder that
the Companies will not make payment in full, the Administrative Lender may
assume that such payment is so made on such date and may, in reliance upon such
assumption, make distributions to the Lenders. If and to the extent the
Companies shall not have made such payment in full, each Lender shall repay to
the Administrative Lender forthwith on demand the applicable amount distributed,
together with interest thereon at the Federal Funds Rate, from the date of
distribution until the date of repayment. The Companies hereby authorize each
Lender, if and to the extent payment is not made when due hereunder, to charge
the amount so due against any account of any and each Company (or any
combination of Companies) with such Lender.
(c) All computations of interest and fees hereunder shall be made on the
basis of a 365 or 366 day year, as applicable, for the actual number of days
elapsed, including the first day but excluding the last day. All payments under
the Loan Papers shall be made in United States dollars, and without setoff,
counterclaim or other defense.
(d) Whenever any payment to be made hereunder or under any other Loan
Papers shall be stated to be due on a day other than a Business Day, such
payment shall be made on the next succeeding Business Day, and such extension of
time shall be included in the computation of interest or fees, if applicable.
SECTION 2.6 BOOKING LOANS. Each Lender may make, carry, or transfer
Advances at, to or for the account of any of its branch offices or the office of
any of its Affiliates.
SECTION 2.7 COLLATERAL AND COLLATERAL CALL.
(a) COLLATERAL. Payment of the Obligation is secured by (i) a perfected
security interest in all presently owned and after-acquired tangible and
intangible personal property and fixtures of the Companies and the Subsidiaries,
including, without limitation, the accounts, equipment, inventory, goods,
fixtures, accounts receivable, contract rights, documents, instruments, chattel
paper, general intangibles, real property, bank accounts, cash equivalents and
other assets of the Companies and the Subsidiaries set forth and described in
the documents and instruments granting the Liens to the Lenders to secure the
Obligation, prior to all Liens other than Permitted Liens, (ii) a first priority
perfected security interest in all of the Capital Stock of each Company (other
than PAG), a first priority perfected security interest in all of the Capital
Stock of the Subsidiaries, and a first priority perfected security interest in
all Metrocall Stock (except for the stock required to be subject to an escrow
arrangement under the terms of the Metrocall Agreement), and (iii) a pledge of
all promissory notes and other instruments evidencing obligations owed to any
Company or any Subsidiary from Metrocall, Inc. or any Subsidiary or any
Affiliate, including without limitation those in existence on the Closing Date
and described on SCHEDULE 2.7 hereto (collectively, together with all other
Properties or assets of the Companies and all Subsidiaries and other Persons
securing the Obligation from time to time, the "Collateral"). The Companies
agree that they will, and will cause the Subsidiaries to, execute and deliver,
or cause to be executed and delivered, such documents as the Administrative
Lender may from time to time reasonably request to create and perfect a first
Lien for the benefit of the Administrative Lender and the Lenders in the
Collateral.
(b) COLLATERAL CALL. Each Company agrees to, and agrees to cause the
Subsidiaries to, grant the Administrative Lender and the Lenders from time to
time at the request of the Lenders a Lien on any of the Property of any Company
or any Subsidiary not already constituting Collateral. In that regard, each
Company shall, and shall cause the Subsidiaries to, use best efforts to assist
the Administrative Lender and the Lenders in creating and perfecting a first
Lien, subject to Permitted Liens, for the benefit of Administrative Lender and
Lenders securing the Obligation in any such Property of the Companies and the
Subsidiaries, including, without limitation, providing the Administrative Lender
with evidence of insurance including flood hazard insurance, UCC searches, Tax
and Lien searches, intellectual property documentation and registration and
other similar types of documents, consents, Authorizations, legal opinions,
instruments and agreements relating to all Property of the Companies and the
Subsidiaries as reasonably requested by the Lenders from time to time.
(c) BANK ACCOUNT. Other than accounts currently in existence to the extent
necessary to clear checks already written, and in any event, after August 31,
1997, the Companies shall maintain one and only one account for the deposit,
holding, and disbursement of all Cash Equivalents, and such account, all Cash
Equivalents held therein, shall be subject to the Lien of the Administrative
Lender. Such account shall be at either (i) the Administrative Lender or (ii) at
a commercial bank which is rated by both Moody's Investors Services, Inc. and
Standard & Poor's as equal or superior to the Administrative Lender and which
has executed an agreement with the Administrative Lender sufficient, in the
opinion of Stroock & Stroock & Lavan LLP as counsel to the Companies, to grant
the Administrative Lender and the Lenders both (x) a perfected security interest
in the account and the Cash Equivalents held therein and (y) the status of bona
fide purchasers of such Cash Equivalents to the extent such status is available
under applicable law (including, where applicable, the Uniform Commercial Code
and applicable portions of the Code of Federal Regulations).
ARTICLE III
CONDITIONS PRECEDENT
SECTION 3.1 CONDITIONS PRECEDENT TO EFFECTIVENESS. The making by the
Lenders of the initial Advance pursuant to this Agreement is subject to
fulfillment of the following conditions precedent:
(a) The making of the Loan and the funding of Advances hereunder shall not
contravene any Law applicable to the Administrative Lender or any Lender.
(b) The Companies shall have delivered to the Administrative Lender and
each Lender a Certificate, dated the effective date, executed by a Responsible
Officer, certifying that (i) no Default or Event of Default has occurred and is
continuing, (ii) the representations and warranties set forth in Article IV
hereof are true and correct, and (iii) it has complied with all agreements and
conditions to be complied with by it under the Loan Papers by such date.
(c) The Companies shall have delivered to the Administrative Lender and
each Lender a Secretary's Certificate, dated the effective date, certifying (i)
that the attached copies of all amendments to each Company's certificate of
incorporation (certified by the Secretary of State of such Company's state of
incorporation) and bylaws since December 30, 1993, together with the
certificates of incorporation and bylaws heretofore delivered to the
Administrative Lender, are true and complete, and in full force and effect,
without amendment except as shown, (ii) that each attached copy of each
Company's resolutions authorizing execution and delivery of this Agreement and
the other Loan Papers is true and complete, and that such resolutions are in
full force and effect, were duly adopted, have not been amended, modified or
revoked, and constitute all resolutions adopted with respect to this loan
transaction, (iii) that copies of each Company's certificates of good standing
and certificates of existence delivered to the Lenders have been issued within
30 days prior to the Closing Date, and that no facts exist that would make such
certificates inaccurate as of the effective date, (iv) to the incumbency, name
and signature of each Responsible Officer and other officer authorized to sign
this Agreement and other Loan Papers on each Company's behalf, (v) that a copy
of the resolutions for PAG authorizing execution and delivery of the Metrocall
Agreement and the consummation of the transactions contemplated thereby are true
and complete, and that such resolutions are in full force and effect, were duly
adopted, have not been amended, modified, or revoked, and constitute all
resolutions adopted with respect to the Metrocall Sale, (vi) that the Metrocall
Agreement attached thereto is true, complete and correct, and (vii) that the
Forbearance Agreement between the Companies and the Subordinated Lenders
attached thereto is true, complete and correct. The Administrative Lender and
Lenders may conclusively rely on the certificate delivered pursuant to this
subsection until they receive notice in writing to the contrary.
(d) Delivery to the Administrative Lender and each Lender of their
respective Notes, this Agreement and all other Loan Papers, all in form and
substance satisfactory to the Administrative Lender and each Lender, and
completed and executed by the Companies, and delivery to the Administrative
Lender of (i) all certificates evidencing Capital Stock of the Companies (other
than PAG), and the Subsidiaries, and (ii) each and every writing evidencing any
indebtedness (other than Cash Equivalents) owed by any Person to any of the
Companies, together with any bond or note power (executed in blank) for each
such writing where appropriate.
(e) Each Lender shall have received its Pro Rata share of cash constituting
Net Proceeds of the Metrocall Agreement, together with an accounting for such
proceeds. In addition, the Administrative Lender shall have taken physical
possession of the following:
(i) two Metrocall Common Stock certificates to be held as
Collateral, and representing in the aggregate (x) that number of shares
having a market value as determined in the Metrocall Agreement equal to
$15,000,000, plus (y) an additional 762,690 additional shares, minus
(z) that number of shares having a market value as determined in the
Metrocall Agreement of (I) $4,000,000 minus (II) the amount of Cash
Equivalents held in escrow pursuant to the Metrocall Agreement;
(ii) one stock certificate of the shares of Metrocall
Preferred Stock held as Collateral, and having in the aggregate a face
and par value of $15,000,000; and
(iii) a copy of a letter from PAG to the escrow agent under
the Metrocall Agreement, accepted by the escrow agent, directing the
escrow agent to deliver to the Administrative Lender any property held
in escrow otherwise to be delivered to PAG.
Each certificate shall be accompanied by a stock power signed in blank. The
Companies shall also provide to the Administrative Lender and each Lender an
accounting showing the calculation of the number of shares of Metrocall Stock
issued under the Metrocall Agreement and the allocation of those shares between
the escrow account and the Collateral as set forth above.
(f) All terms of the Metrocall Agreement, and all related documentation,
shall be acceptable to the Administrative Lender and each Lender in its sole
discretion and absolute discretion, and the Metrocall Sale shall have been
consummated in accordance with the terms, provisions and conditions of the
Metrocall Agreement, without amendments, consents or waivers by the Companies
with respect thereto (except with the express written consent of the
Administrative Lender and each Lender). The Metrocall Agreement as in effect on
June _, 1997, is acceptable to the Administrative Lender and each Lender. The
cash proceeds of the Metrocall Sale shall be not less than $25,000,000 and shall
be distributed as follows: First, $20,500,000 shall be used to pay all accrued
interest, fees, and expenses due pursuant to the Original Credit Agreement
(including without limitation fees and expenses of counsel to the Administrative
Lender and to each Lender) until such amounts are paid in full, and then to
principal owing pursuant to the Original Credit Agreement. Second, to the extent
cash proceeds exceed $25,000,000, such excess shall be applied to principal
owing under the Original Credit Agreement so long as (i) $4,000,000 in cash or
market value as determined in the Metrocall Agreement of Metrocall Common Stock
shall have been deposited into the escrow arrangement required by the Metrocall
Agreement, and (ii) to the extent that the Metrocall Common Stock (excluding the
shares placed into such escrow arrangement) has a market value as determined in
the Metrocall Agreement less than $2,000,000, the Companies shall have retained
cash reserves in an amount equal to the difference between $2,000,000 and the
market value as determined in the Metrocall Agreement of such common stock for
use, if required, to pay accounts payable, expenses incurred in connection with
or incidental to the Plan of Liquidation or in the ordinary course of business
consistent with the Plan of Liquidation, amounts due in connection with claims
and lawsuits, and other expenses of the type described on SCHEDULE 2.3 attached
hereto so long as no Default then exists or would result therefrom.
(g) The Administrative Lender and each Lender shall have received opinions
of Stroock & Stroock & Lavan LLP, counsel to each Company and the Subsidiaries,
dated the Closing Date acceptable to the Administrative Lender and Lenders, and
otherwise in form and substance satisfactory to the Administrative Lender,
Lenders and Special Counsel, with respect to the Advances and the credit
facility evidenced by this Agreement and the Loan Papers, and with respect to
the Metrocall Sale and the Metrocall Agreement.
(h) The Administrative Lender and each Lender shall have received copies of
all opinions rendered by any counsel in connection with the Metrocall Sale and
the Metrocall Agreement, with a letter from such counsel entitling the
Administrative Lender, on behalf of itself and all other Lenders, to rely on
such opinions.
(i) All of the Properties of the Companies and the Subsidiaries shall be
free from Liens (except those securing the Obligation and Permitted Liens) and
the Administrative Lender and each Lender shall be satisfied that each such
Property fully secures the Obligation with a first and prior perfected Lien
pursuant to documentation acceptable to each Lender.
(j) The Administrative Lender and each Lender shall have received, in form
and substance satisfactory to it (i) a certificate from the Secretary of State
of New York certifying that the PAG is a corporation duly organized, validly
existing and in good standing in such state as of the date thereof, and (ii)
certificates of appropriate authorities of all jurisdictions where each Company
should be qualified to do business, to the effect that it is in good standing
and duly qualified to transact business in such jurisdictions.
(k) The Subordinated Lenders shall have entered into a forbearance
agreement ("FORBEARANCE AGREEMENT") with PAG pursuant to terms and conditions,
and subject to documentation, acceptable to the Administrative Lender and each
Lender in its sole and absolute discretion.
(l) The Administrative Lender and each Lender shall have received each of
the following, in form and substance satisfactory to the Administrative Lender,
each Lender and Special Counsel:
(i) the results of UCC and other Lien searches against the
assets of each Company and the Subsidiaries and evidence of the filing
of financing statements on Form UCC-1 necessary to grant the
Administrative Lender a perfected Lien on the collateral;
(ii) evidence that all proceedings of each Company and the
Subsidiaries taken in connection with the transactions contemplated by
this Agreement shall be reasonably satisfactory in form and substance
to the Administrative Lender, each Lender and Special Counsel; and the
Administrative Lender and each Lender shall have received copies of all
documents or other evidence which the Administrative Lender, each
Lender or Special Counsel may reasonably request in connection with
said transactions, including without limitation the resolutions of the
Board of Directors of each Company and each Subsidiary authorizing the
transactions contemplated herein, certified to be true and correct by a
Responsible Officer;
(iii) for each Company and each Subsidiary as of and for the
calendar quarter ended March 31, 1997, consolidated and consolidating
statements of income and balance sheets of each Company and each
Subsidiary for such period, in reasonable detail and certified by a
Responsible Officer to the best of his/her knowledge to be complete and
correct and prepared consistently with past practices and substantially
in accordance with generally accepted accounting principles, subject to
year-end adjustment;
(iv) a duly completed and executed Compliance Certificate
computed after giving effect to the Advance made or to be made on the
Closing Date, evidencing no Default or Event of Default;
(v) copies of all Authorizations and consents, waivers or
other evidence from all stockholders, Tribunals and other material
third parties of all approvals and waivers in connection with the
Metrocall Sale and as otherwise deemed advisable by Special Counsel,
the Administrative Lender or any Lender in connection with this
Agreement and the Loan Papers, or necessary or appropriate and
reasonably requested by the Administrative Lender, Special Counsel or
any Lender;
(vi) payment of all fees (including the facility fee), and
reimbursement to the Administrative Lender and each Lender of all
attorneys' fees and expenses incurred through the Closing Date by the
Administrative Lender and each Lender in connection with the
preparation, negotiation and consummation of the loan transaction
evidenced by this Agreement and the Loan Papers; and
(vii) copies of insurance binders or certificates covering the
assets of each Company and the Subsidiaries showing the Administrative
Lender, on behalf of the Lenders, as loss payee and additional insured
where appropriate.
(m) All proceedings of each Company and the Subsidiaries taken in
connection with the Metrocall Sale and the loan transactions contemplated
hereby, and all documents incidental thereto, shall be satisfactory in form and
substance to the Administrative Lender and each Lender. The Administrative
Lender and each Lender shall have received copies of all documents or other
evidence that it may reasonably request in connection with such transactions.
(n) All proceedings of each Company taken in connection with the
transactions contemplated hereby, and all documents incidental thereto, shall be
satisfactory in form and substance to the Administrative Lender. The
Administrative Lender and each Lender shall have received all information and
copies of all documents that it may reasonably request in connection with such
transactions.
(o) The Administrative Lender shall have received a certificate, executed
by the Chairman of the Board of the Company, certifying both on behalf of the
Company, and as to their own personal knowledge, that:
(i) The Loan Papers constitute the legal, valid and binding
obligations of the Company, enforceable in accordance with their
respective terms (subject, as to enforcement of remedies only, to any
applicable bankruptcy, reorganization, moratorium or similar Laws or
principles of equity affecting the enforcement of creditors' rights
generally),
(ii) Each Lender holds "claims" (as such term is defined in
the Federal Bankruptcy Code, 11 U.S.C. ss. 101(4)) against the Company
in an amount not less than the face amount of such Lender's Note and
such claims are not subject to (and there is no fact, omission or
circumstance that would make such claims subject to) any defense,
offset, counterclaim, subordination, disallowance, avoidance, or other
defect or impairment as of the Closing Date.
(iii) As of the Effective Date, and at all times prior
thereto, the Liens held by the Administrative Lender to secure
Obligations under the Original Credit Agreement were valid and
perfected Liens, and the value of the collateral subject to such
Liens, after deducting any prior Liens, expenses or charges which
would have been paid from the proceeds of such Liens, exceeded the
total amount of the Obligations which such collateral secured.
(iv) After giving effect to the transactions contemplated
hereby and in the Metrocall Agreement, the Administrative Lender holds
a Lien or Liens on all assets of the Companies and such Lien is not
subject to (and there is no fact, omission or circumstance that would
make such Lien subject to) any defense, offset, counterclaim,
subordination, disallowance, avoidance, lack of perfection, or other
defect or impairment as of the Closing Date.
(v) No Company has any "claims" (as such term is defined in
the Federal Bankruptcy Code, 11 U.S.C. ss. 101(4)) or right of offset
or any equitable remedy, privilege or other right against the
Administrative Lender or any Lender except as may be specifically
granted under the terms of the Loan Papers.
(vi) After the Closing Date, the Companies' operating
businesses shall have been terminated and each of them shall, on that
date, have no assets other than those held for liquidation and
distribution to each Company's creditors and shareholders in
accordance with the Loan Papers, agreements between each Company and
its creditors other than the Administrative Lender and the Lenders and
each Company's certificate of incorporation.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Each Company represents and warrants that the following are true and
correct and that upon consummation of the Metrocall Sale the following will be
true and correct:
SECTION 4.1 ORGANIZATION AND QUALIFICATION. Each Company and each
Subsidiary is a corporation duly organized, validly existing, and in good
standing under the Laws of its state of organization. Each Company and each
Subsidiary is qualified to do business in all jurisdictions where the nature of
its business or Properties require such qualification. Set forth on SCHEDULE 4.1
attached hereto is a complete and accurate listing of each Company and each
Subsidiary, showing (a) the jurisdiction of its organization, (b) the classes of
its Capital Stock, the numbers of shares authorized, and the number of shares
outstanding, (c) each owner of outstanding shares on the date hereof, indicating
the ownership percentage (except with respect to PAG), and (d) all outstanding
options, warrants, subscription rights, rights of conversion or purchase, rights
of first refusal, and similar rights relating to such Capital Stock. After the
Closing Date, all outstanding shares of Capital Stock of each Company and the
Subsidiaries are validly issued, fully paid and nonassessable and, to the extent
owned by each Company or the Subsidiaries, are owned free and clear of all
Liens, including any restrictions on hypothecation or transfer, except Liens
securing the Obligation.
SECTION 4.2 DUE AUTHORIZATION; VALIDITY. The Board of Directors of each
Company has duly authorized the execution, delivery and performance of the Loan
Papers. No consent of the stockholders of any Company is required as a
prerequisite to the validity and enforceability of any Loan Papers or any other
document contemplated hereby, except those consents already obtained by the
Companies. Each Company has full legal right, power and authority to execute,
deliver and perform under the Loan Papers.
SECTION 4.3 CONFLICTING AGREEMENTS AND OTHER MATTERS. There exists no
breach, default or event of default under any agreement, Authorization or other
relationship of any Company or any Subsidiary that could reasonably be expected
to cause a Material Adverse Change. The execution or delivery of the Loan
Papers, and performance thereunder, does not conflict with, or result in a
breach of the terms, conditions or provisions of, or constitute a default under,
or result in any violation of, or result in the creation of any Lien upon any
Properties of any Company or any Subsidiary under, or require any consent,
approval or other action by, notice to or filing with any Tribunal or Person
pursuant to, the articles of incorporation or bylaws of any Company or any
Subsidiary, any award of any arbitrator, any Authorization, or any agreement,
instrument or Law to which any Company, any Subsidiary or any of their
Properties is subject. No Authorization which has not been obtained by the
Companies or the Subsidiaries is required in connection with the execution,
delivery and performance of any Loan Papers.
SECTION 4.4 FINANCIAL STATEMENTS. The financial statements of the Companies
and the Subsidiaries delivered to the Administrative Lender and Lenders fairly
present the financial condition and results of operations of the Companies and
the Subsidiaries as of the dates and for the periods shown, all in accordance
with GAAP (except for, with respect to the quarterly financials, the absence of
footnotes). The latest of such annual financial statements reflects all material
liabilities, direct and contingent, of the Companies and the Subsidiaries that
are required to be disclosed in accordance with GAAP.
SECTION 4.5 LITIGATION. Shown on SCHEDULE 4.5 attached hereto is all
Litigation that is pending or, to the best of the Companies' knowledge,
threatened against any Company or any of the Subsidiaries on the date hereof.
There is no pending or, to the best of the Companies' knowledge, threatened
Litigation against any Company or any Subsidiary that could reasonably be
expected to constitute a Material Adverse Change.
SECTION 4.6 COMPLIANCE WITH LAWS.
(a) Each Company and each of the Subsidiaries are in material compliance
with all Applicable Law and statutes and governmental rules and regulations
applicable to it or any of them, including, without limitation (a) applicable
rules and regulations of the FCC and the political subdivisions, governments and
governmental agencies having jurisdiction over the activities of it or any of
them; and (b) applicable rules and regulations of the SEC insofar as such rules
and regulations apply to it or any of them. Each Company and each Subsidiary has
received no notice to the effect that its respective operations are not in
material compliance with any of the requirements of Applicable Law.
(b) No proceeds of any Advance will be used directly or indirectly to
acquire any security in any transaction which is subject to Sections 13 and 14
of the Securities Exchange Act of 1934, as amended. None of the Companies or the
Subsidiaries are engaged in the business of extending credit for the purpose of
purchasing or carrying margin stock (within the meaning of Regulation U issued
by the Board of Governors of the Federal Reserve System), and no proceeds of any
Advance will be used to purchase or carry any margin stock or to extend credit
to others for the purpose of purchasing or carrying any margin stock. The
Companies and the Subsidiaries are not subject to regulation under the Public
Utility Holding Company Act of 1935, the Federal Power Act, the Investment
Company Act of 1940, the Interstate Commerce Act (as any of the preceding acts
have been amended), or any other Law that the incurring of Debt by the Companies
would violate in any material respect.
SECTION 4.7 AUTHORIZATIONS, TITLE TO PROPERTIES AND RELATED MATTERS. The
Companies and the Subsidiaries possess all Authorizations and are not in
violation thereof in any material respect. All Authorizations are in full force
and effect, and no event has occurred that permits, or after notice or lapse of
time could permit, the revocation or termination of any Authorizations which
taken in isolation or when considered with all other such revocations or
termination might reasonably be expected to cause a Material Adverse Change. The
Companies and each of the Subsidiaries has full power, authority and legal right
to own and operate its Properties, and to conduct its business. Each has good
and indefeasible title (fee or leasehold, as applicable) to its Properties,
subject to no Lien of any kind, except Permitted Liens and Liens securing the
Obligation. None of the Companies or the Subsidiaries is in violation of its
respective articles of incorporation or bylaws, any Law, or any material
agreement or instrument binding on or affecting it or any of its Properties. No
business or Properties of the Companies and the Subsidiaries is affected by any
strike, lock-out, or other labor dispute, drought, storm, earthquake, embargo,
act of God or public enemy, or other casualty.
SECTION 4.8 PATENTS, ETC. The Companies and the Subsidiaries have obtained
all patents, trademarks, service-marks, trade names, copyrights, Authorizations
and other rights, free from burdensome restrictions, that are necessary for the
operation of their respective businesses as presently conducted and as proposed
to be conducted. Nothing has come to the attention of the Companies to the
effect that (a) any process, method, part or other material presently
contemplated to be employed by any Company or any Subsidiary may infringe any
patent, trademark, service-mark, trade name, copyright, license or other right
owned by any other Person, or (b) there is pending or overtly threatened any
material claim or litigation against or affecting any Company or any of the
Subsidiaries, contesting their right to sell or use any such process, method,
part or other material.
SECTION 4.9 OUTSTANDING DEBT. The Companies and the Subsidiaries have no
outstanding Funded Debt, Contingent Liabilities or Liens, except as shown on
SCHEDULE 4.9 attached hereto. No material breach, default or event of default
exists under any document, instrument or agreement evidencing or otherwise
relating to any Funded Debt.
SECTION 4.10 TAXES. The Companies and the Subsidiaries have filed all
federal, state and other Tax returns that are required to be filed, and have
paid all Taxes as shown on such returns, as well as all other Taxes, to the
extent due and payable, except such Taxes that are being diligently contested by
the Companies in good faith and for which adequate reserves have been
established in accordance with GAAP. All Tax liabilities of the Companies and
the Subsidiaries are adequately provided for on their books, including interest
and penalties, and adequate reserves have been established therefor in
accordance with GAAP. No income Tax liability of a material nature has been
asserted by taxing authorities for Taxes in excess of those already paid, and no
taxing authority has notified any Company or any of the Subsidiaries of any
deficiency in any Tax return of a material nature.
SECTION 4.11 ERISA. The Companies and the Subsidiaries neither maintain nor
participate in any single or multiple employer employee benefit plans which are
subject to ERISA.
SECTION 4.12 ENVIRONMENTAL MATTERS. Each of the Companies and the
Subsidiaries has obtained all environmental, health and safety permits, licenses
and other Authorizations required under all Environmental Laws to carry on its
business as now being or as proposed to be conducted, except to the extent
failure to have any such permit, license or Authorization would not reasonably
be expected to cause a Material Adverse Change. Each of such permits, licenses
and Authorizations is in full force and effect and each of the Companies and the
Subsidiaries is in compliance with the terms and conditions thereof, and is also
in compliance with all other limitations, restrictions, conditions, standards,
prohibitions, requirements, obligations, schedules and timetables contained in
any applicable Environmental Law or in any regulation, code, plan, order,
decree, judgment, injunction, notice or demand letter issued, entered,
promulgated or approved thereunder, except to the extent failure to comply
therewith would not reasonably be expected to cause a Material Adverse Change.
In addition, except as set forth in SCHEDULE 4.12 hereto, no notice,
notification, demand, request for information, citation, summons or order has
been issued, no complaint has been filed, no penalty has been assessed and no
investigation or review is pending or threatened by any Tribunal or other entity
with respect to any alleged failure by any Company or any of the Subsidiaries to
have any environmental, health or safety permit, license or other Authorization
required under any Environmental Law in connection with the conduct of the
business of any Company or any of the Subsidiaries or with respect to any
generation, treatment, storage, recycling, transportation, discharge or
disposal, or any Release of any Hazardous Materials generated by any Company or
any of the Subsidiaries.
SECTION 4.13 DISCLOSURE. None of the Companies and the Subsidiaries has
made a material misstatement of fact in writing, or failed to so disclose any
fact necessary to make the facts disclosed not misleading, to the Administrative
Lender or any Lender during the course of application for and negotiation of any
Loan Papers or otherwise in connection with any Advances, including without
limitation, any fact relating to Metrocall, Inc. or the Metrocall Common Stock
or the Metrocall Preferred Stock. There is no fact known to any Company that
materially adversely affects any of the Companies' and the Subsidiaries'
Properties or businesses, or that would constitute a Material Adverse Change,
and that has not been set forth in the Loan Papers or in other documents
furnished to the Administrative Lender and/or Lenders.
SECTION 4.14 THE METROCALL SALE.
(a) The execution, delivery and performance by PAG of the Metrocall
Agreement and the consummation of the Metrocall Sale in accordance therewith are
within the corporate powers of PAG, require no action by PAG by or in respect
of, or registration or filing with, or exemption from any governmental body,
agency or official that will not have been taken, and have been duly authorized
by all necessary action under PAG's organizational documents and applicable Law.
The execution, delivery and performance by PAG of the Metrocall Agreement and
the consummation of the Metrocall Sale in accordance therewith, will not
contravene or conflict with or constitute (with or without the giving of notice
or lapse of time or both) a default or breach under, or result in a termination
event or an acceleration of, any obligation arising, existing or created by or
under any agreement or instrument evidencing or governing Debt for borrowed
money of any Company or any Subsidiary, or any judgment, injunction, order,
decree, agreement or other instrument binding upon any Company or any
Subsidiary, or result in the creation or imposition or material modification of
(or obligation to create or impose) any Lien (other than the Liens created by
the Loan Papers) on any of the assets or properties of any Company or any
Subsidiary, or on any of the Capital Stock of any Company or any Subsidiary
under any provision of any Applicable Law or regulation or charter document of
any Company or any Subsidiary.
(b) PAG has previously delivered to the Lenders a true and correct copy of
the Metrocall Agreement as executed and delivered by the respective parties
thereto. Each of the representations and warranties of PAG contained in the
Metrocall Agreement is true and correct in all material respects on the date(s)
when made, to the knowledge of PAG, no rights of cancellation or rescission, no
material defaults and no defenses exist with respect to the Metrocall Agreement,
which, in each case, could reasonably be expected to cause a Material Adverse
Change.
SECTION 4.15 LOCATION. The chief executive offices of each Company and each
Subsidiary are located at the addresses as shown on SCHEDULE 4.15 hereto. Each
Company and each Subsidiary is entitled to receive notices hereunder at its
chief executive office, notwithstanding that certain of them may maintain other
places of business. The present and foreseeable location of the books and
records of each Company and each Subsidiary concerning accounts and accounts
receivable are their chief executive offices.
SECTION 4.16 SURVIVAL OF REPRESENTATIONS AND WARRANTIES, ETC. All
representations and warranties made under this Agreement and the other Loan
Papers shall be deemed to be made at and as of the Closing Date, and each shall
be true and correct when made. All such representations and warranties shall
survive, and not be waived by, the execution hereof by any Lender, any
investigation or inquiry by any Lender, or by the making of any Advance under
this Agreement.
SECTION 4.17 BUSINESS OF THE COMPANIES. After the Closing Date, the
Companies' operating businesses shall have been terminated and each of them
shall, on that date, have no assets other than those held for liquidation and
distribution to each Company's creditors and shareholders in accordance with the
Loan Papers, agreements between each Company and its creditors other than the
Administrative Lender and the Lenders and each Company's certificate of
incorporation.
ARTICLE V
AFFIRMATIVE COVENANTS
So long as any Advance or any other portion of the Obligation is
outstanding, or the Companies owe any other amount hereunder:
SECTION 5.1 COMPLIANCE WITH LAWS AND AUTHORIZATIONS; PAYMENT OF DEBTS.
(a) Each Company shall comply, and cause each of the Subsidiaries to
comply, in all material respects, with all Applicable Laws, Authorizations and
all statutes and governmental rules and regulations applicable to it, or any of
them, including without limitation: (i) applicable rules and regulations of the
FCC, SEC, ERISA and other governmental agencies; (ii) applicable rules and
regulations of the SEC insofar as such rules and regulations apply to it or any
of them; and (iii) applicable provisions of ERISA insofar as such Act applies to
it or any of them. No Company shall permit any condition to exist in connection
with any Plan which would constitute grounds for the PBGC to institute
proceedings to have such Plan terminated or a trustee appointed to administer
such Plan; and not engage in, or permit to exist or occur, or permit any of the
Subsidiaries to engage in, or permit to exist or occur, any other condition,
event or transaction with respect to any such Plan which would result in the
incurrence by any Company or any of the Subsidiaries of any material liability,
fine or penalty.
(b) The use which any Company or any Subsidiary intends to make of any real
property owned by it will not result in the disposal or other release of any
hazardous substance or solid waste on or to such real property, and no Company
nor any Subsidiary shall cause, permit or suffer to exist the disposal or other
Release of any Hazardous Material or solid waste on or to such real property. As
used herein, the terms "solid waste" and "disposal" shall have the meanings
specified in RCRA; provided that to the extent that any other law applicable to
any Company, any Subsidiary or any of their properties establishes a meaning for
"hazardous material," "hazardous substance," "release," "solid waste," or
"disposal" which is broader than that specified herein, such broader meaning
shall apply.
(c) Each Company shall, and shall cause each Subsidiary to, pay its Funded
Debt as and when due, unless payment thereof is being contested in good faith by
appropriate proceedings and adequate reserves have been established therefor.
SECTION 5.2 INSURANCE. Each Company shall, and shall cause each Subsidiary
to, (a) keep its Properties adequately insured at all times by financially sound
and reputable insurers to such extent and against such risks, including fire and
other risks insured against by extended coverage, as is customary with companies
similarly situated and in the same or similar businesses, and show the
Administrative Lender as loss payee, (b) maintain in full force and effect
public liability, workers compensation and business interruption insurance, in
amounts customary for such similar companies to cover normal risks, by insurers
satisfactory to the Administrative Lender, and (c) maintain such other insurance
as may be required by Law or by any Authorization. Each Company shall from time
to time deliver to the Administrative Lender, upon demand, evidence of the
maintenance of such insurance and a summary of coverage under each policy.
SECTION 5.3 MAINTENANCE OF TAX TREATIES. Each Company shall, and shall
cause each Subsidiary to, maintain in full force and effect, without
modification or amendment, and comply with all tax treaties, if any, currently
in effect among the Companies and the Subsidiaries.
SECTION 5.4 INSPECTION RIGHTS. Each Company shall, and shall cause each
Subsidiary to, permit the Administrative Lender or any Lender, upon reasonable
notice under the circumstances, to examine and make copies of and abstracts from
their records and books of account, to visit and inspect their Properties and to
discuss their affairs, finances and accounts with any of their directors,
officers, employees or accountants and representatives, all as the
Administrative Lender or any Lender may reasonably request, at the cost of the
Companies.
SECTION 5.5 RECORDS AND BOOKS OF ACCOUNT; CHANGES IN GAAP. Each Company
shall, and shall cause each Subsidiary to, keep adequate records and books of
account in conformity with GAAP. Each Company and the Subsidiaries shall not
change their fiscal year. Each Company and the Subsidiaries shall not change
their financial method of accounting, except in strict compliance with GAAP,
provided that, if the Companies and the Subsidiaries change their method of
financial accounting in accordance with the terms of this Section 5.6, (a) the
Notification Agent shall notify the Administrative Lender and each Lender of
such change together with an explanation of such change and the effect of such
change on the financial statements of the Companies and the Subsidiaries.
SECTION 5.6 REPORTING REQUIREMENTS. The Companies shall furnish to each
Lender and the Administrative Lender:
(a) As soon as available and in any event within ten (10) days after the
end of each month beginning with the month ending July 31, 1997, (i)
consolidated balance sheets of the Companies and the Subsidiaries as of the end
of such month, all in reasonable detail, and certified by a Responsible Officer
as prepared in accordance with GAAP (except for the absence of footnotes) and
fairly presenting the financial condition and results of operations of the
Companies and the Subsidiaries, and (ii) consolidated statements of income of
the Companies and the Subsidiaries, as of the end of such month and for the
portion of the fiscal year ending with such month, all in reasonable detail, and
certified by a Responsible Officer as prepared in accordance with GAAP (except
for the absence of footnotes) and fairly presenting the financial condition and
results of operations of the Companies and the Subsidiaries, subject to changes
resulting from year-end adjustments;
(b) As soon as available and in any event within 45 days after the end of
each quarter, (i) consolidated balance sheets of the Companies and the
Subsidiaries as of the end of such quarter, setting forth in comparative form,
figures for the prior fiscal year, all in reasonable detail, and certified by a
Responsible Officer as prepared in accordance with GAAP (except for the absence
of footnotes) and fairly presenting the financial condition and results of
operations of the Companies and the Subsidiaries, and (ii) consolidated
statements of income and a consolidated statement of cash flows of the Companies
and the Subsidiaries, as of the end of such quarter and for the portion of the
fiscal year ending with such quarter setting forth in comparative form, figures
for the prior fiscal year, all in reasonable detail, and certified by a
Responsible Officer as prepared in accordance with GAAP (except for the absence
of footnotes) and fairly presenting the financial condition and results of
operations of the Companies and the Subsidiaries, subject to changes resulting
from year-end adjustments;
(c) As soon as available and in any event within 90 days after the end of
each fiscal year of the Companies, consolidated balance sheets of the Companies
and the Subsidiaries as of the end of such fiscal year, and consolidated
statements of income and cash flows of the Companies and the Subsidiaries as of
the end of such fiscal year, and the related consolidated statement of
shareholder's equity of the Companies and the Subsidiaries for such fiscal year,
setting forth, in comparative form, figures for the previous fiscal year, all in
reasonable detail, prepared in accordance with GAAP, and accompanied by an
opinion of the Auditor on the consolidated financial statements, which opinion
shall state that such financial statements were prepared in accordance with
GAAP, that the examination by the Auditor in connection with such financial
statements was made in accordance with generally accepted auditing standards,
and that such financial statements fairly present the financial condition and
results of operations of the Companies and the Subsidiaries, and that, to their
knowledge, there exists no Default or Event of Default under the Loan Papers;
(d) Promptly upon their becoming available, a copy of (i) all material
reports or letters submitted to any Company or any Subsidiary by accountants in
connection with any annual, interim or special audit, including without
limitation any report prepared in connection with the annual audit, and any
other comment letter submitted to management in connection with any such audit,
(ii) each financial statement, report, notice or proxy statement sent by any
Company or any Subsidiary to stockholders generally, (iii) each regular or
periodic report and any registration statement (other than statements on Form
S-8) or prospectus (or material written communication in respect of any thereof)
filed by PAG, any Company or any Subsidiary with any securities exchange, with
the SEC or any successor agency, and (iv) all press releases concerning material
financial aspects of any Company or any Subsidiary;
(e) Promptly upon becoming aware that (i) the holder(s) of any note(s) or
other evidence of Indebtedness or other security of any Company or any
Subsidiary in excess of $100,000 in the aggregate has given notice or taken any
action with respect to a breach, failure to perform, claimed default or event of
default thereunder, (ii) any party to any Capitalized Lease Obligations has
given notice or taken any action with respect to a breach, failure to perform,
claimed default or event of default thereunder, (iii) any occurrence or
non-occurrence of any event which constitutes or which with the passage of time
or giving of notice or both could constitute a material breach by any Company or
any Subsidiary under any material agreement or instrument other than this
Agreement to which any Company or any Subsidiary is a party or by which any of
their properties may be bound, or (iv) any event, circumstance or condition
which could cause a Material Adverse Change, a written notice specifying the
details thereof (or the nature of any claimed default or event of default) and
what action is being taken or is proposed to be taken with respect thereto;
(f) Together with each set of financial statements delivered pursuant to
subsections (a), (b) and (c) above, a Compliance Certificate;
(g) As soon as possible (but in no event later than two Business Days
thereafter) upon knowledge by an officer of any Company of the occurrence of any
Default or Event of Default, or of any material change in any material fact or
circumstance represented or warranted in any Loan Papers, a notice from a
Responsible Officer, setting forth the details of such Default or Event of
Default, or change in fact or circumstance, and the action being taken or
proposed to be taken with respect thereto;
(h) As soon as possible and in any event within five days after knowledge
thereof by a corporate officer of any Company, notice of (i) any Litigation
pending against any Company or any Subsidiary which, if determined adversely,
could reasonably be expected to constitute a Material Adverse Change, together
with a statement of a Responsible Officer, describing the allegations of such
Litigation, and the action being taken or proposed to be taken with respect
thereto and (ii) the commencement of all material proceedings and investigations
by or before any Tribunal, and all actions and proceedings before any arbitrator
involving claims for damages (including punitive damages) in excess of $100,000
in the aggregate (after deducting the amount with respect to any Company or any
Subsidiary is insured), against or in any other way relating directly to any
Company, any Subsidiary, or any of their Properties or businesses;
(i) Promptly following notice or knowledge thereof by a corporate officer
of any Company, notice of any actual or threatened loss or termination of or
refusal to grant or renew any material Authorization, together with a statement
of a Responsible Officer, describing the circumstances surrounding the same, and
the action being taken or proposed to be taken with respect thereto;
(j) As soon as possible, and in any event within 10 days after receipt by
any Company, a copy of (i) any notice or claim to the effect that any Company or
any Subsidiary is or may be liable to any Person as a result of the Release by
any Company, any of the Subsidiaries, or any other Person of any hazardous
substance or hazardous waste into the environment, and (ii) any notice alleging
any violation of any Environmental Law by any Company or any Subsidiary, which
could, in either case, reasonably be expected to cause a Material Adverse
Change;
(k) By noon, Dallas, Texas time, on the first Business Day of each week and
each Business Day following a sale of Metrocall Stock, a Collateral Coverage
Report;
(l) Promptly upon request, such other information concerning the condition
or operations of any Company, or any of the Subsidiaries and its Affiliates,
financial or otherwise, as the Administrative Lender or any Lender may from time
to time reasonably request; and
(m) As soon as possible, and in any event within three (3) Business Days
after Friday of each week, a report of beginning and ending cash for such week,
and receipts and disbursements for such week of the Companies on a consolidated
basis, in reasonable detail, and in any event in form satisfactory to
Administrative Lender and to Lenders.
SECTION 5.7 USE OF PROCEEDS. The Companies shall use the proceeds of
Advances hereunder to refinance existing indebtedness owed under the Original
Credit Agreement.
SECTION 5.8 PAYMENT OF TAXES. Each Company will and will cause each of the
Subsidiaries promptly to pay and discharge all lawful Taxes imposed upon it or
upon its income or profit or upon any Property belonging to it, unless such Tax
shall not at the time be due and payable, or if the validity thereof shall
currently be diligently contested on a timely basis in good faith by appropriate
proceedings (provided that the enforcement of any Liens arising out of any such
nonpayment shall be stayed or bonded during the proceedings) and adequate
reserves with respect to such Tax shall have been established.
SECTION 5.9 COLLATERAL COVERAGE. The Companies shall cause the ratio of the
(a) face amount of the Metrocall Preferred Stock which constitutes Collateral,
plus the fair market value of all Metrocall Common Stock which constitutes
Collateral, to (b) the Total Principal Debt, to at all times equal or exceed 1.5
to 1.0. Such ratio shall be calculated each Monday and on the date of each sale
of such stock before, but assuming such sale has occurred. The fair market value
of the Metrocall Common Stock will be based on the bid price at closing on the
last Trading Day of the preceding week, or the date of sale, whichever is
applicable.
SECTION 5.10 PLAN OF LIQUIDATION. The Companies shall, and shall cause the
Subsidiaries to, comply with the Plan of Liquidation and conduct no business not
reasonably required thereby. PAG may at any time and from time to time liquidate
and dissolve all the Companies (other than PAG) and the Subsidiaries.
SECTION 5.11 COMPLIANCE WITH FORBEARANCE AGREEMENT. The Companies shall,
and shall cause the Subsidiaries to, comply with the terms and conditions of the
Forbearance Agreement as now written and agreed upon.
ARTICLE VI
NEGATIVE COVENANTS
So long as any Advance or any other portion of the Obligation is
outstanding, or the Companies owe any other amount hereunder:
SECTION 6.1 DEBT. The Companies will not, and will not at any time permit
any of the Subsidiaries to create, incur, assume, guarantee or otherwise become
liable with respect to or suffer to exist any Debt except:
(a) Debt of the Companies and the Subsidiaries under the Loan Papers,
(b) unsecured Debt of the Companies in existence on the Closing Date, as
shown on SCHEDULE 4.9 attached hereto, and
(c) accounts payable, expenses incurred in connection with or incidental to
the Plan of Liquidation or in the ordinary course of business, amounts due in
connection with claims and lawsuits, and other expenses of the type described on
SCHEDULE 2.3 attached hereto.
SECTION 6.2 LIMITATION ON LIENS. The Companies will not, and will not cause
or permit any of the Subsidiaries to, create, assume, incur or suffer to exist
any Lien upon or with respect to any Property now owned or hereafter acquired
other than Permitted Liens. It is specifically acknowledged and agreed that the
Companies shall not, and shall not permit any Subsidiary to, agree with any
Person (other than the Lenders and the holders of the Subordinated Debt) not to
grant a Lien on any of their assets.
SECTION 6.3 CONSOLIDATION, MERGER OR DISPOSITION OF ASSETS. The Companies
will not, and will not cause or permit any Subsidiary to, create or acquire any
Subsidiary or directly or indirectly, consolidate with or merge into, or sell,
lease, assign, transfer or otherwise dispose of any of its Property (including,
without limitation, Capital Stock (except with respect to PAG)) to, any Person,
except that,
(a) any Company or any Subsidiary may sell, lease, assign, transfer or
otherwise dispose of Property as contemplated by the Plan of Liquidation;
(b) a wholly-owned Subsidiary may consolidate with or merge into any
Company or any other wholly-owned Subsidiary, and any Company may merge or
consolidate into PAG and any Company (other than PAG) or Subsidiary may be
liquidated and dissolved; and
(c) the Companies may sell or dispose of assets for cash, so long as the
Net Proceeds of such sales are used by the Companies in accordance with the
provisions of Section 2.3(c) hereof.
SECTION 6.4 RESTRICTED PAYMENTS; RESTRICTED INVESTMENTS. The Companies will
not (and will not permit any Subsidiary, to) directly or indirectly make or
declare any Restricted Payment or make any Restricted Investment, except the
Investments in existence on the Closing Date and described on SCHEDULE 6.4
attached hereto.
SECTION 6.5 TRANSACTIONS WITH AFFILIATES. The Companies will not, and will
not cause or permit any of the Subsidiaries to, engage in any transaction with
an Affiliate of the Companies or any of the Subsidiaries (other than the
Companies or a wholly-owned Subsidiary of any Company) on terms less favorable
to such Company or such Subsidiary (as the case may be) than would have been
obtainable in an arms' length dealing with a Person other than an Affiliate,
provided that PAG may make monthly payments to Bariston Associates, Inc. for
investment banking services rendered to PAG in an amount not to exceed in the
aggregate for any fiscal year, of $105,000 plus a cost of living adjustment for
each year after 1993 equal to the change in the consumer price index at the
start of each such year, over such index at the start of the prior year. The
Companies shall, and shall cause the Subsidiaries to, execute enforceable
promissory notes for any Debt among the Companies, the Subsidiaries or any
Affiliate, and cause such notes to be pledged to the Lenders to secure the
Obligations.
SECTION 6.6 OWNERSHIP OF SUBSIDIARIES. Except as contemplated by the Plan
of Liquidation:
(a) The Companies will not (other than PAG), nor will the Companies cause
or permit any of the Subsidiaries, to issue any Capital Stock (or any rights,
warrants or options to acquire, or securities convertible into or exchangeable
for, such Capital Stock) to any Person other than to any Company or any of the
Subsidiaries; and
(b) The Companies shall at all times own, directly or indirectly, 100% of
the Capital Stock (and any rights, warrants or options to acquire, or securities
convertible into or exchangeable for, such Capital Stock) of any Subsidiary
acquired by the Companies after the date hereof.
SECTION 6.7 CONSENSUAL RESTRICTIONS ON SUBSIDIARY DIVIDENDS. Except as
restricted pursuant to the Subordinated Notes and Agreements, the Companies will
not, nor will the Companies cause or permit any of the Subsidiaries to, become a
party to, or in any way be bound by, any agreement restricting the ability of
any Company or any Subsidiary to pay dividends out of profits or make any other
similar distributions of profits to such of the Companies and the Subsidiaries
as shall own Capital Stock of such Subsidiary or such Company.
SECTION 6.8 ISSUANCE OF STOCK: AMENDMENT OF CHARTER. The Companies shall
not, and shall not permit any Subsidiary to, issue, sell or otherwise dispose of
any Capital Stock of any Company (other than PAG) or any of the Subsidiaries, or
any warrants, rights or options to acquire such stock or interest, except to the
Companies or the Subsidiaries, unless such shares, warrants, rights or options
shall be pledged to the Administrative Lender hereunder for the ratable benefit
of the Lenders.
SECTION 6.9 FISCAL YEAR. None of the Companies nor any Subsidiary shall
change its fiscal year, unless required to do so by GAAP.
SECTION 6.10 AMENDMENTS AND WAIVERS. None of the Companies, nor any of the
Subsidiaries shall, nor shall any Company permit any Subsidiary to, amend or
change any Loan Paper other than pursuant to Section 9.1 hereof, nor shall any
Company or any of the Subsidiaries change or amend (or take any action or fail
to take any action the result of which is an effective amendment or change) or
accept any waiver or consent with respect to, (a) any documents or instruments
executed or generated in connection with any Company's capital structure, except
to the extent that any such change does not adversely effect the interests of
the Lenders, (b) notwithstanding (a) above, any documents or instruments
executed or generated in connection with PAG's Preferred Stock, (c) any
management agreement, (d) the Metrocall Agreement or any agreement executed in
connection with the Metrocall Agreement, or (e) notwithstanding (a) above, the
Subordinated Notes and Agreements or any document or instrument executed in
connection with the Subordinated Debt.
SECTION 6.11 ERISA. The Companies will not, and will not cause or permit
any Subsidiary to, create, maintain, or participate in any single or multiple
employer employee benefit plan which is subject to ERISA.
ARTICLE VII
EVENTS OF DEFAULT
SECTION 7.1 EVENTS OF DEFAULT. Any one or more of the following shall be an
"Event of Default" hereunder, if the same shall occur for any reason whatsoever,
whether voluntary or involuntary, by operation of Law, or otherwise:
(a) The Companies shall fail to pay (i) any principal payable under any
Loan Papers when due (including, without limitation, as a result of scheduled
repayment, scheduled reduction, mandatory prepayment or otherwise), or (ii) any
interest payable under any Loan Papers within three days of the date when due;
or the Companies shall fail to pay any fees payable under Section 2.2 hereof
when due; or the Companies shall fail to pay any other amounts payable under any
Loan Papers within five days after the date when due;
(b) Any representation or warranty made or deemed made by any Company or
any of the Subsidiaries (or any of their officers or representatives) under or
in connection with any Loan Papers shall prove to have been incorrect or
misleading in any material respect when made or deemed made;
(c) Any Company or any Subsidiary shall fail to perform or observe any term
or covenant contained in Article VI hereof, Section 5.6(i), or Sections 5.9
through 5.11 hereof;
(d) Any Company, any of the Subsidiaries or any Person shall fail to
perform or observe any other term or covenant contained in any Loan Papers or in
any other written agreement with the Lenders in connection with this Agreement,
other than those described in subsections (a) and (c) above, and such failure
shall not be remedied within 30 days after the occurrence of such default;
(e) Any Loan Papers or provision thereof shall, for any reason, not be
valid and binding on any Company, or not be in full force and effect, or shall
be declared to be null and void; or the validity or enforceability of any Loan
Papers shall be contested by any Company or any Subsidiary (or any shareholder);
or any Company or any Subsidiary shall deny that it has any or further liability
or obligation under its Loan Papers; or less than 100% of the Capital Stock of
the Companies (other than PAG) or the Subsidiaries shall be pledged to the
Lenders to secure the Obligations;
(f) Any of the following shall occur: (i) Metrocall Inc., any Company or
any Subsidiary shall make an assignment for the benefit of creditors; (ii)
Metrocall, Inc., any Company or any Subsidiary shall petition or apply to any
Tribunal for the appointment of a trustee, receiver, or liquidator of it, or of
any substantial part of its assets, or shall commence any proceedings relating
to any Company or any Subsidiary under any bankruptcy, reorganization,
compromise, arrangement, insolvency, readjustment of debts, conservatorship,
moratorium, dissolution, liquidation or other debtor relief Laws of any
jurisdiction, whether now or hereafter in effect; (iii) any such petition or
application shall be filed, or any such proceedings shall be commenced, against
Metrocall, Inc., any Company or any Subsidiary and such Company or such
Subsidiary consents thereto or the same is not dismissed or otherwise discharged
within 60 days, or an order, judgment or decree shall be entered appointing any
such trustee, receiver or liquidator, or approving the petition in any such
proceedings; (iv) any final order, judgment or decree shall be entered in any
proceedings against Metrocall, Inc., any Company or any Subsidiary decreeing its
dissolution; or (v) any final order, judgment, or decree shall be entered in any
proceedings against any Company or any Subsidiary decreeing its split-up which
requires the divestiture of a substantial part of its assets;
(g) Any Company or any Subsidiary shall fail to pay all or any portion of
any Debt or Contingent Liability of $100,000 or more when due (whether by
scheduled maturity, required prepayment, acceleration, demand or otherwise), and
such failure shall continue after the applicable grace period, if any, specified
in the agreement or instrument relating to such Debt or Contingent Liability;
any Company or any Subsidiary shall fail to perform or observe any term or
covenant contained in any agreement or instrument relating to any such Debt or
Contingent Liability, when required to be performed or observed, and such
failure shall continue after the applicable grace period, if any, specified in
such agreement or instrument, and can result in acceleration of the maturity of
such Debt or Contingent Liability; or any such Debt or Contingent Liability
shall be declared to be due and payable, or required to be prepaid (other than
by a regularly scheduled required prepayment), prior to the stated maturity
thereof;
(h) Any Company or any Subsidiary shall fail to pay any final judgment(s)
outstanding against any of them for the payment of $100,000 or more within 60
days following the date such final judgment was rendered;
(i) Any Company or any Subsidiary shall be required under any Environmental
Law (i) to implement any remedial, neutralization or stabilization process or
program, the cost of which would constitute a Material Adverse Change, or (ii)
to pay any penalty, fine, damages or clean up in an aggregate amount of $100,000
or more per annum;
(j) Any change in the Chairman of the Board of PAG shall occur, provided
that, if PAG shall have replaced such person by an appropriate person within 90
days thereafter and if the Lenders have approved thereof in writing, such change
shall not constitute an Event of Default; or any Change in Control shall occur;
(k) Any Company shall make any payment on the Subordinated Debt; or any
Company shall establish a sinking fund or analogous fund, or otherwise set aside
funds for the purpose of making any payment on the Subordinated Debt; or the
holders of the Subordinated Debt shall accept any payment on the Subordinated
Debt;
(l) Metrocall Common Stock shall, other than temporarily for a period of
not more than twenty-four hours, at any time cease to be traded publicly either
on a securities exchange or over-the-counter, or trading in such stock shall at
any time be halted or restricted by any order, rule, judgment, decree, decision
or other action by the SEC, any Tribunal, stock exchange or the National
Association of Securities Dealers; or
(m) Metrocall, Inc. shall at any time cease to be a reporting company under
the Securities Exchange Act of 1934 unless, prior to such time, Metrocall, Inc.
shall agree in writing with the Administrative Lender and each Lender to provide
reports to the Administrative Lender and each Lender containing such
information, in such format and at such times as would be required under such
Act if Metrocall, Inc. had continued to be a reporting company under such Act.
SECTION 7.2 REMEDIES UPON DEFAULT. If an Event of Default described in
Section 7.1(f) hereof shall occur, the aggregate unpaid principal balance of and
accrued interest on all Advances shall, to the extent permitted by applicable
Law, thereupon become due and payable concurrently therewith, without any action
by the Administrative Lender or any Lender, and without diligence, presentment,
demand, protest, notice of protest or intent to accelerate, or notice of any
other kind, all of which are hereby expressly waived to the fullest extent
permitted by applicable Law. Subject to the foregoing sentence, if any Event of
Default shall occur and be continuing, the Administrative Lender, or any Lender
who has elected pursuant to Section 4.4(d) of the Security Agreement to receive
its Pro Rata portion of the Metrocall Stock and release any interest in any
further Collateral, may at its election, and with respect to the Administrative
Lender shall upon the request of the Majority Lenders, do any one or more of the
following:
(a) With respect to the Administrative Lender it may declare the entire
Obligation, or with respect to a Lender making such an election it may declare
its Note, immediately due and payable, whereupon the Obligation or such Lender's
Note, as applicable, shall be due and payable without diligence, presentment,
demand, protest, notice of protest or intent to accelerate, or notice of any
other kind (except notices specifically provided for under Section 7.1 hereof),
all of which are hereby expressly waived to the fullest extent permitted by
applicable Law;
(b) Reduce any claim to judgment; and
(c) Exercise any Rights afforded under any Loan Papers, by Law, at equity,
or otherwise.
SECTION 7.3 CUMULATIVE RIGHTS. All Rights available to the Administrative
Lender and Lenders under the Loan Papers shall be cumulative of and in addition
to all other Rights granted thereto at Law or in equity, whether or not amounts
owing thereunder shall be due and payable, and whether or not the Administrative
Lender or any Lender shall have instituted any suit for collection or other
action in connection with the Loan Papers.
SECTION 7.4 WAIVERS. The acceptance by the Administrative Lender or any
Lender at any time and from time to time of partial payment of any amount owing
under any Loan Papers shall not be deemed to be a waiver of any Event of Default
then existing. No waiver by the Administrative Lender or any Lender of any Event
of Default shall be deemed to be a waiver of any Event of Default other than
such Event of Default. No delay or omission by the Administrative Lender or any
Lender in exercising any Right under the Loan Papers shall impair such Right or
be construed as a waiver thereof or an acquiescence therein, nor shall any
single or partial exercise of any such Right preclude other or further exercise
thereof, or the exercise of any other Right under the Loan Papers or otherwise.
SECTION 7.5 PERFORMANCE BY THE ADMINISTRATIVE LENDER. Should any covenant
of the Companies or any Subsidiary fail to be performed in all material respects
in accordance with the terms of the Loan Papers, the Administrative Lender may,
at its option, perform or attempt to perform such covenant on behalf of such
Company or such Subsidiary. Notwithstanding the foregoing, it is expressly
understood that the Administrative Lender and Lenders do not assume, and shall
not ever have, except by express written consent of the Administrative Lender or
any such Lender, any liability or responsibility for the performance of any
duties or covenants of any Company or any Subsidiary.
SECTION 7.6 EXPENDITURES. Each Company agrees, jointly and severally, to
reimburse the Administrative Lender and Lenders for any reasonable out-of-pocket
sums spent by any of them in connection with the exercise of any Right provided
herein. Such sums shall bear interest at a rate per annum equal to the lesser of
(a) the Highest Lawful Rate and (b) the Base Rate plus 3%, from the date spent
until the date of repayment by the Companies, and shall be due and payable on
demand.
SECTION 7.7 CONTROL. None of the covenants or other provisions contained in
this Agreement or any other Loan Papers shall, or shall be deemed to, give the
Administrative Lender or any Lender Rights to exercise control over the affairs
and/or management of the Companies or any of the Subsidiaries, the power of the
Administrative Lender or any Lender being limited to the Rights to exercise the
remedies provided in this Article; provided, however, that if the Administrative
Lender or any Lender becomes the owner of any Capital Stock or other equity
interest in any Person, whether through foreclosure or otherwise, it shall be
entitled to exercise such legal Rights as it may have by being an owner of such
stock or other equity interest in such Person.
ARTICLE VIII
THE ADMINISTRATIVE LENDER
SECTION 8.1 AUTHORIZATION AND ACTION. Each of the Lenders hereby appoints
and authorizes the Administrative Lender to take such action as the
Administrative Lender on its behalf and to exercise such powers under this
Agreement and the other Loan Papers as are delegated to the Administrative
Lender by the terms hereof, together with such powers as are reasonably
incidental thereto. As to any matters not expressly provided for by this
Agreement and the other Loan Papers (including without limitation enforcement or
collection of the Notes), the Administrative Lender shall not be required to
exercise any discretion or take any action, but shall be required to act or to
refrain from acting (and shall be fully protected in so acting or refraining
from acting) upon the instructions of the Majority Lenders (or all Lenders, if
required under Section 9.1 hereof), and such instructions shall be binding upon
all Lenders; provided, however, that the Administrative Lender shall not be
required to take any action which exposes the Administrative Lender to personal
liability or which is contrary to any Loan Papers or applicable Law. The
Administrative Lender agrees to give to each Lender notice of each notice given
to it by the Companies pursuant to the terms of this Agreement, and to
distribute to each applicable Lender in like funds all amounts delivered to the
Administrative Lender by the Companies for the Ratable or individual account of
any Lender.
SECTION 8.2 ADMINISTRATIVE LENDER'S RELIANCE, ETC. Neither the
Administrative Lender, nor any of its directors, officers, agents, employees or
representatives shall be liable for any action taken or omitted to be taken by
it or them under or in connection with this Agreement or any other Loan Papers,
except for its or their own gross negligence or willful misconduct. Without
limitation of the generality of the foregoing, the Administrative Lender (a) may
treat the payee of any Note as the holder thereof until the Administrative
Lender receives written notice of the assignment or transfer thereof signed by
such payee and in form satisfactory to the Administrative Lender; (b) may
consult with legal counsel (including counsel for any Company or any
Subsidiary), independent public accountants and other experts selected by it,
and shall not be liable for any action taken or omitted to be taken in good
faith by it in accordance with the advice of such counsel, accountants or
experts; (c) makes no warranty or representation to any Lender and shall not be
responsible to any Lender for any statements, warranties or representations made
in or in connection with this Agreement or any other Loan Papers; (d) shall not
have any duty to ascertain or to inquire as to the performance or observance of
any of the terms, covenants or conditions of this Agreement or any other Loan
Papers on the part of the Companies or the Subsidiaries or to inspect the
Property (including the books and records) of the Companies or the Subsidiaries;
(e) shall not be responsible to any Lender for the due execution, legality,
validity, enforceability, genuineness, sufficiency or value of this Agreement,
any other Loan Papers, or any other instrument or document furnished pursuant
hereto; and (f) shall incur no liability under or in respect of this Agreement
or any other Loan Papers by acting upon any notice, consent, certificate, or
other instrument or writing (which may be by telegram, cable, telex or telecopy)
believed by it to be genuine and signed or sent by the proper party or parties.
SECTION 8.3 NATIONSBANK OF TEXAS, N.A. AND AFFILIATES. With respect to its
Loan and Loan Papers, NationsBank of Texas, N.A. shall have the same Rights
under this Agreement as any other Lender and may exercise the same as though it
were not the Administrative Lender. NationsBank of Texas, N.A. and its
Affiliates may accept deposits from, lend money to, act as trustee under
indentures of, and generally engage in any kind of business with, any Company,
any Subsidiary, any Affiliate thereof and any Person who may do business
therewith, all as if NationsBank of Texas, N.A. were not the Administrative
Lender and without any duty to account therefor to any Lender.
SECTION 8.4 LENDER CREDIT DECISION. Each Lender acknowledges that it has,
independently and without reliance upon the Administrative Lender or any other
Lender, and based on the financial statements referred to in Sections 4.4 and
5.6 hereof and such other documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this
Agreement. Each Lender also acknowledges that it will, independently and without
reliance upon the Administrative Lender or any other Lender and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under this
Agreement and the other Loan Papers.
SECTION 8.5 INDEMNIFICATION BY LENDERS. LENDERS AGREE TO INDEMNIFY THE
ADMINISTRATIVE LENDER, PRO RATA, FROM AND AGAINST ANY AND ALL LIABILITIES,
OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS, COSTS,
EXPENSES OR DISBURSEMENTS OF ANY KIND OR NATURE WHATSOEVER WHICH MAY BE IMPOSED
ON, INCURRED BY OR ASSERTED AGAINST THE ADMINISTRATIVE LENDER IN ANY WAY
RELATING TO OR ARISING OUT OF ANY LOAN PAPERS OR ANY ACTION TAKEN OR OMITTED BY
THE ADMINISTRATIVE LENDER THEREUNDER, INCLUDING ANY NEGLIGENCE OF THE
ADMINISTRATIVE LENDER; PROVIDED, HOWEVER, THAT NO LENDER SHALL BE LIABLE FOR ANY
PORTION OF SUCH LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS,
JUDGMENTS, SUITS, COSTS, EXPENSES OR DISBURSEMENTS RESULTING FROM THE
ADMINISTRATIVE LENDER'S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. WITHOUT
LIMITATION OF THE FOREGOING, LENDERS AGREE TO REIMBURSE THE ADMINISTRATIVE
LENDER, PRO RATA, PROMPTLY UPON DEMAND FOR ANY UNREIMBURSED OUT-OF-POCKET
EXPENSES (INCLUDING ATTORNEYS' FEES) INCURRED BY THE ADMINISTRATIVE LENDER IN
CONNECTION WITH THE ADMINISTRATION, MODIFICATION, AMENDMENT OR ENFORCEMENT
(WHETHER THROUGH NEGOTIATION, LEGAL PROCEEDINGS OR OTHERWISE) OF, OR LEGAL
ADVICE IN RESPECT OF RIGHTS OR RESPONSIBILITIES UNDER, THE LOAN PAPERS. THE
OBLIGATIONS OF THE LENDERS UNDER THIS SECTION 8.5 SHALL SURVIVE (A) THE
EXECUTION OF THIS AGREEMENT AND (B) THE TERMINATION OF THIS AGREEMENT AND THE
MATURITY OR REPAYMENT OF ALL OBLIGATIONS HEREUNDER.
SECTION 8.6 SUCCESSOR ADMINISTRATIVE LENDER. The Administrative Lender may
resign at any time by giving written notice thereof to the Lenders and the
Notification Agent, and may be removed at any time with or without cause by the
action of all Lenders (other than the Administrative Lender, if it is a Lender).
Upon my such resignation or removal, the Majority Lenders shall have the right
to appoint a successor Administrative Lender from the Lenders at such time, with
the consent of the Notification Agent (which shall not be unreasonably
withheld). If no successor Administrative Lender shall have been so appointed
and shall have accepted such appointment within 30 days after the retiring
Administrative Lender's giving of notice of resignation or the Lenders' removal
of the retiring Administrative Lender, then the retiring Administrative Lender
may, on behalf of the Lenders, appoint a successor Administrative Lender, which
shall be a commercial bank organized under the Laws of the United States of
America or of any State thereof and having a combined capital and surplus of at
least $50,000,000. Whether or not a successor Administrative Lender shall have
been appointed, after the expiration of the 30 day period, the retiring
Administrative Lender shall be discharged from its duties and obligations under
the Loan Papers. Notwithstanding any Administrative Lender's resignation or
removal hereunder, the provisions of this Article shall continue to inure to its
benefit as to any actions taken or omitted to be taken by it while it was the
Administrative Lender under this Agreement.
SECTION 8.7 COLLATERAL AGENT. Each Lender appoints the Administrative
Lender to act as collateral agent on its behalf under the Loan Papers,
including, without limitation, the documents and instruments granting Liens and
security interests in the Collateral to secure the Obligation. In such capacity,
the Administrative Lender may at its election, and shall, at the direction of
the Majority Lenders (or refrain from doing so at the direction of the Majority
Lenders) take such action and exercise such Rights against the Collateral as
permitted by the Loan Papers, by Law, at equity or otherwise.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 AMENDMENTS AND WAIVERS. No amendment or waiver of any provision
of this Agreement or any other Loan Paper, nor consent to any departure by any
Company or any of the Subsidiaries therefrom, shall be effective unless the same
shall be in writing and signed by the Administrative Lender with the consent of
the Majority Lenders, and then any such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given;
provided, however, that no amendment, waiver or consent shall, unless in writing
and signed by each of the Lenders affected thereby, (a) increase the Loan, (b)
reduce any principal, interest, fees or other amounts payable to such Lenders
hereunder, or waive or result in the waiver of any Event of Default under
Section 7.1(a) hereof, (c) postpone any date fixed for any payment of principal,
interest, fees or other amounts payable to such Lenders hereunder, (d) release
any Collateral or Guaranties securing the Companies' obligations hereunder
except as specifically provided for in the Loan Papers, (e) change the meaning
of Specified Percentage, Majority Lenders or the number of Lenders required to
take any action hereunder, (f) amend Sections 5.9, 6.3, 6.4, 6.8, 6.10, 9.20, or
Section 4.4(c) of the Security Agreement, or amend this Section 9.1, or (g)
waive any cross default to any payment default under the Subordinated Notes and
Agreements. No amendment, waiver or consent shall affect the Rights or duties of
the Administrative Lender under any Loan Papers, unless it is in writing and
signed by the Administrative Lender in addition to the requisite number of
Lenders.
SECTION 9.2 NOTICES. Unless otherwise provided herein, all notices,
requests, consents, demands and other communications shall be in writing and
shall be personally delivered, sent by telecopy or telex (answerback received),
or mailed, by certified mail, postage prepaid, to the following addresses:
(a) IF TO ANY COMPANY, TO THE NOTIFICATION AGENT AT:
Page America Group, Inc.
c/o Bariston Associates, Inc.
One International Place
Boston, MA 02110
Attention: David A. Barry
(617) 330-8950 - phone
(617) 330-8951 - facsimile
WITH A COPY TO
Stroock & Stroock & Lavan LLP
180 Maiden Lane
New York, NY 10038
Attention: Martin H. Neidell, Esq.
(212) 806-5836 - phone
(212) 806-6006 - facsimile
(b) IF TO THE ADMINISTRATIVE LENDER:
NationsBank of Texas, N.A.
901 Main Street, 66th Floor
Dallas, Texas 75202
Attention: Mr. William E. Livingstone, IV
Senior Vice President
(214) 508-2023 - phone
(214) 508-0604 - facsimile
WITH A COPY TO:
Winstead Sechrest & Minick P.C.
5400 Renaissance Tower
1201 Elm Street
Dallas, Texas 75270
Attention: Ira D. Einsohn, Esq.
(214) 745-5223 - phone
(214) 745-5390 - facsimile
(c) IF TO ANY LENDER:
to its address shown on the signature pages hereto or in the
applicable assignment agreement in accordance with Section
9.4 hereof
or to such other address as any party may designate in written notice to the
other parties. All notices, requests, consents, demands and other communications
hereunder will be effective when so personally delivered or sent by telecopy or
telex, or five days after being so mailed; provided, however, that notices to
the Administrative Lender pursuant to Article II hereof shall be effective when
received. Each Company agrees that the Administrative Lender shall have no duty
or obligation to verify or otherwise confirm telephonic notices given pursuant
to Article II hereof, and agrees to indemnify and hold harmless the
Administrative Lender and Lenders for any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, claims, costs and
expenses resulting, directly or indirectly, from acting upon any such notice.
The obligations of the Companies under this Section 9.2 shall survive (a) the
execution of this Agreement and (b) the termination of this Agreement and the
maturity or repayment of the Obligation hereunder.
SECTION 9.3 PARTIES IN INTEREST. All covenants and agreements contained in
this Agreement and all other Loan Papers shall bind and inure to the benefit of
the respective successors and assigns of the parties hereto. The Lenders may
from time to time assign or transfer their interests hereunder pursuant to
Section 9.4 hereof. No Company may assign or transfer its Rights or obligations
hereunder without the prior written consent of all Lenders.
SECTION 9.4 ASSIGNMENTS AND PARTICIPATIONS.
(a) Each Lender may assign its Rights and obligations as a Lender under the
Loan Papers to any Affiliate of such Lender or to the Federal Reserve Bank, and,
with the prior written consent of the Administrative Lender (which such consent
shall not be unreasonably withheld), to one or more Eligible Assignees, provided
that (i) each assignment shall be not less than the entire unpaid Principal Debt
owing to such Lender, (ii) each such assignment must be made pursuant to an
Assignment and Acceptance Agreement, and (iii) the processing fee referenced in
Section 9.4(c) below must be paid to the Administrative Lender.
(b) Each Lender may sell participations to one or more banks or other
entities in all or any of its Rights and obligations under the Loan Papers;
provided, however, that (i) such Lender's obligations under the Loan Papers
shall remain unchanged, (ii) such Lender shall remain solely responsible to the
other parties hereto for the performance of such obligations, (iii) such Lender
shall remain the holder of its Note for all purposes of the Loan Papers, (iv)
the participant shall be granted the Right to vote on or consent to only those
matters described in subsections (a) through (d) of Section 9.1 hereof to the
extent it is affected thereby, and (v) the Companies, the Administrative Lender,
and other Lenders shall continue to deal solely and directly with such Lender in
connection with its Rights and obligations under the Loan Papers.
(c) Administrative Lender may maintain at its address set forth herein a
copy of each Assignment and Acceptance Agreement received by it from each
Assignor and a register (the "Register") for the recordation of the names and
addresses of the Lenders and the commitments of, and principal amount of
Advances owing to, each Lender from time to time. The entries in the Register
shall be conclusive absent demonstrable error, and the Companies, the
Administrative Lender and the Lenders may treat each Person whose name is
recorded in the Register as the owner of the Loan recorded therein for all
purposes of this Agreement. Upon the Administrative Lender's receipt of an
executed Assignment and Acceptance Agreement, together with a payment to the
Administrative Lender of a registration and processing fee of $3,500, the
Administrative Lender shall (i) promptly accept such assignment and (ii) on the
effective date thereof, record the information contained therein in the
Register.
(d) Any Lender may, in connection with any assignment or participation, or
proposed assignment or participation, disclose to the assignee or participant,
or proposed assignee or participant, any information relating to the Companies
or any of the Subsidiaries furnished to such Lender by or on behalf of the
Companies or the Subsidiaries.
(e) Notwithstanding any other provision set forth in this Agreement, any
Lender may at any time create a security interest in all or any portion of its
rights under this Agreement (including, without limitation, the Advances owing
to it and the Note or Notes held by it) in favor of any Federal Reserve Bank in
accordance with Regulation A of the Board of Governors of the Federal Reserve
System.
SECTION 9.5 SHARING OF PAYMENTS. If any Lender shall obtain any payment
(whether voluntary, involuntary, through the exercise of any Right of set-off,
or otherwise) on account of its Advances in excess of its Pro Rata share of
payments made by the Companies, such Lender shall forthwith purchase
participations in Advances made by the other Lenders as shall be necessary to
share the excess payment Pro Rata with each of them; provided, however, that if
any of such excess payment is thereafter recovered from the purchasing Lender,
its purchase from each Lender shall be rescinded and each Lender shall repay the
purchase price to the extent of such recovery together with a Pro Rata share of
any interest or other amount paid or payable by the purchasing Lender in respect
of the total amount so recovered. The Companies agree that any Lender so
purchasing a participation from another Lender pursuant to this Section may, to
the fullest extent permitted by Law, exercise all its Rights of payment
(including the Right of set-off) with respect to such participation as fully as
if such Lender were the direct creditor of the Companies in the amount of such
participation. Provided, however, that this Section 9.5 shall not be applicable
to any Lender who exercises its irrevocable option to exchange its Note for
Metrocall Preferred Stock in accordance with Section 9.20 hereof, or to any
Lender who in accordance with Section 4.4(d) of the Security Agreement receives
its Pro Rata portion of the Metrocall Stock and otherwise releases any further
interest in any other Collateral with respect to such Lender's Note.
SECTION 9.6 RIGHT OF SET-OFF. Upon the occurrence and during the
continuance of any Event of Default, each Lender who at such time holds a Note
[and has not made the election permitted by Section 4.4(d) of the Security
Agreement] is hereby authorized at any time and from time to time, to the
fullest extent permitted by Law, to set-off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held and
other indebtedness at any time owing by such Lender to or for the credit or the
account of any Company against any and all of the obligations of the Companies
now or hereafter existing under this Agreement and the other Loan Papers,
whether or not the Lenders or such Lender shall have made any demand under this
Agreement or the other Loan Papers, and even if such obligations are unmatured.
Such Lender shall promptly notify the Notification Agent after any such set-off
and application, provided that the failure to give such notice shall not affect
the validity of such set-off and application. The Rights of each Lender under
this Section are in addition to other Rights (including, without limitation,
other Rights of set-off) which each Lender may have.
SECTION 9.7 COSTS AND EXPENSES.
(a) The Companies, jointly and severally, agree to pay on demand (i) all
reasonable costs and expenses of the Administrative Lender and each Lender
(including reasonable attorneys' fees and expenses) in connection with the
preparation, negotiation, administration, interpretation, modification,
amendment, waiver, consent or release of any Loan Papers, including, without
limitation, reasonable fees of Special Counsel, any local counsel and other
attorneys' fees of the Administrative Lender, (ii) all reasonable costs and
expenses of the Administrative Lender and each Lender (including reasonable
attorneys' fees) in connection with the administration, review and
interpretation of this Agreement and the Loan Papers, and (iii) all costs and
expenses (including reasonable attorneys' fees and expenses) of the
Administrative Lender and each Lender in connection with any restructuring,
work-out or enforcement or collection of any portion of the Obligation, or the
enforcement of any Loan Papers.
(b) In addition, the Companies shall, jointly and severally, pay any and
all stamp, debt and other Taxes payable or determined to be payable in
connection with any payment hereunder (other than Taxes on the overall net
income of the Administrative Lender or any Lender) or in connection with the
execution, delivery or recordation of any Loan Papers, and agrees to save the
Administrative Lender and Lenders harmless from and against any and all
liabilities with respect to, or resulting from any delay in paying or omission
to pay any Taxes in accordance with this Section, including any penalty,
interest and expenses relating thereto. All payments by the Companies under any
Loan Papers shall be made free and clear of and without deduction (except as
required by Law) for any present or future Taxes (other than Taxes on the
overall net income of the Administrative Lender or any Lender) of any nature now
or hereafter existing, levied or withheld, including all interest, penalties or
similar liabilities relating thereto. If any Company shall be required by Law to
deduct or to withhold any Taxes from or in respect of any amount payable
hereunder, (i) the amount so payable shall be increased to the extent necessary
so that, after making all required deductions and withholdings (including Taxes
on amounts payable to the Administrative Lender or any Lender pursuant to this
sentence), the payee receives an amount equal to the sum it would have received
had no such deductions or withholdings been made, (ii) such Company shall make
such deductions or withholdings, and (iii) such Company shall pay the full
amount deducted or withheld to the relevant taxing authority in accordance with
applicable Law.
SECTION 9.8 INDEMNIFICATION BY THE COMPANIES. EACH COMPANY, JOINTLY AND
SEVERALLY, AGREES TO INDEMNIFY, DEFEND, AND HOLD HARMLESS THE ADMINISTRATIVE
LENDER, THE LENDERS, AND THEIR AFFILIATES, DIRECTORS, OFFICERS, EMPLOYEES,
AGENTS, ATTORNEYS AND REPRESENTATIVES, FROM AND AGAINST ANY AND ALL LIABILITIES,
OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS, CLAIMS,
COSTS, EXPENSES AND DISBURSEMENTS OF ANY KIND OR NATURE WHATSOEVER WHICH MAY BE
IMPOSED ON, INCURRED BY OR ASSERTED AGAINST ANY OF THEM IN ANY WAY RELATING TO
OR ARISING OUT OF ANY LOAN PAPERS (INCLUDING IN CONNECTION WITH OR AS A RESULT,
IN WHOLE OR IN PART, OF THE NEGLIGENCE OF ANY OF THEM), ANY TRANSACTION RELATED
HERETO OR THERETO, OR ANY ACT, OMISSION OR TRANSACTION OF ANY COMPANY AND ITS
AFFILIATES, OR ANY OF THEIR DIRECTORS, OFFICERS, EMPLOYEES OR REPRESENTATIVES;
PROVIDED, HOWEVER, THAT THE ADMINISTRATIVE LENDER AND LENDERS SHALL NOT BE
INDEMNIFIED PURSUANT TO THIS SECTION FOR ANY LOSSES OR DAMAGES WHICH THE
COMPANIES FINALLY PROVE WERE CAUSED BY SUCH INDEMNIFIED PARTY'S WILLFUL
MISCONDUCT OR GROSS NEGLIGENCE. THE OBLIGATIONS OF THE COMPANIES UNDER THIS
SECTION 9.8 SHALL SURVIVE (A) THE EXECUTION OF THIS AGREEMENT AND (B) THE
TERMINATION OF THIS AGREEMENT AND THE MATURITY OR REPAYMENT OF THE OBLIGATION
HEREUNDER.
SECTION 9.9 RATE PROVISION. It is not the intention of any party to any
Loan Papers to make an agreement violative of the Laws of any applicable
jurisdiction relating to usury. Regardless of any provision in any of the Loan
Papers, no Lender shall ever be entitled to receive, collect or apply, as
interest on the Obligation, any amount in excess of the Maximum Amount. If any
Lender ever receives, collects or applies, as interest, any such excess, such
amount which would be excessive interest shall be deemed a partial repayment of
principal and treated hereunder as such; and if principal is paid in full, any
remaining excess shall be paid to the Companies. In determining whether or not
the interest paid or payable, under any specific contingency, exceeds the
Maximum Amount, the Companies and Lenders shall, to the maximum extent permitted
under Applicable Laws, (a) characterize any nonprincipal payment as an expense,
fee or premium rather than as interest, (b) exclude voluntary prepayments and
the effect thereof, and (c) amortize, prorate, allocate and spread in equal
parts, the total amount of interest throughout the entire contemplated term of
the Obligation so that the interest rate is uniform throughout the entire term
of the Obligation; provided, however, that if the Obligation is paid and
performed in full prior to the end of the full contemplated term thereof, and if
the interest received for the actual period of existence thereof exceeds the
Maximum Amount, Lenders shall refund to the Companies the amount of such excess
or credit the amount of such excess against the total principal amount owing,
and, in such event, no Lender shall be subject to any penalties provided by any
Laws for contracting for, charging or receiving interest in excess of the
Maximum Amount. This Section shall control every other provision of all
agreements among the parties to this Agreement pertaining to the transactions
contemplated by or contained in the Loan Papers.
SECTION 9.10 APPLICATION OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties relating to the Companies' Subsidiaries shall be
deemed to be made with respect to any newly formed or acquired Subsidiary as of
its formation or acquisition, and shall be true and correct on such date. All
representations and warranties made under this Agreement shall survive, and not
be waived by, the execution of the Loan Papers by the Administrative Lender and
Lenders, any investigation or inquiry by the Administrative Lender or any
Lender, or any disbursement of an Advance hereunder.
SECTION 9.11 SEVERABILITY. If any provision of any Loan Papers is held to
be illegal, invalid or unenforceable under present or future Laws during the
term thereof, such provision shall be fully severable, the appropriate Loan
Paper shall be construed and enforced as if such illegal, invalid or
unenforceable provision had never comprised a part thereof, and the remaining
provisions thereof shall remain in full force and effect and shall not be
affected by the illegal, invalid or unenforceable provision or by its severance
therefrom. Furthermore, in lieu of such illegal, invalid or unenforceable
provision there shall be added as a part of such Loan Paper a legal, valid and
enforceable provision as similar in terms to the illegal, invalid or
unenforceable provision as may be possible and the parties are able to negotiate
among themselves in good faith.
SECTION 9.12 EXCEPTIONS TO COVENANTS. No Company nor any Subsidiary shall
be deemed to be permitted to take any action or to fail to take any action that
is permitted as an exception to any covenant in any Loan Papers, or that is
within the permissible limits of any covenant, if such action or omission would
result in a violation of any other covenant in any Loan Papers.
SECTION 9.13 COUNTERPARTS. This Agreement and the other Loan Papers may be
executed in any number of counterparts, all of which taken together shall
constitute one and the same instrument. In making proof of any such agreement,
it shall not be necessary to produce or account for any counterpart other than
one signed by the party against which enforcement is sought.
SECTION 9.14 ENTIRE AGREEMENT. THIS AGREEMENT AND THE OTHER LOAN PAPERS
REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES. This Agreement
amends and restates the Original Credit Agreement in its entirety.
SECTION 9.15 GOVERNING LAW.
(A) THIS AGREEMENT AND ALL LOAN PAPERS SHALL BE DEEMED CONTRACTS MADE UNDER
THE LAWS OF TEXAS AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF TEXAS, EXCEPT TO THE EXTENT (A) FEDERAL LAWS GOVERN THE
VALIDITY, CONSTRUCTION, ENFORCEMENT AND INTERPRETATION OF ALL OR ANY PART OF
THIS AGREEMENT AND ALL LOAN PAPERS OR (B) STATE LAW GOVERNS UCC COLLATERAL
INTERESTS FOR PROPERTIES OF THE COMPANIES AND THE SUBSIDIARIES OUTSIDE THE STATE
OF TEXAS. WITHOUT EXCLUDING ANY OTHER JURISDICTION, EACH COMPANY AND EACH
SUBSIDIARY AGREES THAT THE COURTS OF TEXAS WILL HAVE JURISDICTION OVER
PROCEEDINGS IN CONNECTION HEREWITH.
(B) EACH COMPANY AND EACH SUBSIDIARY HEREBY WAIVES PERSONAL SERVICE OF ANY
LEGAL PROCESS UPON IT. IN ADDITION, EACH COMPANY AND EACH SUBSIDIARY AGREES THAT
SERVICE OF PROCESS MAY BE MADE UPON IT BY REGISTERED MAIL (RETURN RECEIPT
REQUESTED) DIRECTED TO SUCH COMPANY AT ITS ADDRESS DESIGNATED FOR NOTICE UNDER
THIS AGREEMENT AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED UPON RECEIPT
BY SUCH COMPANY. NOTHING IN THIS SECTION SHALL AFFECT THE RIGHT OF THE
ADMINISTRATIVE LENDER OR ANY LENDER TO SERVE LEGAL PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW.
SECTION 9.16 WAIVER OF JURY TRIAL. TO THE MAXIMUM EXTENT PERMITTED BY LAW,
THE COMPANIES, EACH SUBSIDIARY AND EACH LENDER HEREBY WAIVES ANY RIGHT THAT IT
MAY HAVE TO A TRIAL BY JURY OF ANY DISPUTE (WHETHER A CLAIM IN TORT, CONTRACT,
EQUITY, OR OTHERWISE) ARISING UNDER OR RELATING TO THIS AGREEMENT, THE OTHER
LOAN PAPERS, OR ANY RELATED MATTERS, AND AGREES THAT ANY SUCH DISPUTE SHALL BE
TRIED BEFORE A JUDGE SITTING WITHOUT A JURY.
SECTION 9.17 DISSEMINATION OF INFORMATION. The Companies hereby authorize
each Lender to disclose to any participant or assignee (or prospective
participant or assignee) in accordance with the terms of Section 9.4 hereof, or
any other Person acquiring an interest in the Loan Papers by operation of law or
otherwise (each a "Transferee") and any prospective Transferee any and all
information in such Lender's possession concerning the creditworthiness of each
Company and each Subsidiary.
SECTION 9.18 TAXES.
(a) Each Lender that is not incorporated under the laws of the United
States of America or a state thereof agrees that it will deliver to the
Notification Agent and the Administrative Lender, on or prior to the Closing
Date or the date such financial institution becomes a Lender, (i) two valid,
duly completed copies of United States Internal Revenue Service Form 1001 or
4224 or successor applicable form, as the case may be, and (ii) a valid, duly
completed Internal Revenue Service Form W-8 or W-9 or successor applicable form.
Each such Lender also agrees to deliver to the Notification Agent and the
Administrative Lender two further copies of the said Form 1001 or 4224 and Form
W-8 or W-9, or successor applicable forms or other manner of certification, as
the case may be, on or before the date that any such form expires or becomes
obsolete or after the occurrence of any event requiring a change in the most
recent form previously delivered by it to the Notification Agent, and such
extensions or renewals thereof as may reasonably be requested by the
Notification Agent or the Administrative Lender, unless in any such case an
event (including, without limitation, any change in treaty, law or regulation)
has occurred prior to the date on which any such delivery would otherwise be
required which renders all such forms inapplicable or which would prevent such
Lender from duly completing and delivering any such form with respect to it and
such Lender so advises the Notification Agent and the Administrative Lender.
Such Lender shall certify (i) in the case of a Form l001 or 4224, that it is
entitled to receive payments under this Agreement without deduction or
withholding of any United States federal income taxes and (ii) in the case of a
Form W-8 or W-9, that it is entitled to an exemption from United States backup
withholding tax.
(b) If any Taxes for which any Company would be required to make payment
under Section 9.7(b) are imposed, any such Lender shall use its reasonable
efforts to avoid or reduce such Taxes by taking any appropriate action
(including, without limitation, assigning its rights hereunder to a related
entity or a different office) which would not, in the sole opinion of such
Lender, be otherwise disadvantageous to such Lender.
(c) If any interest in any Loan Paper is transferred to any Transferee
which is organized under the laws of any jurisdiction other than the United
States or any State thereof, the transferor Lender shall cause such Transferee,
concurrently with the effectiveness of such transfer, (i) to represent to the
transferor Lender (for the benefit of the transferor Lender, the Administrative
Lender and the Companies) that under applicable law and treaties no taxes will
be required to be withheld by the Administrative Lender, the Companies or the
transferor Lender with respect to any payments to be made to such Transferee in
respect of the Advances, (ii) to furnish to the transferor Lender, the
Administrative Lender and the Notification Agent either U.S. Internal Revenue
Service Form 4224 or U.S. Internal Revenue Service Form 1001 (wherein such
Transferee claims entitlement to complete exemption from U.S. federal
withholding tax on all interest payments hereunder), and (iii) to agree (for the
benefit of the transferor Lender, the Administrative Lender and the Companies)
to provide the transferor Lender, the Administrative Lender and the Companies a
new Form 4224 or Form 1001 upon the obsolescence of any previously delivered
form and comparable statements in accordance with applicable U.S. laws and
regulations and amendments duly executed and completed by such Transferee, and
to comply from time to time with all applicable U.S. laws and regulations with
regard to such withholding tax exemption.
SECTION 9.19 JOINT AND SEVERAL OBLIGATIONS OF THE COMPANIES. Each Company
and the Lenders agree that the obligations and duties of the Companies
hereunder, and under each of the Loan Papers, shall be joint and several in all
instances.
SECTION 9.20 EXCHANGE OF NOTES. The Companies hereby grant to each Lender
an irrevocable option to, at any time on or before August 31, 1997, in a single
transaction for each Lender, exchange such Lender's Note for shares of Metrocall
Preferred Stock which constitute Collateral in accordance with such Lender's
Specified Percentage, which Metrocall Preferred Stock shall be valued at the
liquidation preference thereof per share. Upon the failure of any Lender to
exercise such option on or before August 31, 1997, such option shall terminate
without further notice or action. Such option shall be exercisable upon not less
than 5 days prior written notice by a Lender to PAG and the Administrative
Lender. Such notices shall be irrevocable. Within 5 days after receipt of such
Lender's Specified Percentage of the Metrocall Preferred Stock which constitutes
Collateral, which stock shall be delivered in accordance with such Lender's
written instructions within 5 days after delivery of such notice, such Lender
shall deliver its Note to the Administrative Lender which shall mark it
cancelled. Effective on the date of such notice, such Lender shall no longer be
a party to this Agreement or any other Loan Papers except for the purpose of
enforcing this Section 9.20, and the Specified Percentage of each Lender shall
accordingly be automatically adjusted by the Administrative Lender.
SECTION 9.21 RELEASE OF LIENS. Effective the date hereof the Lenders will
release all Liens on the assets being sold pursuant to the Metrocall Agreement
and are delivering to the Companies on the date hereof financing statement
partial release forms sufficient to accomplish the foregoing.
SECTION 9.22 COMPANY WAIVERS. The Companies each hereby expressly
acknowledge and agree that none of them has any setoffs, counterclaims,
adjustments, recoupments, defenses, claims or actions of any character, whether
contingent, non-contingent, liquidated, unliquidated, fixed, matured, unmatured,
disputed, undisputed, legal, equitable, secured or unsecured, known or unknown,
against any Lender or the Administrative Lender or any grounds or cause for
reduction, modification or subordination of the Obligation or any liens or
security interests of any Lender or the Administrative Lender. To the extent any
Company may possess any such setoffs, counterclaims, adjustments, recoupments,
claims, actions, grounds or causes, each Company hereby waives, and hereby
releases each Lender and the Administrative Lender from, any and all of such
setoffs, counterclaims, adjustments, recoupments, claims, actions, grounds and
causes, such waiver and release being with full knowledge and understanding of
the circumstances and effects of such waiver and release and after having
consulted counsel with respect thereto.
IN WITNESS WHEREOF, this Credit Agreement is executed as of the date first
set forth above.
THE COMPANIES: PAGE AMERICA GROUP, INC.
______________________________________
By: ________________________________
Its: ________________________________
PAGE AMERICA OF ILLINOIS, INC.
______________________________________
By: ________________________________
Its: ________________________________
PAGE AMERICA COMMUNICATIONS
OF INDIANA, INC.
______________________________________
By: ________________________________
Its: ________________________________
PAGE AMERICA OF NEW YORK, INC.
______________________________________
By: ________________________________
Its: ________________________________
PAGE AMERICA COMMUNICATIONS
OF CALIFORNIA, INC.
______________________________________
By: ________________________________
Its: ________________________________
PAGE AMERICA COMMUNICATIONS
OF FLORIDA, INC.
______________________________________
By: ________________________________
Its: ________________________________
PAGE AMERICA PENNSYLVANIA, INC.
______________________________________
By: ________________________________
Its: ________________________________
ADIRONDACK RADIO TELEPHONE
CO., INC.
______________________________________
By: ________________________________
Its: ________________________________
ADMINISTRATIVE LENDER: NATIONSBANK OF TEXAS, N.A., as the
Administrative Lender
By: William E. Livingstone, IV
Its: Senior Vice President
<PAGE>
LENDERS:
Specified Percentage: 44.428647% NATIONSBANK OF TEXAS, N.A.,
Individually
Address:
901 Main Street, 66th Floor _______________________________
Dallas, Texas 75202 By: William E. Livingstone, IV
Attn: Mr. William E. Livingstone, IV Its: Senior Vice President
Senior Vice President
Special Percentage: 26.657189% CANADIAN IMPERIAL BANK OF
COMMERCE
Address:
425 Lexington Ave., 8th Floor
New York, New York 10017 _______________________________
Attn: Robert N. Greer By: Robert N. Greer
Its: Assistant General Manager
Specified Percentage: 18.899949% SWISS BANK CORPORATION,
CAYMAN ISLANDS BRANCH
Address:
45 Broadway, 26th Floor
New York, New York 10006 ________________________________
Attn: James Cullinane By: _____________________________
Its:_____________________________
Specified Percentage: 10.014217% MERRILL LYNCH, PIERCE, FENNER &
SMITH INCORPORATED
Address:
World Financial Center, North
Tower, 7th Floor ________________________________
250 Vesey By: _____________________________
New York, New York 10281-1307 Its:_____________________________
Attn: John Engelen
EXHIBIT 10.11
FORBEARANCE AGREEMENT
This Forbearance Agreement, dated as of July 1, 1997, is by and among
Sandler Mezzanine Partners, L.P., a Delaware limited partnership, Sandler
Mezzanine T-E Partners, L.P., a Delaware limited partnership, Sandler Mezzanine
Foreign Partners, L.P., a Delaware limited partnership (collectively, the
"Sandler Investors"), T. Rowe Price High Yield Fund, Inc. (the "TRP Fund"), Page
America Group, Inc., a New York corporation (the "Page America"), Page America
of Illinois, Inc., an Illinois corporation ("PA-Illinois"), Page America
Communications of Indiana, Inc., an Indiana corporation ("PA-Indiana"), Page
America of New York, Inc., a New York corporation ("PA-New York"), Page America
Communications of California, Inc., a California corporation ("PA-California"),
Page America Communications of Florida, Inc., a Florida corporation
("PA-Florida" and collectively with Page America, PA-Illinois, PA-Indiana,
PA-New York and PA-California, the "Obligors").
RECITALS
Pursuant to a certain Subordinated Promissory Note, Preferred Stock, Common
Stock and Warrant Purchase Agreement, dated as of December 30,1993, among Page
America, the Sandler Investors, TRP Fund and certain of its affiliates and
certain other investors in Page America (the "Original Purchase Agreement"),
Page America issued and sold to the Sandler Investors, TRP Fund and such
affiliates and such other investors Promissory Notes due 2003 of Page America in
the aggregate principal amount of $13,000,000 (the "Original Notes") and certain
other securities of Page America.
Pursuant to an Indenture, dated as of June 15, 1994, between the Obligors
and American Stock Transfer & Trust Company, as Indenture Trustee (the "Original
Indenture"), Page America exchanged the Original Notes for the Obligors' 12%
Series B Subordinated Notes due 2003 (the "Series B Notes") in the aggregate
principal amount of $13,000,000. Pursuant to a certain Amendment To Indenture,
dated as of July 28, 1995 (the "July 1995 Amendment"), the terms of the
Indenture and the Series B Notes were amended in certain respects, including,
among other things, by changing the stated maturity date of the Series B Notes
to December 31, 1996 and by increasing the interest rate of the Series B Notes
(and certain additional notes of Page America issued in payment of accrued
interest thereon) to 15% per annum.
Pursuant to a certain Amended and Restated Asset Purchase Agreement, dated
as of January 30, 1997, as amended March 28,1997, between Page America and
certain of its subsidiaries and Metrocall, Inc., a Delaware corporation
("Metrocall"), substantially all of the assets of Page America and certain of
its subsidiaries are being sold to Metrocall, and such sale requires the consent
of the holders of the Series B Notes, as amended.
Certain defaults and events of default under the Original Indenture and the
Series B Notes, in each case as previously amended, have occurred and are
continuing, and certain of such defaults and events of default will continue
after the consummation of the transactions contemplated by such Asset Purchase
Agreement.
The Sandler Investors and the TRP Fund currently hold all of the
outstanding Series B Notes, as amended, and have agreed, subject to the terms,
conditions and provisions of this Agreement, to forbear from exercising certain
rights and remedies as such holders by reason of such defaults and events of
default.
Therefore, in consideration of the mutual covenants and agreements set
forth in this Agreement and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:
ARTICLE I
DEFINITIONS; CERTAIN RULES OF CONSTRUCTION
Section 1.1 DEFINITIONS. Capitalized terms used in this Agreement but not
expressly defined herein have the respective meanings given them in the
Indenture (as defined below in this Section l.1), and such terms and meanings
are hereby incorporated herein by reference. As used in this Agreement, the
following terms have the following respective meanings:
"Affiliate" means, with respect to any Person, any other Person that,
directly or indirectly, controls, is controlled by or is under common control
with, such Person. For the purposes of this definition "control" (including the
terms "controlled by" and "under common control with"), as used with respect to
any person, shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of such Person,
whether through the ownership of voting securities, by contract or otherwise.
None of the Sandler Investors, the TRP Fund nor any of their respective
Affiliates shall be deemed to be an Affiliate of the Company or any of its
subsidiaries for purposes of this Agreement.
"Agreement" means this Forbearance Agreement, as the same may be amended,
supplemented or modified in accordance with the terms hereof.
"Asset Purchase Agreement" means the Amended and Restated Asset Purchase
Agreement, dated as of January 30, 1997, as amended March 28, 1997, among the
Company, PA-New York, PA-Illinois, PA-Indiana, Page America of Pennsylvania,
Inc., a Pennsylvania corporation, and Metrocall, as the same may be further
amended from time to time in accordance with its terms.
"Business Day" means any day other than a Saturday, a Sunday or a day on
which banking institutions in either New York, New York, or the city and state
in which the principal executive offices of the Company within the United States
are located are not open for business.
"capital stock" means, when used with respect to any corporation, any and
all shares of capital stock (however designated) of such corporation, including
each class and series of common stock and preferred stock of such corporation,
any and all "phantom" shares of capital stock of any class or series, any and
all stock appreciation rights, any and all other equity, ownership,
participating or beneficial interests in such corporation and any and all
equivalents of any of the foregoing, and including any security or interest
convertible into or warrant, option or other right (absolute or contingent) to
subscribe for, purchase or otherwise acquire any of the foregoing, in each case
whether or not evidenced by any certificate, instrument or other document and
whether voting or nonvoting.
"Closing Date" means the date of the closing of the consummation of the
Metrocall Transactions.
"Company" means Page America and its successors.
"Contract" means any agreement, contract, commitment, indenture, lease,
license, instrument, note, bond, security, agreement in principle, letter of
intent, undertaking, promise, covenant, arrangement or understanding, whether
written or oral.
"Debt" means, with respect to any Person, at any time, without duplication,
(i) all obligations of such Person for borrowed money, (ii) all obligations of
such Person evidenced by bonds, debentures, notes or other similar instruments,
(iii) all obligations of such Person to pay the deferred purchase price of
property or services, except trade accounts payable in the ordinary course of
business, or professional fees and similar accounts payable that arise in
connection with any transaction not prohibited by this Agreement, but only if
and so long as the same are payable on customary terms, (iv) all obligations of
such Person as lessee under capital leases, (v) all Debt secured by a Lien on
any asset of such Person, whether or not such Debt is otherwise an obligation of
such Person and (vi) all Debt of others guaranteed by such Person.
"Default" means any event specified in Section 7.01 of the Indenture,
whether or not any requirement in connection with such event for the giving of
notice, lapse of time, or happening of any further condition has been satisfied.
"Distribution" has the meaning set forth in Section 3.1 of this Agreement.
"Distribution Date" means the Business Day any Distribution is made.
"Event of Default" means any Default under the Indenture.
"Forbearance Period" means the period from the date of this Agreement to
the Forbearance Termination Date.
"Forbearance Period Expiration Date" means the first to occur of (i) 2:00
p.m., New York City time on December 31, 1998 and (ii) thirty days after the
date of final maturity of the Senior Indebtedness, whether such final maturity
occurs by way of prepayment, acceleration or otherwise; PROVIDED, HOWEVER, that
if all Senior Indebtedness is discharged in full, if all the assets of the
Company, other than the reserves as described under Section 3.1 (a) of this
Agreement, have been distributed in accordance with the terms of this Agreement
and if the Obligors have complied with this Agreement, the Forbearance Period
Expiration Date shall be extended for a reasonable additional time until the
liabilities to which such reserves were established have been paid or otherwise
discharged and any excess funds or other property remaining in such reserves has
been distributed in accordance with the terms of this Agreement.
"Forbearance Termination Date" means the first to occur of (i) the
Forbearance Period Expiration Date and (ii) the occurrence of any one or more
events as specified in Section 2.3 of this Agreement.
"Form S-4" means the Registration Statement Form S-4 (File No. 333-21231)
filed with and declared effective on May 9, 1997 by the SEC relating to, among
other things, the transactions contemplated by the Asset Purchase Agreement,
including the Prospectus of Metrocall relating to the Metrocall Securities to be
issued to the Company pursuant to the Asset Purchase Agreement, the Proxy
Statement of the Company for its Special Meeting of Shareholders relating to the
Metrocall Transactions and the Plan of Liquidation and all exhibits and
supplements thereto or filed therewith, as the same may have been or may be
amended or supplemented from time to time.
"Governmental Authority" means any government, any court or any
governmental department, agency, board, bureau or commission or other authority
or instrumentality of the United States or any foreign or domestic state,
province, commonwealth, nation, territory, possession, country, parish, town,
township, village or municipality.
"Holder" means a Person whose name a Security is registered under the
Registrar's (as defined in the Indenture) books pursuant to the terms of the
Indenture.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended.
"Indemnified Party" has the meaning set forth in Section 9.1 of this
Agreement.
"Indenture" means the Original Indenture, as amended by the July 1995
Amendment and as it may hereafter be further amended in accordance with its
terms.
"Indenture Instruments" means the Indenture, the Securities and all
guaranties and other instruments and agreements heretofore or hereafter executed
and delivered pursuant to or in connection with or relating to any of the
transactions contemplated by or indebtedness or obligations created or evidenced
by the Indenture or any of the Securities, in each case as amended through and
in effect on the date hereof and as thereafter amended in accordance with their
respective terms.
"July 1995 Amendment" has the meaning set forth in the second paragraph
under the Recitals of this Agreement.
"Liabilities" has the meaning set forth in Section 9.1 of this Agreement.
"Lien" means, with respect to any property or asset, any mortgage, lien
(statutory or other), pledge, charge, claim, option, encumbrance, security
interest, or preference, priority or other security agreement or preferential
arrangement (including any conditional sale agreement, capital lease or other
title retention agreement) or other adverse claim of any kind in respect of such
property or asset.
"Metrocall" has the meaning set forth in the third paragraph under the
Recitals of this Agreement.
"Metrocall Consideration" has the meaning set forth in Section 3.1 of this
Agreement.
"Metrocall Securities" means any capital stock, securities or Rights of any
kind, type, class or series issued by Metrocall and acquired or held at any time
by the Company or any of its subsidiaries, and also includes any capital stock,
securities or Rights of any kind, type, class or series of Metrocall or any
other issuer into or for which any Metrocall Securities may be changed or
converted or exchanged or which may otherwise be received by or distributed to
the holders of any Metrocall Securities by reason of an exercise of purchase,
exchange or conversion rights, a dividend or distribution, a recapitalization,
reorganization, merger, consolidation, sale of all or substantially all assets
or any other transaction or event.
"Metrocall Transactions" means the transactions contemplated by the Asset
Purchase Agreement.
"Metrocall Transaction Agreements" means the Asset Purchase Agreement or
any registration rights agreement or other agreement or instrument relating to
the Metrocall Transactions.
"Noteholders" means the Sandler Investors and the TRP Fund.
"Obligors" has the meaning set forth in the first paragraph of this
Agreement.
"Original Indenture" has the meaning set forth in the second paragraph
under the Recitals of this Agreement.
"Original Notes" has the meaning set forth in the first paragraph under the
Recitals of this Agreement.
"Original Purchase Agreement" has the meaning set forth in the first
paragraph under the Recitals of this Agreement.
"PA-California" has the meaning set forth in the first paragraph of this
Agreement.
"PA-Florida" has the meaning set forth in the first paragraph of this
Agreement.
"PA-Illinois" has the meaning set forth in the first paragraph of this
Agreement.
"PA-Indiana" has the meaning set forth in the first paragraph of this
Agreement.
"PA-New York" has the meaning set forth in the first paragraph of this
Agreement.
"Page America" has the meaning set forth in the first paragraph of this
Agreement.
"Permitted Liens" has the meaning assigned to that term in the Senior
Credit Agreement, as in effect on the date hereof.
"Person" means any individual, corporation, limited liability company,
general or limited partnership, joint venture, association, joint stock company,
trust, unincorporated business or organization, Governmental Authority, or other
entity, whether acting in an individual, fiduciary or other capacity.
"Plan of Liquidation" means the Plan of Complete Liquidation and
Dissolution providing for the liquidation of the Company and the dissolution of
the Company as a corporate entity subsequent to the closing of the Metrocall
Transactions, as such Plan of Liquidation is set forth as an exhibit to the Form
S-4 and as it may hereafter be amended in accordance with the terms hereof.
"Requirement of Law" means, as to any Person, the charter or bylaws or
other organizational or governing documents of such Person, and all federal,
state and local laws, rules, regulations, orders, judgments, decrees or other
determinations of an arbitrator, court or other Governmental Authority,
applicable to or binding upon such Person or any of its property or to which
such Person or any of its property is subject.
"Released Parties" has the meaning set forth in Section 8.4 of this
Agreement.
"Rights" means any evidences of indebtedness, shares of stock or other
securities or obligations which are convertible into or exchangeable for, or
options, warrants or other rights to subscribe for, purchase or otherwise
acquire, any capital stock, Rights or other securities of any Person, in any
case with or without payment of additional consideration in cash or property,
whether immediately or upon the occurrence of a specified date or a specified
event or the satisfaction or happening of any other condition or contingency and
however denominated.
"Sandler Investors" has the meaning set forth in the first paragraph of
this Agreement.
"SEC" means the Securities and Exchange Commission.
"Senior Credit Agreement" means the Amended and Restated Credit Agreement,
dated as of July 1, 1997, among the Company, PA-Illinois, PA-Indiana, PA-New
York, PA- California, PA-Florida, Page America of Pennsylvania, Inc., a
Pennsylvania corporation, Adirondack Radio Telephone Co., Inc., a New York
corporation, the Lenders (as defined therein), and Nationsbank of Texas, N.A., a
national banking association, individually as a Lender and as Administrative
Lender, as amended from time to time.
"Senior Loan Documents" means the Senior Credit Agreement and all notes,
security agreements and other instruments and agreements executed and delivered
pursuant thereto, as amended through and in effect on the effective date hereof
and as thereafter amended.
"Senior Indebtedness" means all indebtedness, liabilities and obligations
of the Company existing or arising under any Senior Loan Document.
"Senior Lenders" means all holders of Senior Indebtedness.
"Series B Notes" has the meaning set forth in the second paragraph under
the Recitals of this Agreement.
"Specific Plan" has the meaning set forth in Section 6.1 of this Agreement.
"subsidiaries" means, as to any Person, any corporation or other entity of
which securities or other ownership interests having ordinary voting power to
elect a majority of the board of directors or other persons performing similar
functions are at the time directly or indirectly owned by such Person.
"TRP Fund" has the meaning set forth in the first paragraph of this
Agreement.
"Warrants" has the meaning set forth in Section 10.3 of this Agreement.
Section 1.2 CERTAIN RULES OF CONSTRUCTION. This Agreement is to be
interpreted in accordance with the following rules of construction:
(a) All definitions of terms apply equally to both the singular and
plural forms of the terms defined. Whenever the context may require, any
pronoun shall include the corresponding masculine, feminine and neuter
forms.
(b) The words "include," "includes" and "including" are deemed to be
followed by the phrase "without limitation". The words "herein", "hereof",
and "hereunder" and words of similar import refer to this Agreement in its
entirety and is not limited to any part hereof unless the context shall
otherwise require. The word "or" is not exclusive and means "and/or."
(c) All references in this Agreement to Articles, Sections and
subsections are references to Articles, Sections and subsections of this
Agreement, unless otherwise specified.
(d) All references to (i) this Agreement, (ii) the Metrocall
Transaction Agreements, (iii) any other agreement or other instrument or
(iv) any applicable law or other statute law, or regulation, permit,
license or similar item are to it as amended and supplemented from time to
time (and, in the case of a statute or regulation, to any corresponding
provisions of successor statutes or regulations), unless otherwise
specified.
(e) Any reference in this Agreement or any other document or item
prepared or delivered pursuant to or in connection with this Agreement to
the laws or regulations of any Governmental Authority, whether such
reference is specific or by implication, shall, unless otherwise expressly
provided in the document or item containing the reference, mean the latest
regulations in effect at the time of such reference.
(f) Any reference in this Agreement to a "day" or number of "days"
(without the explicit qualification "Business") is a reference to a
calendar day or number of calendar days. If any action or notice is to be
taken or given on or by a particular calendar day, and such calendar day is
not a Business Day, then such action or notice may be taken or given on the
next Business Day.
(g) All parties and their respective legal counsel have participated,
or had the opportunity to participate, in the drafting of this Agreement,
and this Agreement will be construed simply and according to its fair
meaning and not strictly for or against either party.
(h) When used with reference to any Right, the term "exercise" shall
mean to exercise the right to subscribe for, purchase or otherwise acquire
shares of capital stock represented by such Right, and variants of such
word (including "exercised" and "exercisable") shall have correlative
meanings. Whenever used with respect to any share of capital stock, the
word "issue" includes any issuance, sale or other method of transfer or
delivery of such share, whether such share is newly issued or is a treasury
share and variants of such word (including "issued", "issuance" or
"issuable") used with respect to any share of capital stock shall have
correlative meanings; therefore, any provision of this Agreement which is
stated to be applicable if the Company or any other issuer issues or shall
issue any share is applicable both to a newly issued share and to a
treasury share sold or otherwise transferred or delivered.
(i) The descriptive headings of the several Articles and Sections of
this Agreement are inserted for convenience only and shall not control or
affect the meaning or construction of any of the provisions hereof.
ARTICLE II
ACKNOWLEDGMENT; FORBEARANCE
Section 2.1 ACKNOWLEDGMENT. The Obligors jointly and severally acknowledge,
represent and warrant to and covenant and agree with the Noteholders and each of
them as follows:
(a) The Indenture, the Securities and each other Indenture Instrument
continue to be in effect in accordance with their respective terms and are
hereby ratified and confirmed. Each of the Securities held by each
Noteholder is duly authorized and validly issued and outstanding. Each of
the Indenture and the Securities and the other Indenture Instruments, if
any, to which the Company is a party constitutes the legal, valid and
binding obligation of the Company, enforceable in accordance with its
terms, except that (i) such enforceability may be subject to bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights and
(ii) such enforceability may be subject to general principles of equity
(regardless of whether enforcement is considered in a proceeding in equity
or at law). Each Indenture Instrument to which any other Obligor is a party
constitutes the legal, valid and binding obligation of such Obligor,
enforceable in accordance with its terms, except that (i) such
enforceability may be subject to bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights and (ii) such
enforceability may be subject to general principles of equity (regardless
of whether enforcement is considered in a proceeding in equity or at law).
(b) All of the outstanding Securities are due and payable in full as a
result of maturity and also as a result of acceleration by reason of prior
Events of Default.
Section 2.2 FORBEARANCE.
(a) Subject to the terms, conditions and provisions of this Agreement,
the Noteholders agree not to institute suit for collection of the
Securities against the Company or exercise any other remedies available to
them under any Indenture Instrument during the Forbearance Period.
(b) The Obligors jointly and severally agree that, during the
Forbearance Period, none of them shall initiate any action or proceeding of
any kind against any of the Noteholders, any other Holder or the Trustee,
exercise any remedy or make any claim against or demand upon any of the
Noteholders, any other Holder or the Trustee with respect to the
Securities, the Indenture, any other Indenture Instrument or the
indebtedness or obligations evidenced or created thereby.
(c) Subject to the rights of the Senior Lenders under Article 4 of the
Indenture, on and after the Forbearance Termination Date, any or all of the
Noteholders, any other Holders and the Trustee shall be entitled to
exercise all rights and remedies to which they are entitled under the
Indenture, the Securities, any other Indenture Instrument, at law, in
equity or otherwise whether in order to collect on the Securities, with
respect to any present or future default, Default or Event of Default under
the Securities, the Indenture, any other Indenture Instrument or this
Agreement, with respect to the indebtedness and obligations evidenced or
created thereby or hereby or otherwise, without any further lapse of time,
expiration of applicable grace periods or requirements of notice (including
notice of default or Event of Default, intent to accelerate or notice of
acceleration), all of which are hereby expressly waived by the Company and
each of the other Obligors.
Section 2.3 TERMINATION OF FORBEARANCE. Upon the occurrence of any of the
following events, the Forbearance Period shall terminate and any or all of the
Noteholders, any other Holders and the Trustee shall, at its or their sole
option and absolute discretion, will be entitled to exercise all rights and
pursue all remedies referred to in Section 2.2 (c) or otherwise available,
including collecting amounts due under or with respect to the Securities and the
other Indenture Instruments:
(a) Any Obligor or any of its subsidiaries shall make an assignment
for the benefit of creditors or shall petition or apply to any tribunal for
the appointment of a trustee, custodian, receiver or liquidator of it or of
all or any substantial part of its assets or shall commence any proceedings
relating to any Obligor or any of its subsidiaries under any bankruptcy,
reorganization, compromise, arrangement, insolvency, readjustment of debts,
conservatorship, moratorium, dissolution, liquidation or other debtor
relief law of any jurisdiction, whether now or hereafter in effect; or any
such petition or application shall be filed or any such proceeding shall be
commenced against any Obligor or any of its subsidiaries, and such Obligor
or such subsidiary consents thereto or the same is not dismissed or
otherwise discharged within 60 days; or an order, judgment or decree shall
be entered appointing any such trustee, custodian, receiver or liquidator
or granting relief to any Obligor or any of its subsidiaries or approving
the petition in any such proceeding; any final order, judgment or decree
shall be entered in any proceedings against any Obligor or any of its
subsidiaries decreeing its dissolution; or any final order, judgment, or
decree shall be entered in any proceedings against any Obligor or any of
its subsidiaries decreeing its split-up which requires the divestiture of a
substantial part of its assets.
(b) Any Obligor or any of its subsidiaries shall fail to file any tax
returns (federal, state and local) required to have been filed or to pay
all taxes shown thereon to be due, except those for which extensions have
been obtained, those which are being contested in good faith and those
state and local returns which in the aggregate are not material.
(c) The existence of any decision, judgment, order, writ, injunction,
decree, award or determination that adversely affects the performance by
any Obligor of its obligations under this Agreement; or the occurrence of
any reportable event in connection with, or the default in the performance
of any obligation or the Company or any of its subsidiaries in respect of,
any employee benefit plan of the Company or any of its subsidiaries.
(d) The discovery by any Noteholder that any representation or
warranty made by the Obligors or any of them in this Agreement was untrue,
incorrect or misleading in any material respect when made.
(e) Any Lien, writ, claim or charge, including any mechanic's or
materialman's lien, any abstract of judgment, or any writ of attachment,
garnishment or sequestration is filed against or with respect to the Senior
Lenders' collateral, whether or not naming the Company as a defendant,
except for Permitted Liens.
(f) Any Obligor breaches or defaults in performance of any covenant or
agreement contained in this Agreement.
(g) The existence or occurrence of any default or event of default
under any Senior Loan Document (unless the Senior Lenders waive any such
default or event of default and all consequences thereof) (A) not existing
and disclosed in writing to the Noteholders on the Closing Date and (B)
continuing for 14 days from the date of such existence or occurrence
without being cured.
(h) The giving by any Person of notice to any Obligor or any of its
subsidiaries or the taking by any Person of any other action with respect
to a claimed default or event of default with respect to any other Debt or
liabilities of any Obligor or any of its subsidiaries equal to or greater
than, individually or in the aggregate, $500,000; the acceleration of (or
the existence of any right to accelerate) any such Debt or liability or the
exercise of any remedy with respect to any such Debt or liability or any
security therefor; or the existence of any decision, judgment, award or
determination involving claims against any Obligor or any of its
subsidiaries that were unknown to the Noteholders on the effective date of
this Agreement and equal to or greater than, individually or in the
aggregate, $500,000.
(i) The entry of any injunction, restraining or similar order issued
by a court of competent jurisdiction or by any federal or state regulatory
or administrative agency that restrains, restricts or prohibits or imposes
substantial penalties or damages with respect to (or any other materially
adverse relief or remedy in connection with), the consummation of any of
the transactions contemplated by the Metrocall Transaction Agreements or
this Agreement.
(j) If (A) holders of shares of Preferred Stock or common stock of the
Company have demanded, in connection with the Metrocall Transactions or the
dissolution of the Company, appraisal rights with respect thereto in
accordance with the New York Business Corporation Law or if the holders of
shares of Preferred Stock exercise any right to require the redemption,
repurchase or other acquisition for value of such Preferred Stock, (B) the
aggregate amounts payable to any or all such holders by virtue of or in
settlement of such demands or exercises exceed $500,000 and (C) such
amounts payable to such holders are or may become payable prior to or on a
PARI PASSU basis with the Company's obligations under the Securities and
this Agreement or otherwise are not subordinate in right of payment or with
respect to remedies to such obligations in a manner reasonably satisfactory
to the Noteholders.
(k) If the Company or any of its subsidiaries shall fail to proceed
diligently and in good faith to wind up its affairs, discharge all Senior
Indebtedness in full and to make distributions as provided in Article III
of this Agreement in accordance with the plans and timetables approved by
the Noteholders or otherwise agreed to by the Company and the Noteholders
pursuant to Section 6.1 of this Agreement.
(l) If this Agreement, any Indenture Instrument, or any provision
hereof or thereof shall, for any reason, not be valid and binding on any
Obligor, or not be in full force and effect, or shall be declared to be
null and void; or such validity or enforceability shall be contested by any
Obligor or any of its subsidiaries; or any Obligor or any of its
subsidiaries shall deny that it has any or further liability or obligation
hereunder or thereunder.
ARTICLE III
DISTRIBUTIONS; INTEREST ON THE SECURITIES
Section 3.1 PRIORITY OF DISTRIBUTIONS. The Company shall distribute the
consideration received under the Asset Purchase Agreement (including any
contingent payments and any property or funds released from any escrow) (the
"Metrocall Consideration") and all other assets of the Company, including the
proceeds from the sale or liquidation thereof, as follows:
(a) To pay, or establish reasonable reserves for payment, of
liabilities of the Company (i) existing on or immediately prior to the
Closing Date as set forth on SCHEDULE A hereto, (ii) existing after the
Closing Date if such liabilities are incurred in connection with claims and
other expenses of the type set forth in SCHEDULE A hereto without violation
of this Agreement or (iii) incurred in connection with or reasonably
incidental to the dissolution and liquidation of the Company in accordance
with the Plan of Liquidation and this Agreement; PROVIDED, that the
aggregate amount of the liabilities referred to in clauses (ii) and (iii)
in this subsection (a) shall not exceed $250,000 plus any reasonable
additional amounts mutually consented to by the Company and the Noteholders
(which consent of the Noteholders shall not be unreasonably withheld).
(b) To pay any amounts of the Senior Indebtedness or to pay amounts
due thereunder to avoid any defaults with respect to the Senior
Indebtedness.
(c) Subject to Articles V, VI and VII, any Metrocall Consideration,
other assets of the Company or proceeds (including any thereof released
from any reserve) which either (i) are available for payment or
distribution to the Holders or stockholders of the Company without
violation of the Senior Credit Agreement or (ii) remain after making the
payments or establishing the reserves referred to in subparagraph (a) of
this Section 3.1 will be paid and distributed by the Company to the Holders
and the Company's stockholders. Each such payment or distribution (a
"Distribution") shall be made as follows and in the following order of
priority:
(i) until the Holders of the Securities, as such,
have indefeasibly received Distributions totaling $19,000,000,
the Company shall make 70% of any and all Distributions to the
Holders, and the Company shall make the balance of 30% of the
Distributions to the stockholders of the Company; and
(ii) after the Holders of the Securities, as such,
have indefeasibly received Distributions totaling $19,000,000,
the Company shall make 50% of any and all Distributions to the
Holders, and the Company shall make the balance of 50% of the
Distributions to the stockholders of the Company.
Notwithstanding the foregoing provisions of this Section 3.1, any or all such
Distributions shall not be made if a majority of the Noteholders request the
Company to delay or otherwise terminate any such Distribution. Once the Senior
Indebtedness has been discharged, the Company shall at any time and from time to
time, promptly upon the demand of the Noteholders, make one or more
Distributions in cash or in kind or in any other manner that the Noteholders
shall request.
Section 3.2 FORM OF DISTRIBUTIONS AND VALUATION.
(a) All Distributions to the Holders or any of the Noteholders (as holders
of Securities) will be in such form of consideration (whether cash, Metrocall
Securities or other property) as shall be approved by the Noteholders.
Distributions in consideration other than cash will be valued at fair market
value, which in the case of publicly traded securities will be the average of
the reported last sales prices for the 10 consecutive trading days before the
Distribution in question, and in the case of other capital stock, securities or
property will be determined by agreement of the Holders and the Company or, if
they are unable to agree, by appraisal in accordance with Section 3.2(b) hereof.
In the event of any permitted Distribution to the Noteholders of any capital
stock or securities of Metrocall, such capital stock or securities shall be
registered under the Securities Act of 1933 and applicable state securities laws
for public resale and shall otherwise be freely transferable. The reported last
sales price of a publicly traded security for any trading day shall be the
reported last sales price, regular way (and if no such sales take place on any
day, such day shall not be a trading day), as reported on the principal
consolidated or composite transaction reporting system on the principal national
securities exchange on which such security is listed or admitted to trading or,
if not listed or admitted to trading on any national securities exchange, on the
Nasdaq National Market or, if such security is not quoted on the Nasdaq National
Market, the average of the closing bid and asked prices on such day in the
over-the-counter market as reported by the National Association of Securities
Dealers, Inc. or, if bid and asked prices for the security on each such day
shall not have been reported through the National Association of Securities
Dealers, Inc., the average of the bid and asked prices for such date as
furnished by any New York Stock Exchange member firm regularly making a market
in such security selected for such purpose by the Company with the approval of
the Noteholders. As used herein, a "trading day" for any publicly traded
security is a day on which each national securities exchange on which such
security is listed and the Nasdaq National Market are open for business.
(b) Whenever any appraisal of any securities or property is required
pursuant to any provision of this Agreement, each of the Company and the
Noteholders will promptly (and in any event not later than ten days after the
occurrence resulting in the need for such appraisal) appoint an independent
investment banking firm that is not an Affiliate or Related Party of the Company
or any Noteholder and shall use its respective reasonable efforts to cause its
designated appraiser to deliver its report setting forth its appraisal within
thirty days of its selection. If the higher appraised value is not greater than
110% of the lower appraised value, then the fair market value of the appraised
property shall be equal to the average of such two appraised values; however, if
the higher appraised value is greater than 110% of the lower appraised value,
then such two appraisers shall jointly select a third appraiser (which shall
also be an independent investment banking firm that is not an Affiliate or
Related Party of the Company or any Noteholder), and each shall furnish such
third appraiser with the work product used by each of such original appraisers
in preparing their respective appraisals, and in such case the fair market value
of the appraised property shall be equal to the average of the two closest
appraised values reported by such three appraisers. If, as provided above in
this subsection, a third appraisal is required in order to determine the fair
market value of the appraised property, each of the Company and the Noteholders
shall use reasonable efforts to cause such third appraiser to be promptly
designated and to deliver its report as early as possible and in any event
within twenty days after its selection. The Company shall bear all appraisal
costs.
(c) If the receipt by any Noteholder of any Distribution or part thereof
would (or such Noteholder is advised by its own legal counsel that such receipt
would or might) be subject to the HSR Act or any other law, rule or regulation
which requires any filing or registration with or review or approval by any
governmental authority or agency, the Company shall promptly comply with any
requirements of such law, rule or regulation applicable to it and shall
cooperate with such Noteholder in such Noteholder's efforts to comply with the
requirements of such law, rule or regulation applicable to it on a timely basis.
Each party shall bear and pay any costs or expenses that it incurs in complying
with any such requirements.
Section 3.3 PAYMENTS AND TRANSFER OF METROCALL CONSIDERATION. Any
Distribution or any part of a Distribution made in cash by the Company to the
Holders or the Noteholders (whether as holders of Securities or stockholders of
the Company) shall be made in immediately available funds by wire transfer to
accounts of such Persons with banks designated by them by notice to the Company
given not later than two Business Days prior to any such Distribution or by
checks payable in next-day funds to the order of each such Person. Any
Distribution or any part of a Distribution made to such Persons in Metrocall
Securities or any other capital stock owned or controlled by the Company shall
be made by delivering to such Persons certificates for such securities duly
endorsed or accompanied by stock powers duly endorsed in blank, with any
required transfer stamps affixed thereto.
Section 3.4 DIVIDENDS AND OTHER DISTRIBUTIONS. The Company shall make any
and all dividends, distributions, purchases or redemptions of any class or
series of capital stock of the Company otherwise permitted by this Agreement on
a PRO RATA basis to or from all holders of shares of such class or series as of
the record date or, if no record date is established, as of the date of payment.
Section 3.5 SATISFACTION OF OBLIGATIONS. Unless the Company or any other
Obligor breaches or fails to perform any covenant or agreement in this
Agreement, all amounts due and payable under the Securities and the Indenture,
and all obligations thereunder, shall be satisfied in full upon the occurrence
of either (i) the receipt by the Holders of the Securities of the indefeasible
payment in full for all amounts due under the Securities or (ii) the Company's
complete dissolution and liquidation and the subsequent distribution of all its
assets in accordance with the Plan of Liquidation and this Agreement. This
Agreement and the rights and obligations of the parties hereto under this
Agreement (including the Company's obligations to make Distributions under this
Article III) shall survive and continue until terminated as provided in Section
10.20.
Section 3.6 INTEREST ON THE SECURITIES. The annual interest rate originally
provided for in the Indenture and the Securities previously has been amended
such that interest has been charged, effective as of, from and after January 1,
1995, at the rate of 15% per annum. Interest shall continue to be charged at the
rate of 15% per annum on the unpaid principal balance of the Securities from and
after the date hereof until the Securities are paid in full or the obligations
thereunder are otherwise satisfied in accordance with the terms and provisions
of this Agreement. Although interest has been accrued and unpaid and interest
shall continue to be charged at 15% per annum, if the Holders of the Securities
indefeasibly receive Distributions in accordance with this Agreement and the
Company and each other Obligor thereafter continues to comply with the terms of
this Agreement, then the interest that has accrued and will accrue in excess of
the interest required to be paid pursuant to this Article III shall be forgiven
effective upon the complete and final liquidation and dissolution of the Company
and the distribution of all of its assets (including any placed in any reserve
referred to herein) in accordance with this Agreement. Notwithstanding any
provision of the Securities or the Indenture to the contrary, in the event of a
default, Default or Event of Default under or a breach or violation of the
Indenture, the Securities or this Agreement, the annual rate of interest shall
be, from that date forward, the lesser of (i) 18% per annum or (ii) the maximum
interest rate permitted to be charged under applicable law.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
In order to induce the Noteholders to execute and deliver this Agreement,
the Obligors jointly and severally represent and warrant to the Noteholders as
follows:
Section 4.1 CORPORATE EXISTENCE AND POWER. Each Obligor is a corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction indicated after its name in the first paragraph of this Agreement
and has all requisite corporate power and authority to own, lease and operate
its properties and to conduct its business as conducted and as proposed to be
conducted.
Section 4.2 CORPORATE AUTHORIZATION; BINDING EFFECT. The execution,
delivery and performance by each Obligor of this Agreement and the consummation
of the transactions contemplated hereby are within such Obligor's corporate and
legal powers and have been duly and validly authorized by all necessary
corporate or other action on the part of such Obligor. Where this Agreement
requires or contemplates that the Company or any other Obligor will cause any of
its Affiliates to take or refrain from taking, or will not permit any of its
Affiliates to take or refrain from taking, any specified action, such Affiliate
has all requisite power and authority to take or refrain from taking such action
and the Company or such other Obligor (as the case may be) has the legal and
practical ability to cause such Affiliate to take or refrain from taking such
action. This Agreement has been duly executed and delivered by each Obligor and
constitutes a legal, valid and binding agreement of such Obligor, enforceable in
accordance with its terms, except that (i) such enforceability may be subject to
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or
other similar laws now or hereafter in effect relating to creditors' rights and
(ii) such enforceability may be subject to general principles of equity
(regardless of whether enforcement is considered in a proceeding in equity or at
law).
Section 4.3 NO CONSENTS REQUIRED. The execution, delivery and performance
by each Obligor of this Agreement and the consummation of the transactions
contemplated hereby require no action by or in respect of, or filing with, any
Governmental Authority or other Person pursuant to any applicable Requirement of
Law or any Contract.
Section 4.4 NONCONTRAVENTION. The execution, delivery and performance by
each Obligor of this Agreement and the consummation of the transactions
contemplated hereby do not and will not (i) violate any Requirement of Law, (ii)
violate or conflict with any provision of the certificate of incorporation or
bylaws of such Obligor, (iii) require any consent under, conflict with, result
in a violation or breach of, or constitute (with or without notice or lapse of
time or both) a default or event of default (or give rise to any right of
termination, cancellation, modification or acceleration) under any provision of
any Contract to which such Obligor is a party or by which it or any of its
properties or assets are or may be bound or (iv) result in the creation of, or
impose on such Obligor an obligation to create, a Lien on any of its properties
or assets.
Section 4.5 NO INTERFERENCE. This Agreement is not being made or entered
into with the actual intent to hinder, delay, or defraud any entity or Person.
No action or proceeding, including a voluntary or involuntary petition for
bankruptcy under any chapter of the United States Bankruptcy Code or any other
federal or state bankruptcy laws, has been instituted or threatened by or
against any Obligor.
Section 4.6 ACCURACY OF INFORMATION.
(a) The Company has delivered to the Noteholders true and complete copies,
certified by an officer of the Company, of each of (i) the Senior Loan Documents
and (ii) all agreements and instruments relating to the Metrocall Transactions
and the Plan of Liquidation, including the Form S-4, in each case as amended or
proposed to be amended through and in effect on the date hereof.
(b) None of the information supplied by the Company or any of its
Affiliates, directors, officers, employees, agents or representatives which is
contained in or incorporated by reference in the Form S-4 or any amendment or
supplement thereto filed or to be filed with the SEC or any other documents
filed or to be filed with the SEC or any other Governmental Authority in
connection with the transactions contemplated thereby, was or will be, at the
respective times such documents were or are filed or became or becomes
effective, at the time of the Special Meeting of the Company's stockholders
referred to therein or any other meeting of stockholders to be held in
connection with the Metrocall Transactions or the Plan of Liquidation, was or
will be false or misleading with respect to any material fact, or omit to state
any material fact 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 in any earlier communication with respect to the
solicitation of any proxy for any such meeting. The Form S-4 complies as to form
in all material respects with the applicable provisions of the Securities Act of
1933, as amended, and the Securities Exchange Act of 1934, as amended, and the
respective rules and regulations under each such Act.
(c) All information provided by or on behalf of any Obligor to the
Noteholders on or prior to the date hereof, including all financial statements
and the Form S-4 (insofar as such information relates to the Company and its
Affiliates) was, at the date of delivery, true and accurate in all respects.
Neither this Agreement nor any written statement furnished by or on behalf of
any Obligor in connection with any of the transactions contemplated hereby
contained when delivered any untrue statement of material fact or omitted when
delivered any material fact necessary in order to make the statements contained
herein and therein not misleading in light of the circumstances under which
made, nor do the foregoing now contain any untrue statement of a material fact
or omit to state a material fact necessary in order to make the statements
contained herein and therein not misleading. The Obligors recognize and
acknowledge that the Noteholders are entering into this Agreement based in part
on the information relating to the financial condition of the Company, the
Metrocall Transactions and the status of the Company's obligations and
indebtedness to the Senior Lenders provided to the Noteholders, including the
information contained in the documents referred to in Section 4.6(a), and that
the truth and accuracy of such information is a material inducement to
Noteholders in entering into this Agreement.
Section 4.7 NO UNDISCLOSED LIABILITIES. There are no liabilities of the
Company or any of its subsidiaries of any kind whatsoever, whether accrued,
contingent, absolute, determined, determinable or otherwise, and there is no
existing condition, situation or set of circumstances which could reasonably be
expected to result in such a liability, other than (i) liabilities disclosed on
SCHEDULE A or SCHEDULE 4.10 attached hereto, (ii) liabilities evidenced by the
Senior Loan Documents and the Securities, (iii) liabilities disclosed in filings
made by the Company with the SEC and (iv) undisclosed liabilities incurred in
the ordinary course of business consistent with past practice which,
individually or in the aggregate, are not material to the Company. Neither the
Company nor any of its subsidiaries is in breach or violation of any Senior Loan
Document and no default or event of default (or event which, with notice, lapse
of time or otherwise, would result in a default or event of default) under any
Senior Loan Document has occurred and is continuing.
Section 4.8 LIENS. There is no Lien, writ, claim or charge, including any
mechanic's or materialman's lien, any abstract of judgment, or any writ of
attachment, garnishment or sequestration filed against or with respect to the
Senior Lender's collateral (except for Liens under the Senior Loan Documents or
Permitted Liens), whether or not naming the Company or any of its subsidiaries
as a defendant.
Section 4.9 TAXES. The Company and its subsidiaries have filed all United
States Federal Income tax returns and all other material tax returns (including
state and local) which are required to be filed by them or any of them and have
paid (or made adequate provision on their respective books for the payment of)
all taxes due pursuant to such returns or pursuant to any assessment received by
the Company or any of its subsidiaries.
Section 4.10 LITIGATION; EMPLOYEE BENEFITS. There is no action, suit,
inquiry or proceeding pending against, or to the Company's knowledge threatened
against or affecting, the Company or any of its subsidiaries or any of the
transactions contemplated by the Form S-4 before or by any court or arbitrator
or any Governmental Authority, except for such litigation disclosed on Schedule
4.10 hereto; and there is no reportable event in connection with, or the
Company's default in the performance of any obligation in respect of, any
employee benefit plan.
Section 4.11 METROCALL TRANSACTION AGREEMENTS AND SENIOR LOAN DOCUMENTS.
Each of the representations and warranties of the Company or any of its
Affiliates contained in any Metrocall Transaction Agreement or any Senior Loan
Document were true and complete in all respects when made or deemed to have been
made. The Senior Credit Agreement and all "Loan Papers" referred to therein have
been duly executed and delivered substantially in the respective forms
previously furnished to the Noteholders and are in full force and effect and all
conditions set forth in Article III of the Senior Credit Agreement have been
satisfied or duly waived by the "Lenders" thereunder. The Metrocall Transactions
have been consummated in accordance with the terms of the Asset Purchase
Agreement in the form filed as an exhibit to the Form S-4, without any waiver or
release on the part of the Company or any of its subsidiaries.
ARTICLE V
NEGATIVE COVENANTS
In order to induce the Noteholders to execute and deliver this Agreement,
the Obligors jointly and severally covenant to and agree with the Noteholders as
follows:
Section 5.1 SALE AND ISSUANCE OF STOCK. Without limiting the generality of
Section 5.13, such Obligor shall not, and shall not permit any of its
subsidiaries to, sell, issue, purchase, redeem or otherwise acquire for value
any of its capital stock or debt securities or other indebtedness ranking on a
pari passu basis with or subordinate to the Securities or any securities
exercisable for or convertible into any of such capital stock, debt securities
or other indebtedness, other than to issue common stock of the Company upon the
exercise of options, warrants and convertible securities outstanding on the
Closing Date and disclosed in the Form S-4, in accordance with their terms in
effect on the Closing Date and except as specifically provided under Article III
of this Agreement.
Section 5.2 RESTRICTED PAYMENTS. Without limiting the generality of Section
5.13, such Obligor shall not, and shall not permit any of its subsidiaries to,
declare or pay any dividends or make any other payments or distributions,
whether in cash, property, securities or a combination thereof, to holders of
any of its capital stock or debt securities or other indebtedness ranking on a
pari passu basis with or subordinate to the Securities, or set aside, pursuant
to a sinking fund or otherwise, any cash, property, securities or combination
thereof for any of the foregoing purposes, except as specifically provided under
Article III of this Agreement and except for dividends or distributions to the
Company by a wholly owned subsidiary of the Company.
Section 5.3 CERTAIN TRANSACTIONS. Such Obligor shall not, and shall not
permit any of its subsidiaries to, enter into any transactions with any officer,
director or Affiliate of the Company or any of its subsidiaries or with any
Related Person of any of the foregoing, their immediate families or any Person
in which any such Person has a 5% equity interest or of which such Person is a
director, officer, general partner or employee, except as specifically provided
under Article III or set forth on SCHEDULE A attached hereto. For purposes of
this Section, the term "Related Person" means, with respect to any Person, (i)
any entity (other than the Company or a subsidiary of the Company) of which such
Person is a director, officer, partner, manager or other member of management,
or is, directly or indirectly, the beneficial owner of 10 percent or more of any
class or series of equity interests, (ii) any trust or estate in which such
Person has a substantial beneficial interest or as to which such Person serves
as trustee or in a similar capacity and (iii) if such Person is a natural
person, such Person's relatives (by blood, adoption or marriage) and any Entity
(other than the Company or a subsidiary of the Company), trust or estate with
which any such relative of such Person has any relationship specified in clause
(i) or (ii) of this definition.
Section 5.4 DISPOSITION OF ASSETS. Such Obligor shall not, and shall not
permit any of its subsidiaries to, convey, sell, transfer (including any
transfer to liquidating or other trusts), lease, assign, license or otherwise
dispose of, directly or indirectly, any of its assets, including the Metrocall
Consideration, except for dispositions by the Company made in accordance with
this Agreement (i) to satisfy the Company's obligations under the Senior Credit
Agreement, (ii) to pay other liabilities of the Company incurred without
violation of this Agreement or (iii) to pay, or establish reserves for payment,
of liabilities of the Company as described under Article III of this Agreement.
Section 5.5 AMENDMENTS OF COMPANY DOCUMENTS; OTHER AGREEMENTS. The Company
shall not amend, modify or repeal any provision of the articles or certificate
of incorporation or bylaws of the Company, any resolution of the Board of
Directors of the Company creating any preferred stock or any other class or
series of capital stock or the Plan of Liquidation. The Company shall not, and
shall not permit any subsidiary to, consent or agree to amend, modify or
supplement, grant any waiver or release of, under or with respect to, or forbear
to exercise or assert any right, benefit or claim existing or arising by virtue
of the terms, conditions or provisions of any of the Senior Loan Documents.
Section 5.6 MERGERS AND PURCHASES OF ASSETS. Such Obligor shall not, and
shall not permit any of its subsidiaries to, (i) consolidate or merge with or
into another Person (or permit any other Person to merge or consolidate with or
into it) or enter into any binding share exchange or any similar transaction
with any other Person, dissolve or liquidate or (ii) purchase or otherwise
acquire any assets of any Person; PROVIDED, HOWEVER, that (A) the Company may
dissolve in accordance with this Agreement and (B) any wholly owned subsidiary
of the Company may merge into, or dissolve and liquidate into, the Company or
another wholly owned subsidiary of the Company.
Section 5.7 LIQUIDATION. Such Obligor shall not, and shall not permit any
of its subsidiaries to, liquidate, dissolve or wind up its affairs, except in
accordance with the Plan of Liquidation and this Agreement.
Section 5.8 INCURRENCE OF INDEBTEDNESS. Such Obligor shall not, and shall
not permit any of its subsidiaries to, voluntarily create, incur, assume or
suffer to exist any additional indebtedness, guarantees or contingent
liabilities, other than (i) additional interest, penalties, fees and other
payment obligations accruing under or in respect of the Senior Indebtedness
(other than in respect of additional borrowings or extensions of additional
credit) in accordance with the terms of the Senior Credit Agreement as in effect
on the Closing Date or (ii) otherwise permitted or contemplated by Article III
of this Agreement.
Section 5.9 EXECUTION AND AMENDMENT OF AGREEMENTS. Such Obligor shall not,
and shall not permit any of its subsidiaries to, amend any of its material
agreements or enter into any agreement which, by its terms, would adversely
affect the ability of the Company to fully perform its obligations with respect
to the Senior Loan Documents, the Securities, the Indenture or this Agreement.
Section 5.10 CONDUCT OF BUSINESS. The Company shall not conduct or engage
in any business or affairs other than reasonably incidental to the dissolution
and liquidation of the Company in accordance with the Plan or Liquidation and
this Agreement.
Section 5.11 EMPLOYEE AGREEMENTS AND BENEFITS. Such Obligor shall not, and
shall not permit any of its subsidiaries to, establish, enter into or modify any
arrangements or agreements with any director, officer or employee or any
employee benefit plan, except for termination of such plans.
Section 5.12 BANKRUPTCY FILINGS. Such Obligor shall not, and shall not
permit any of its subsidiaries to, voluntary file for any protection or relief
under any chapter of the United States Bankruptcy Code or any other federal or
state bankruptcy laws or any other laws for the relief or protection of debtors.
Section 5.13 PAYMENTS. Such Obligor shall not, and shall not permit any of
its subsidiaries to, make any payments or distributions of cash, capital stock,
securities or other property to any creditor, security holder or other Person,
except those contemplated under Section 3.1 of this Agreement.
Section 5.14 AMENDMENT OF METROCALL TRANSACTION AGREEMENTS. The Company
shall not modify, amend or grant any waiver or release of, under or with respect
to, or forbear from exercising or asserting or fail to exercise, assert or
perfect any right, benefit or claim existing or arising by virtue of the terms,
conditions or provisions of the Asset Purchase Agreement or any other Metrocall
Transaction Agreements or any securities of Metrocall (or any of its successors)
at any time held by the Company; and the Company shall not enter into any
agreement, arrangement or understanding with or for the benefit of Metrocall or
any of its Affiliates, other than the Asset Purchase Agreement and the other
Metrocall Transaction Agreements contemplated thereby and disclosed in the Form
S-4.
Section 5.15 RIGHTS UNDER THE METROCALL TRANSACTION AGREEMENTS. Unless
otherwise specifically provided for herein, the Company shall not exercise any
conversion, registration or other right or make any election or claim under or
with respect to the terms, conditions or provisions of any of the Metrocall
Transaction Agreements or any securities of Metrocall (or any of its successors)
at any time held by the Company.
Section 5.16 CONVERSION OF SERIES B PREFERRED STOCK. The Company shall not
convert any shares of Series B Preferred Stock into Metrocall common stock
without the prior written consent of the Noteholders unless any such conversion
of shares is made solely for the purpose of paying the liabilities of the
Company described in Section 3.1 of this Agreement and is in an amount that is
no more than reasonably necessary to pay such liabilities.
Section 5.17 LIENS. Such Obligor shall not, and shall not permit any of its
subsidiaries to, create or suffer to exist any Lien or encumbrance on any of its
assets now owned or hereafter acquired by it, except for Liens under the Senior
Credit Agreement, and Permitted Liens.
Section 5.18 INTEREST IN SECURITIES. Such Obligor shall not, and shall not
permit any of its subsidiaries to, make any loan, extend any credit, make any
capital contribution or advance to, or investment in, or purchase, acquire or
guarantee, endorse or otherwise become contingently liable, directly or
indirectly, for any stock, bonds, notes, debentures or other securities or
obligations of, or any other interest in, any Person; PROVIDED, HOWEVER, that
the Company may acquire and own Metrocall Securities received pursuant to the
Asset Purchase Agreement or received as distributions thereon or otherwise by
reason of ownership thereof.
Section 5.19 LITIGATION. The Company shall not file any action, suit, or
claim or otherwise commence any litigation, arbitration or other proceeding or
settle any such litigation, arbitration or other proceeding (whether initiated
by the Company or otherwise), including any proceeding under Section 623 of the
New York Business Corporation Law, or make any significant decision or election
regarding any litigation or any proceeding under Section 623 of the New York
Business Corporation Law which may be initiated in connection with any of the
transactions contemplated by the Form S-4 or this Agreement.
ARTICLE VI
AFFIRMATIVE COVENANTS
In order to induce the Noteholders to execute and deliver this Agreement,
the Obligors jointly and severally covenant to and agree with the Noteholders as
follows:
Section 6.1 IMPLEMENTATION OF PLAN OF LIQUIDATION. The Company shall
consult regularly (and in any event no less than once a month and promptly upon
the request of the Noteholders) with the Noteholders regarding the
implementation of the Plan of Liquidation, including with respect to whether and
when to exercise conversion, registration and other rights with regard to the
Metrocall Securities held by the Company, whether to sell or otherwise dispose
of or liquidate any such Metrocall Securities and the timing and method of any
such sale, disposition or liquidation. After such consultation among the Company
and the Noteholders with respect to the implementation of the Plan of
Liquidation, the Company shall propose to the Noteholders a specific plan of
implementation regarding the Plan of Liquidation (each, a "Specific Plan"); and
subject to the rights of the holders of the Senior Indebtedness, the Company
shall, promptly upon the consent of the Noteholders, implement any such Specific
Plan. Within thirty days from the execution date of this Agreement, the Company
shall use its reasonable best efforts to consult with the Noteholders as
provided above and present to the Noteholders for their approval a Specific
Plan. If (i) for any reason any Specific Plan is not implemented in accordance
with its terms and in a timely manner, (ii) the Company reasonably believes that
any such Specific Plan cannot be implemented in accordance with its terms and in
a timely manner, (iii) there is a material change in the value of the Metrocall
Securities or (iv) the Noteholders believe that any such Specific Plan should be
modified or altered in any manner, the Company shall consult with the
Noteholders in the manner provided above and propose to the Noteholders a
modified Specific Plan within fifteen days from the date of such consultation
that, subject to the rights of the holders of the Senior Indebtedness, shall be
implemented promptly by the Company upon the consent of the Noteholders. In any
event and without limiting the generality of Section 6.2, if no Specific Plan
has been approved by the Noteholders and implemented by the end of the
Forbearance Period, the Company shall, promptly upon the demand of the
Noteholders, make distributions in cash or in kind of the Metrocall Securities
and any and all other assets of the Company as provided under Article III of
this Agreement.
Section 6.2 DISTRIBUTIONS. The Company shall, upon the request of the
Noteholders, distribute all or any portion of the Metrocall Consideration (in
kind or in cash) or the proceeds from the sale or liquidation of the Metrocall
Consideration (in kind or in cash) in accordance with the provisions under
Article III of this Agreement.
Section 6.3 LIMITATION OF EXPENSES. The Company shall use its best efforts
to minimize its expenses and liabilities in connection with the implementation
of the Plan of Liquidation and the conduct of its activities and affairs, and in
no event shall the aggregate amount of such expenses and all liabilities
voluntarily incurred by the Company (other than as permitted by Section 5.8 of
this Agreement) on or after the closing date of this Agreement exceed $100,000
plus any reasonable additional amounts as may be mutually agreed upon by the
Company and the Noteholders.
Section 6.4 FINANCIAL STATEMENTS AND OTHER INFORMATION.
(a) The Company shall notify the Noteholders of any and all non public,
material information that is or would be reasonably likely to affect the value
of the Metrocall Securities as soon as practicable and in any event within three
days after any director or officer of the Company obtains knowledge of any such
information.
(b) The Company shall promptly deliver to the Noteholders the financial
statements, reports and other information required by the Indenture and the
following:
(i) all notices, communications and information furnished or delivered
by the Company to the Senior Lenders or received by the Company from the
Senior Lenders pursuant to the Senior Credit Agreement or otherwise;
(ii) all notices, communications and information furnished or
delivered by the Company to Metrocall or received by the Company from
Metrocall pursuant to the Metrocall Transaction Agreements or otherwise,
including all proxy statements, notices, reports and other information that
the Company receives from Metrocall by virtue of its ownership of any
securities of Metrocall;
(iii) copies of all such financial statements, proxy statements,
notices and reports that the Company sends to its public shareholders,
copies of all material press releases that it makes and copies of all
registration statements (without exhibits) and all reports that it files
with the SEC;
(iv) as soon as practicable and in any event within three days after
any director or officer of the Company obtains knowledge of the existence
or occurrence (A) of any condition or event that, in the opinion of
management of the Company, is reasonably likely to have a material adverse
effect, (B) of the existence or occurrence of any Default or Event of
Default, (C) that any Person has given any notice to the Company or taken
any other action with respect to a claimed default or event of default with
respect to the Senior Indebtedness or any other significant Debt or
liability of the Company, (D) accelerated (or has obtained the right to
accelerate) any such Debt or liability or exercised any remedy with respect
to any such Debt or liability or any security therefor, (E) of the
institution of any litigation involving claims against the Company equal to
or greater than $500,000 with respect to any single cause of action, (F) of
any adverse determination in any court proceeding in any litigation
involving a potential liability to the Company equal to or greater than
$500,000 with respect to any single cause of action that makes the
likelihood of an adverse determination in such litigation against the
Company substantially more probable, or (G) of the institution of any
action or proceedings against the Company under any chapter of the United
States Bankruptcy Code or any federal or state bankruptcy or insolvency law
or other law for the protection of creditors;
(v) copies of all material reports and notices that the Company files
with the Internal Revenue Service, the Pension Benefit Guaranty Corporation
or the United States Department of Labor or that the Company receives from
any such Governmental Authority or governmental agency; and
(vi) such other information regarding the business, condition
(financial or otherwise), assets, liabilities, operations or prospects of
the Company as any Noteholder may reasonably request.
Section 6.5 INSPECTION OF PROPERTY. The Company shall permit any authorized
agent or representative of the Noteholders from time to time upon reasonable
notice to (i) visit the properties of the Company and its subsidiaries, (ii)
discuss the business affairs, finances and accounts of the Company and its
subsidiaries with any of their respective officers, directors and accountants
and (iii) examine the corporate books and financial records of the Company and
its subsidiaries and make copies thereof or extracts therefrom.
ARTICLE VII
CERTAIN OTHER COVENANTS
Section 7.1 INCORPORATED SENIOR CREDIT AGREEMENT COVENANTS. In order to
induce the Noteholders to execute and deliver this Agreement, the Obligors
jointly and severally covenant to and agree with the Noteholders that they shall
comply with each of the covenants contained the Incorporated Credit Agreement
Sections (as defined in Section 7.2(a) below), with the same force and effect as
if each of such covenants (together, subject to Section 7.2(b) below, with the
definitions of all terms used therein which are defined in the Senior Credit
Agreement) were set forth at length herein and made directly to the Noteholders
on and as of the date hereof.
Section 7.2 INCORPORATED CREDIT AGREEMENT SECTIONS.
(a) The "Incorporated Credit Agreement Sections" are Sections 5.1 through
5.6, inclusive, 5.8, 6.4, 6.6, 6.7, 6.8, 6.9 and 6.11 and the last sentence of
Section 6.5 of the Senior Credit Agreement (notwithstanding any termination,
amendment or modification thereof or supplement thereto subsequent to the date
hereof, irrespective of whether such termination, amendment, modification or
supplement has been consented to by the lenders under the Senior Credit
Agreement).
(b) In the event that any defined term contained in the Senior Credit
Agreement which is incorporated by reference into this Agreement (the
"Incorporated Definitions") also is defined in this Agreement, then for purposes
of this Article VII (but not for purposes of any other provision of this
Agreement) such term shall have the meaning assigned to it in the Senior Credit
Agreement as in effect on the date of this Agreement (notwithstanding any
subsequent termination, amendment or modification thereof, unless consented to
in writing by the Noteholders), except: (i) all references in the Incorporated
Credit Agreement Sections and the Incorporated Definitions to the
"Administrative Lender" or to any "Lender" or "Lenders" shall be deemed to be
references to the "Noteholders" (as defined in this Agreement); and (ii) all
references in the Incorporated Credit Agreement Sections and the Incorporated
Definitions to the "Companies" shall be deemed to be references to the
"Obligors" (as defined in this Agreement).
ARTICLE VIII
INDENTURE COVENANTS; CONFLICTS; WAIVERS
Section 8.1 INDENTURE PROVISIONS. Except as otherwise provided in this
Agreement, the Company will continue to comply with the terms and provisions of,
and otherwise satisfy its obligations under, the Indenture, except that its
obligations to comply with Sections 5.01, 5.03, 5.06, 5.07, 5.08, 5.09 and 5.10
of the Indenture will be suspended during the Forbearance Period.
Section 8.2 NO WAIVER BY NOTEHOLDERS.
(a) The execution, delivery and performance of this Agreement by the
Noteholders and the acceptance by the Noteholders of performance of the Company
hereunder (i) except as specifically provided in Section 10.1, shall not
constitute a waiver or release by the Noteholders, the Holders or the Trustee or
any of them of any existing or future default, Event of Default, breach or
violation that may now or hereafter exist under or with respect to the
Indenture, the Securities, any other Indenture Instrument or the Original
Purchase Agreement, including any such default, Event of Default, breach or
violation consisting of or resulting, directly or indirectly, from the
transactions contemplated by the Asset Purchase Agreement, the initiation of
proceedings for the dissolution of the Company, the adoption or implementation
of the Plan of Liquidation, any past or future failure of the Company to comply
with or perform any of its covenants or agreements contained in the Indenture,
the Securities, any other Indenture Instrument, the Original Purchase Agreement
or this Agreement (whether or not such failure is a direct or indirect result of
any such transactions or proceedings) or any consequences of any of the
foregoing, and (ii) except as specifically provided in Section 2.2, 3.6 or 10.1,
shall be without prejudice to, and is not a waiver or release of, the rights of
the Noteholders, the Holders, the Trustee or any of them at any time in the
future to exercise any or all rights, powers, privileges and remedies conferred
by or existing under the Indenture, the Securities, any other Indenture
Instrument, the Original Purchase Agreement, by contract, at law, in equity or
otherwise, including the right to accelerate the maturity of the Securities, if
not already accelerated, and to institute collection or other proceedings
against the Company or any other Obligor.
(b) Except as expressly provided in Sections 2.2 and 3.6, nothing contained
in this Agreement is intended to or shall amend, alter, eliminate, impair,
qualify or limit the liabilities and obligations of the Company or any other
Obligor, which are absolute and unconditional, or any of the rights, benefits,
powers, privileges, preferences, priorities or remedies of any of the
Noteholders, any other Holder or the Trustee under or with respect to the
Indenture, the Securities, any other Indenture Instrument, the Original Purchase
Agreement or under applicable law or otherwise with respect to any of the
foregoing or any of the obligations or indebtedness created or evidenced
thereby.
Section 8.3 CERTAIN WAIVERS AND AGREEMENTS BY THE COMPANY. The Obligors, on
behalf of themselves and their respective predecessors, successors,
subsidiaries, Affiliates, assigns, agents, attorneys, past and present officers,
directors and stockholders and each other Person which has or could potentially
derive rights through it, hereby irrevocably, unconditionally, jointly and
severally:
(i) waive any and all rights to other notice of payment default or any
other default, protest and notice of protest, dishonor, diligence in
collecting and the bringing of suit against any party, notice of intention
to accelerate, notice of acceleration, demand for payment and any other
notices whatsoever regarding the Indenture, the Securities (or any of them)
or any indebtedness or obligation evidenced thereby;
(ii) waive, release and forever discharge (A) all claims or defenses,
or right to claim or raise as a defense, whether known or unknown, present
or future, that any Noteholder or future Holder or any of its predecessors,
successors, assigns, agents, officers, directors, employees, attorneys and
representatives of any kind ("Released Parties") has charged, collected or
received usurious interest under any Security or the Indenture and (B) all
other claims, counterclaims, demands, actions, causes of action, offsets
and defenses of any and every kind or character, whether known or unknown,
present or future, which the Company or any other Obligor now has or
hereafter may have against any of the Released Parties arising out of or
with respect to the Securities, the Indenture, any other Indenture
Instrument, the Original Purchase Agreement, this Agreement or any
transaction contemplated hereby or thereby, including claims for
negligence, gross negligence, or bad faith;
(iii) suspend and toll the running of time under the statute of
limitations applicable to any action, complaint, claim, counterclaim, cross
claim or third party complaint, however styled, arising out of or in
connection with the Securities or the Indenture from the date hereof until
the end of the Forbearance Period, such that the period of time from
December 31, 1996 until the end of the Forbearance Period shall not be
asserted or relied upon in any way in computing the running of time under
the statute of limitations with respect to any such action, complaint,
claim, counterclaim, cross claim, or third party complaint; and
(iv) covenant and agree that no claim, right or remedy now or
hereafter becoming available pursuant to the terms of the Indenture, the
Securities, any other Indenture Instrument, the Original Purchase
Agreement, at law, in equity or otherwise shall be barred, limited,
prejudiced, impaired or otherwise affected by any statute of limitations or
otherwise by reason of the execution and delivery or performance of any
provision of this Agreement nor by reason of any past or future
forbearance, waiver, consent, extension or other act, failure to act or any
delay in acting on the part of any Noteholder, any Holder or the Trustee.
ARTICLE IX
INDEMNIFICATION
Section 9.1 COMPANY INDEMNITY.
(a) The Obligors jointly and severally agree to defend, protect, indemnify
and hold harmless each Holder and each Holder's Affiliates, partners, directors,
officers, agents and employees (each an "Indemnified Party") from and against
any and all liabilities, obligations, losses, deficiencies, claims,
investigations, suits, actions, proceedings, damages, assessments, penalties,
judgments, costs, disbursements and expenses of any kind or nature (including
reasonable legal fees) or causes of action (collectively, "Liabilities"), and
amounts paid or agreed to be paid in settlement of, any claim, action, suit,
hearing, proceeding or investigation against such Indemnified Party or any
action, suit or proceeding initiated by such Indemnified Party in connection
with securing, exercising, enjoying and enforcing such Indemnified Party's
rights, benefits and privileges or enforcing any of the obligations and
liabilities of any Obligor under this Agreement, including appeals, whether
direct, indirect or consequential, in any manner resulting from, arising out of,
based upon or related or attributable to (i) any breach or inaccuracy of any
representation or warranty of, or any breach or failure to perform any covenant,
agreement or obligation, of the Company or any other Obligor contained in this
Agreement, (ii) the invalidity, illegality, unenforceability or ineffectiveness,
or alleged invalidity, illegality, unenforceability or ineffectiveness, of any
provision of this Agreement, including Section 8.2, 8.3 or 10.4 hereof, (iii)
the execution, delivery or performance of this Agreement by any party hereto,
the consummation of any of the transactions contemplated hereby or the
possession, exercise or failure to exercise of any of the rights, powers,
privileges or remedies conferred upon the Noteholders or any of them by this
Agreement, including any claim that the Noteholders or any of them have any
fiduciary or other duty or obligation to any stockholder or creditor of the
Company or any of its subsidiaries or has breached any such duty or obligation
or (iv) any liability or obligation or alleged liability or obligation to, or
claim by, any existing or future holder or former holder of capital stock,
Rights or other securities issued by, or any creditor of or claimant against,
any Obligor or any of their respective Affiliates or any predecessor or
successor of any thereof, whether relating to any event, fact or circumstances
occurring or existing at any time prior to, at or after the date of this
Agreement, by reason of consummation of any of the transactions contemplated by
this Agreement or the Form S-4, by reason of any event or matter referred to in
clause (iii) of this sentence or otherwise.
(b) The Company's and each other Obligor's obligation to indemnify under
Section 9.1(a) with respect to any Liability will not arise unless a Holder or
any Indemnified Party (i) notifies the Company in writing of such potential
Liability, in the case of a Holder, within a reasonable time after such Holder
receives written notice of such Liability; PROVIDED that the lack of such notice
will not affect the Company's or any other Obligor's obligation hereunder (A) if
the Company or any other Obligor otherwise has knowledge of such Liability and
(B) unless such lack of notice is the cause of the Company's inability to
adequately and reasonably defend such Liability, (ii) gives the Company the
opportunity and authority to assume the defense of and settle such Liability,
subject to the provisions of the next two sentences, and (iii) furnishes to the
Company all such reasonable information and assistance available to any Holder
(or other Indemnified Parties) as may be reasonably requested by the Company and
necessary for the defense against such Liability. The Company will assume on
behalf of the Indemnified Party and conduct with due diligence and in good faith
the defense of such Liability with counsel (including in-house counsel)
reasonably satisfactory to the Indemnified Party; PROVIDED that the Indemnified
Party will have the right to be represented therein by advisory counsel of its
own selection and at its own expense. If the Indemnified Party reasonably
concludes that there may be legal defenses available to it which are different
from or additional to, or inconsistent with, those available to the Company, the
Indemnified Party will have the right to select separate counsel reasonably
satisfactory to the Company to participate in the defense of such action on its
own behalf at the Company's expense. In the event the Company fails to defend
any Liability as to which an indemnity might be provided herein, then the
Indemnified Party may, at the Company's expense, contest or settle such matter
without the Company's consent. The Company will not, and will not permit any of
its Affiliates to, settle any such Liability without the consent of the
Indemnified Party, which consent will not be unreasonably withheld.
ARTICLE X
MISCELLANEOUS
Section 10.1 LIMITED WAIVER. Subject to the terms and conditions set forth
herein, to the compliance by each Obligor and its subsidiaries with this
Agreement and in reliance on the representations and warranties of the Obligors
herein contained, the Noteholders, to the extent they may lawfully do so, hereby
waive provisions of Sections 5.07 and 5.11 of the Indenture to the extent and
only to the extent necessary to permit the consummation, in accordance with the
terms of the Asset Purchase Agreement in the form filed as an exhibit to the
Form S-4, of the sale of assets of the Company and its subsidiaries to
Metrocall. Without limiting the generality of Section 8.2 or Section 10.2
hereof, except as specifically waived in this Section or as otherwise
specifically provided in this Agreement, the Indenture and the other Indenture
Instruments shall remain in full force and effect and are hereby ratified and
confirmed, and the foregoing waiver performance of shall be limited precisely as
written and is not intended to and shall not constitute a waiver of compliance
by any Obligor with respect to any other provision or condition of the
Securities, the Indenture, any other Indenture Instrument or this Agreement or
of any other existing or future breach or violation of or Event of Default under
or with respect to the Securities, the Indenture, any other Indenture
Instrument, including any breach or violation or Event of Default which occurs
in the future as a result of consummation of the Metrocall Transactions, nor
prejudice any right or remedy that Noteholders, the Holders or the Trustee may
now have or may have in the future under or in connection with the Securities,
the Indenture, any other Indenture Instrument or this Agreement. The Obligors
acknowledge that this Agreement does not satisfy the requirements of the
Indenture with respect to the amendment thereof or waiver thereunder and that
neither the execution and delivery hereof by the Noteholders nor any provision
hereof shall be deemed to be a representation or warranty by any Noteholder to
the contrary or that this Agreement is effective to bind the Trustee.
Section 10.2 REAFFIRMATION. The Obligors jointly and severally acknowledge,
represent, warrant, covenant and agree that there are no and will be no
defenses, counterclaims or offsets to any of the Company's or any other
Obligor's indebtedness, liabilities or obligations under or created or evidenced
by the Securities, the Indenture or any other Indenture Instrument, whether now
existing or hereafter arising, and that the Securities, the Indenture and each
other Indenture Instrument are hereby ratified and confirmed, are and shall
continue to be in full force and effect and are and shall continue to be legal,
valid, binding, and enforceable in accordance with their respective terms. Any
default in the performance or breach or violation of this Agreement by any
Obligor shall constitute an Event of Default under the Securities and the
Indenture and shall allow the Noteholders, the Holders and the Trustee to
exercise all rights and remedies available to them thereunder, hereunder, at
law, in equity or otherwise; PROVIDED, HOWEVER, that the same shall not affect
the validity of any Distribution made in accordance with the terms hereof prior
thereto. As among the parties to this Agreement and their successors and
permitted assigns, in the event of any conflict between the terms of this
Agreement and the terms of the Indenture, the terms of this Agreement shall
govern during the Forbearance Period.
Section 10.3 CANCELLATION OF WARRANTS. The Noteholders, who are also
holders of 10-Year Common Stock Purchase Warrants of the Company, for the
purchase initially of an aggregate of up to 1,155,556 shares of Common Stock of
the Company (the "Warrants"), covenant and agree that all such Warrants are
hereby voided and canceled, will have no further force and effect and will no
longer entitle any of the Noteholders holding such Warrants to purchase any
equity securities of the Company upon the terms and the conditions set forth in
any such Warrants or to otherwise receive any funds from the Company in respect
of such Warrants.
Section 10.4 NO FIDUCIARY DUTIES CREATED. This Agreement is not intended,
nor shall it be construed, to place any Obligor or any Affiliate of any Obligor,
or the management or conduct of the business or affairs or any Obligor or any
Affiliate of any Obligor, in the control of any of the Noteholders or to create
any fiduciary or other duty or obligation to any stockholders or creditors of
the Company or any other Obligor.
Section 10.5 FEES AND EXPENSES. The Company covenants and agrees to pay,
and will reimburse the Noteholders on demand to the extent paid by them: (i) all
out-of-pocket costs and expenses of every character (including the reasonable
fees and disbursements of a single firm of legal counsel to the Noteholders)
incurred by the Noteholders in connection with the negotiation, preparation,
review, execution and delivery of this Agreement and any future amendment or
supplement hereto and any approval, consent, waiver, release or other matter
requested or required hereunder (or required pursuant to any arrangements or
understandings prior to the execution of this Agreement), and (ii) all costs and
expenses, including reasonable attorneys' fees and expenses, incurred or
expended in connection with the exercise of any right or remedy, or the
enforcement of any obligation of the Company or any other Obligor hereunder or
under or with respect to the Securities, the Indenture or any other Indenture
Instrument.
Section 10.6 OBLIGATIONS SEVERAL, NOT JOINT. No Noteholder shall have any
liability with respect to any other Noteholder's obligations hereunder and each
Noteholder shall be separately and independently entitled to rely on the
representations and warranties of the Obligors or any of them made to the
Noteholders in this Agreement and to the benefit of all agreements, covenants,
obligations and commitments of the Obligors or any of them made with or to the
Noteholders herein.
Section 10.7 LIMITATION ON INTEREST. No provision of this Agreement shall
require the payment or permit the collection, application or receipt of interest
in excess of the maximum permitted by applicable state or federal law. If any
excess of interest in such respect is herein provided for, or shall be
adjudicated to be so provided for herein, the provisions of this paragraph shall
govern, and neither the Company nor its successors or assigns shall be obligated
to pay the amount of such interest to the extent it is in excess of the amount
permitted by applicable law. It is expressly stipulated and agreed to be the
intent of the Company and the Noteholders to at all times comply with the usury
and other laws relating to the Securities and any subsequent revisions, repeals
or judicial interpretations thereof, to the extent that any of the same are
applicable to the Securities. In the event any Holder ever receives, collects or
applies as interest any such excess, such amount which would be excessive
interest shall be applied to the reduction of the unpaid principal balance of
the Securities, and, if upon such application the principal balance of the
Securities is paid in full, any remaining excess shall be forthwith paid to the
Company and the provisions of this Agreement, the Indenture and the Securities
shall immediately be deemed reformed and the amounts thereafter collectible
thereunder reduced, without the necessity of execution of any new document, so
as to comply with the then applicable law, but so as to permit the recovery of
the fullest amount otherwise called for thereunder. In determining whether or
not the interest paid or payable, the Holders shall, to the maximum extent
permitted under applicable law, amortize, prorate, allocate and spread the total
amount of interest throughout the entire term of the Securities so that the
amount or rate of interest charged for any and all periods of time during the
term of the Securities is to the greatest extent possible less than the maximum
amount or rate of interest allowed to be charged by law during the relevant
period of time. Notwithstanding any of the foregoing, if at any time applicable
laws shall be changed so as to permit a higher rate or amount of interest to be
charged than that permitted prior to such change, then unless prohibited by law,
references in this Agreement and the Securities to "applicable law" for purposes
of determining the maximum interest or rate of interest that can be charged
shall be deemed to refer to such applicable law as so amended to allow the
greater amount or rate of interest.
Section 10.8 COMMUNICATIONS. All notices and other communications required
or permitted by this Agreement shall be in writing, and, (i) if to the
Noteholders, to Sandler Mezzanine Partners, L.P., 767 Fifth Avenue, 45th Floor,
General Motors Building, New York, New York 10153, Attention: Hannah C. Stone,
or to such other address as the Noteholders may designate in a written notice to
the Company, (ii) if to the Company or any other Obligor, to Bariston
Associates, Inc., One International Place, Boston, Massachusetts 02110,
Attention: David A. Barry, or to such other address as the Company may designate
in a written notice to each Holder and (iii) if to any Holder other than a
Noteholder, to such Person at such address as such Person may from time to time
specify by written notice to the Company. All notices and other communications
required or permitted by this Agreement shall be deemed to have been duly given
if personally delivered to the intended recipient at the proper address
determined pursuant to this Section 10.8 or sent to such recipient at such
address by registered or certified mail, return receipt requested, Express Mail,
Federal Express or similar overnight delivery service for next Business Day
delivery or by telegram, telex or facsimile transmission and will be deemed
given, unless earlier received: (1) if sent by certified or registered mail,
return receipt requested, five calendar days after being deposited in the United
States mail, postage prepaid; (2) if sent by Express Mail, Federal Express or
similar overnight delivery service for next Business Day delivery, the next
Business Day after being entrusted to such service, with delivery charges
prepaid or charged to the sender's account; (3) if sent by telegram or telex or
facsimile transmission, on the date sent; and (4) if delivered by hand, on the
date of delivery.
Section 10.9 APPROVALS AND SIMILAR ACTIONS. Any party hereto which is
required by any provision of this Agreement to agree, approve, accept, consent
or conduct other similar action shall exercise its discretion with respect to
such action in accordance with accepted practices and in good faith, and such
action shall not be unreasonably delayed or withheld, except where sole
discretion as to whether or not to grant an approval or consent is expressly
reserved to a single party and this Agreement expressly states that such party
may withhold such approval or consent in its sole and absolute discretion, in
which case such approval or consent can be withheld for any reason or no reason
or conditioned in any manner desired by such party (unless this Agreement
specifically provides otherwise), in each case in such party's sole and absolute
discretion. Any consents, approvals, waivers, decisions and other such actions
required of the Noteholders shall be made by Noteholders holding a majority in
principal amount of the outstanding Securities.
Section 10.10 SPECIFIC PERFORMANCE. Each party agrees with the other party
that such other party would be irreparably damaged if any of the provisions of
this Agreement are not performed in accordance with their specific terms and
that monetary damages would not provide an adequate remedy in such event.
Accordingly, in addition to any other remedy to which the nonbreaching party may
be entitled, at law or in equity, the nonbreaching party will be entitled to
injunctive relief to prevent any breach or continued breach of and to
specifically enforce, such provisions, and if a court of competent jurisdiction
should find that a party has breached (or attempted to breach) any such
provisions, such party shall not oppose the entry of an appropriate order
compelling performance by such party and restraining it from any further
breaches (or attempted breaches).
Section 10.11 SOLE AGREEMENT. The Obligors jointly and severally
acknowledge and agree that there are no agreements by the Noteholders or any of
them or their respective predecessors in interest, with respect to the
Securities or the Indenture or the indebtedness evidenced or obligations created
thereby, except for the Indenture, the Securities, the other Indenture
Instruments, if any, and this Agreement. Without limiting the generality of the
foregoing, the Obligors acknowledge and agree that (i) the Noteholders have not
made any agreement to, and are not otherwise obligated to, extend, renew,
forgive, modify or otherwise restructure the Securities, the Indenture or the
indebtedness evidenced or the obligations created by the Securities or the
Indenture and (ii) except as and to the extent expressly set forth in this
Agreement, neither the Noteholders or any of them nor any of their respective
predecessors in interest makes or has made any representation, warranty,
covenant, or agreement whatsoever regarding the subject matter of this
Agreement, the Securities or the Indenture.
Section 10.12 AMENDMENTS. This Agreement may not be amended, modified or
supplemented unless approved in writing by each of the Noteholders and the
Company.
Section 10.13 WAIVERS; REMEDIES CUMULATIVE. The observance of any term of
this Agreement may be waived (whether generally or in a particular instance and
either retroactively or prospectively) by the party entitled to enforce such
term, but any such waiver will be effective only if in a writing signed by the
party against which such waiver is to be asserted. Except as otherwise provided
in this Agreement, no failure or delay of either party in exercising any power,
right or remedy under this Agreement will operate as a waiver thereof, nor will
any single or partial exercise of any such right or power, or any power,
preclude any other or further exercise thereof or the exercise of any other
right, power or remedy. A waiver by either party shall be limited to the
specific instance in which it is given and, therefore, any waiver by either
party of any obligation of the other party under or breach by the other party of
this Agreement or of any power, right or remedy of the waiving party shall not
be a waiver of any other obligation or further or future performance of the same
obligation, of any other or succeeding breach, of any other or further exercise
of such power, right or remedy or any other power, right or remedy. Except as
otherwise expressly provided in this Agreement, all remedies provided for in
this Agreement will be cumulative and in addition to and not in lieu of any
other remedies available to either party at law, in equity or otherwise;
however, notwithstanding the foregoing, neither party shall be permitted to seek
any remedy to the extent expressly constrained by the terms hereof from doing so
or to a greater extent than limited by the terms hereof.
Section 10.14 ASSIGNMENT. None of the Obligors may, voluntarily or by
operation of law, assign any of its rights or delegate any of its obligations
hereunder, in whole or in part, to any other Person without the prior written
consent of the Noteholders, which consent may be withheld or conditioned in the
Noteholders' sole and absolute discretion. Unless the Noteholders otherwise
agree in writing, no assignment or delegation by the Company or any other
Obligor shall relieve or release the Company or any other Obligor from any of
its obligations or commitments, whether accruing prior to or after to such
assignment or delegation. Any Noteholder may freely assign its rights and
delegate its obligations hereunder, in whole or in part, with the consent of the
other Noteholders.
Section 10.15 BINDING EFFECT: NO THIRD-PARTY BENEFICIARIES. This Agreement
will be binding upon and inure to the benefit of the parties and their
respective successors and permitted assigns, including any future holder of any
Security. Except as expressly provided in this Agreement, the provisions of this
Agreement are solely for the benefit of the parties and are not intended to
confer upon any Person except the parties any rights or remedies hereunder.
Except as expressly provided in this Agreement, there are no third party
beneficiaries of this Agreement and this Agreement shall not provide any third
person with any remedy, claim, liability, reimbursement, claim of action, or
other right in excess of those existing without reference to this Agreement.
Section 10.16 GOVERNING LAW. This Agreement shall be governed by and
construed and interpreted in accordance with the laws of the State of New York,
irrespective of the choice of laws principles of the State of New York, as to
all matters, including matters of validity, construction, effect, performance
and remedies.
Section 10.17 WAIVER OF JURY TRIAL. EACH PARTY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN
RESPECT OF ANY ACTION, SUIT OR PROCEEDING ARISING OUT OF THIS AGREEMENT OR THE
TRANSACTION CONTEMPLATED HEREBY.
Section 10.18 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which when so executed shall be deemed to be an original,
but all of which when taken together shall constitute one and the same
instrument. Telecopies of signatures shall be binding and effective.
Section 10.19 SEVERABILITY. To the extent that any provision of this
Agreement shall be judicially unenforceable in any one or more jurisdictions,
such provision shall not be affected with respect to any other jurisdiction,
each provision with respect to each jurisdiction being construed as several and
independent. If any term or provision of this Agreement or the application
thereof to any Person or circumstance is, to any extent, declared or found to be
illegal, unenforceable or void, then all parties will be relieved of all
obligations arising under such term or provision, but only to the extent that
such term or provision is illegal, unenforceable or void, it being the intent
and agreement of the parties that this Agreement will be deemed amended by
modifying such term or provision to the extent necessary to make it legal and
enforceable while preserving its intent or, if that is not possible, by
substituting therefor another term or provision that is legal and enforceable
and achieves the same objective. If the remainder of this Agreement will not be
affected by such declaration or finding and is capable of substantial
performance, then each term and provision not so affected will be enforced to
the extent permitted by law. If necessary to effect the intent of the parties,
the parties will negotiate in good faith to amend this Agreement to replace the
unenforceable language with enforceable language which as closely as possible
reflects such intent and to amend any other term or provision thereby rendered
incapable of substantial performance or otherwise affected thereby to the extent
necessary to permit the practical realization, insofar as legally possible, of
the intent of the parties.
Section 10.20 SURVIVAL. All representations, warranties, covenants and
agreements of the Obligors contained herein shall survive the execution,
delivery and performance of this Agreement, the expiration or termination of the
Forbearance Period or this Agreement, any investigation made by or on behalf of
any Noteholder and the payment of all indebtedness, liabilities and obligations
under the Securities and the Indenture. The provisions of Articles IX and X of
this Agreement shall survive the expiration or termination of the Forbearance
Period or this Agreement and the payment of all indebtedness, liabilities and
obligations under the Securities and the Indenture. This Agreement shall
terminate upon the complete dissolution and liquidation of each of the Obligors,
the distribution of all their respective assets (including any reserves
established as contemplated by this Agreement) in accordance with the Plan of
Liquidation and this Agreement and the indefeasible receipt by the Noteholders
of all Distributions and other payments and distributions provided for in this
Agreement, provided that no claims under Article IX hereof are pending and
unresolved.
Section 10.21 SHARING OF PAYMENTS. If any Noteholder or Holder shall obtain
any payment (whether voluntary, involuntary, through the exercise of any right
of set-off, or otherwise) on account of the Securities in excess of its pro rata
share of payments made by the Company or any other Obligor, such Noteholder or
Holder shall forthwith purchase Securities or participations in the Securities
held by the other Noteholders or Holders as shall be necessary to share the
excess payment pro rata with each of them. For purposes hereof, the "pro rata"
share of any Holder or Noteholder as of any time shall be the percentage of the
aggregate principal amount of all outstanding Securities represented by the
principal amount of the Securities held by such Holder or Noteholder; PROVIDED,
that from and after the date the Securities cease to be outstanding, the pro
rata share of any Holder or Noteholder shall be its pro rata share determined as
provided above in this sentence immediately prior to such date.
Section 10.22 ENTIRE AGREEMENT. This Agreement (together with the schedules
attached hereto) constitutes the entire agreement of the parties and supersedes
all prior and contemporaneous agreements and understandings, both written and
oral, among the parties with respect to the subject matter hereof. All schedules
attached to this Agreement are expressly made a part of, and incorporated by
reference into, this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
SANDLER MEZZANINE PARTNERS, L.P.
By: Sandler Mezzanine General Partnership,
General Partner
By: MJM Media Corp., General Partner
By:
Name: Michael J. Marocco
Title: President
SANDLER MEZZANINE FOREIGN PARTNERS, L.P.
By: Sandler Mezzanine General Partnership,
General Partner
By: MJM Media Corp., General Partner
By:
Name: Michael J. Marocco
Title: President
SANDLER MEZZANINE T-E PARTNERS, L.P.
By: Sandler Mezzanine General Partnership,
General Partner
By: MJM Media Corp., General Partner
By:
Name: Michael J. Marocco
Title: President
T. ROWE PRICE HIGH YIELD FUND, INC.
By:
Name: Mark J Vaselkiv.
Title: President
PAGE AMERICA GROUP, INC.
By:
Name:
Title:
PAGE AMERICA OF ILLINOIS, INC.
By:
Name:
Title:
SANDLER MEZZANINE FOREIGN PARTNERS, L.P.
By: Sandler Mezzanine General Partnership,
General Partner
By: MJM Media Corp., General Partner
By:
Name: Michael J. Marocco
Title: President
SANDLER MEZZANINE T-E PARTNERS, L.P.
By: Sandler Mezzanine General Partnership,
General Partner
By: MJM Media Corp., General Partner
By:
Name: Michael J. Marocco
Title: President
T. ROWE PRICE HIGH YIELD FUND, INC.
By:
Name: Mark J. Vaselkiv
Title: President
PAGE AMERICA GROUP, INC.
By:
Name:
Title:
PAGE AMERICA OF ILLINOIS, INC.
By:
Name:
Title:
PAGE AMERICA COMMUNICATIONS OF INDIANA,
INC.
By:
Name:
Title:
PAGE AMERICA OF NEW YORK, INC.
By:
Name:
Title:
PAGE AMERICA COMMUNICATIONS OF
CALIFORNIA, INC.
By:
Name:
Title:
PAGE AMERICA COMMUNICATIONS OF FLORIDA,
INC.
By:
Name:
Title:
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<CASH> 1,382
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 35,559
<CURRENT-LIABILITIES> 34,700
<BONDS> 0
0
30,068
<COMMON> 1,603
<OTHER-SE> (30,812)
<TOTAL-LIABILITY-AND-EQUITY> 35,559
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 777
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,078
<INCOME-PRETAX> 19,180
<INCOME-TAX> 439
<INCOME-CONTINUING> (5,287)
<DISCONTINUED> 22,596
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 17,309
<EPS-PRIMARY> 1.08
<EPS-DILUTED> 0
</TABLE>
