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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
[Fee Required]
For the fiscal year ended December 31, 1995
OR
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Act of
1934
[No Fee Required]
For the transition period to
Commission File No. 0-17316
MOBILE TELECOMMUNICATION
TECHNOLOGIES CORP.
(Exact name of Registrant as specified in its charter)
Delaware 64-0518209
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
200 South Lamar Street
Mtel Centre, South Building 39201
Jackson, Mississippi (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code: (601) 944-1300
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of Each Class which registered
-------------------- ------------------------
None None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $.01 per share,
together with associated rights to purchase
Series C Junior Participating Preferred Stock
(Title Class)
-----------------------------
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 [ ]
Aggregate market value of the voting stock held by non-affiliates of the
Registrant:
$747,039,846 as of March 1, 1996
Indicate the number of shares of each of the Registrant's classes of
common stock, as of the latest practicable date:
54,137,156 shares of Common Stock, par value $.01 per share, outstanding
as of March 1, 1996.
Documents incorporated by reference in this Annual Report on Form 10-K:
Portions of the definitive proxy statement relating to the 1996 Annual
Meeting of Stockholders in Part III, Items 10 (as related to Directors), 11, 12
and 13.
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. [ ]
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TABLE OF CONTENTS
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PART I
ITEM 1. BUSINESS............................................................................... 1
ITEM 2. PROPERTIES............................................................................. 15
ITEM 3. LEGAL PROCEEDINGS...................................................................... 16
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.................................... 16
EXECUTIVE OFFICERS OF THE REGISTRANT................................................... 16
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.................. 17
ITEM 6. SELECTED FINANCIAL DATA................................................................ 18
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.. 20
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA............................................ 32
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE... 32
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT..................................... 32
ITEM 11. EXECUTIVE COMPENSATION................................................................. 32
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT......................... 32
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS......................................... 32
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.. 33
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS............................................. F-1
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PART I
ITEM 1. BUSINESS
GENERAL
Mobile Telecommunication Technologies Corp. ("Mtel" or the "Company") is
a leading provider of nationwide and international one-way wireless messaging
services to mobile professionals in the United States and selected
international markets. Mtel, which pioneered the one-way nationwide wireless
messaging business, offers a wide range of messaging services in thousands of
towns and cities in the United States and in 19 foreign countries. Mtel's
strategy is to maintain its leadership position by serving as a high quality,
single source provider of one-way messaging services to mobile professionals
and continuing to develop and provide innovative, value-added one-way and
two-way messaging services. As of December 31, 1995, Mtel had approximately
1,098,500 units in service worldwide, which represents an increase of 105%
over the approximately 536,600 units in service as of December 31, 1994, and
includes approximately 907,200 SkyTel one-way messaging units in the United
States, 15,400 SkyTel 2-Way(TM) domestic units and 175,900 international one-
way messaging units.
Mtel, through its wholly-owned subsidiary SkyTel Corp. ("SkyTel"),
provides one-way messaging services in the United States by means of SkyTel's
ground-based transmitter system, leased satellite facilities and proprietary
messaging technology and software utilizing two dedicated channels on the 931
MHz frequency (collectively, the "931 MHz Frequencies") licensed by the
Federal Communications Commission ("FCC"). As part of its strategic focus,
Mtel has sought to become a single source provider to mobile professionals
many of whom have needs for local and regional messaging services in addition
to nationwide and international services. To facilitate this strategy, Mtel
offers regional and local coverage options and, on February 17, 1995,
acquired United States Paging Corporation ("USPC"), which provides local and
regional paging services through contractual arrangements with substantially
all of the commercial radio service providers in the United States to a
customer base composed primarily of corporations requiring service in
multiple locations.
On September 19, 1995, Mtel commenced commercial operation of the first
two-way wireless messaging network in the United States ("SkyTel 2-Way(TM)")
that utilizes frequencies allocated by the FCC for narrowband personal
communication services ("PCS"). SkyTel 2-Way(TM) service, which is currently
available in approximately 1,300 cities throughout the United States, enables
business travelers and consumers to send and receive two-way messages through
the use of a new class of small, low-power, light-weight devices, laptop and
palmtop computers and public and private e-mail systems, without the need to
know the location of the sender or receiver at the time of transmission. The
SkyTel 2-Way(TM) network utilizes a proprietary system architecture designed
and developed by Mtel and offers various communications services, including
acknowledgement messaging, wireless two-way messaging and information
services.
Mtel, through Mtel International, Inc. ("Mtel International"), operates
or has investments in joint ventures that operate nationwide one-way
messaging systems in Argentina, Brazil, Colombia, Ecuador, Guatemala, Hong
Kong, Indonesia, Malaysia, Malta, Mexico, Paraguay, Peru, the United Kingdom
and Uruguay. As of December 31, 1995, Mtel had approximately 175,900
international one-way messaging units in service, which reflects its
proportionate share of units placed in service by its joint ventures as well
as units in service of its consolidated operations. Mtel also provides its
subscribers with access to an international network using Mtel's proprietary
technology that interconnects the systems operated by the Company's
international subsidiaries and joint ventures with the systems in the United
States, the Bahamas, Bermuda, Canada, Norway and Singapore.
Mtel was incorporated in Delaware on October 21, 1988. On November 18,
1988, Mtel (then a wholly-owned subsidiary of Mobile Communications
Corporation of America ("MCCA")) succeeded by merger to the businesses and
assets of COM/NAV Marine, Inc., also a wholly-owned subsidiary of MCCA. On
April 4, 1989,
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MCCA distributed all of the then outstanding shares of Common Stock of Mtel,
par value $.01 per share ("Common Stock"), to the stockholders of MCCA
immediately prior to the acquisition by BellSouth Corporation of MCCA's local
and regional paging operations and cellular radio telephone interests.
Unless the context otherwise requires, references to Mtel or the Company
herein include Mobile Telecommunication Technologies Corp. and its
subsidiaries. Mtel's executive offices are located at 200 South Lamar
Street, Mtel Centre, South Building, Jackson, Mississippi 39201 and its
telephone number is (601) 944-1300.
Set forth below is a description of the Company's businesses. The
Company's businesses have been classified into four business segments:
SkyTel one-way messaging, SkyTel 2-Way(TM), International and Other. See Note
10 of Notes to Consolidated Financial Statements for certain financial
information concerning these business segments.
Certain statements set forth in the Company's Annual Report on Form 10-k
constitute forward looking statements within the meaning of Section 27A of
the Securities Act of 1933, as amended, and are subject to the safe harbor
created by such section. When appropriate, certain factors that could cause
results to differ materially from those projected in the forward looking
statements are enumerated and, as a result, this Annual Report on Form 10-k,
including the consolidated financial statements and the notes thereto, should
be read in its entirety for a complete understanding of such factors.
SKYTEL ONE-WAY MESSAGING
One-Way Messaging Products and Services. SkyTel provides one-way
messaging services in thousands of cities and towns in the United States by
means of SkyTel's ground based transmitter system, leased satellite
facilities and proprietary messaging technology and software utilizing the
931 MHz Frequencies. SkyTel provides to its subscribers numerous service
benefits, including a fully redundant network that helps insure system
reliability, an expanded product offering that includes both local and
regional service along with its established nationwide and international
service, centralized 24-hour customer service and efficient centralized in-
house billing that provides tailored billing options to meet individualized
customer needs.
The Company's principal one-way messaging services in the United States
are marketed under the names SkyPager(R) for numeric paging service,
SkyWord(R) for alphanumeric messaging service and SkyTalk(R) for digital
voice message storage and retrieval services. A subscriber for one-way
messaging services may obtain tone-only, numeric or alphanumeric service on a
local, regional, nationwide or international basis, with regional coverage in
six regions, three of which correspond to the Eastern, Central and Western
(which includes both the Mountain and Pacific) time zones and three of which
provide coverage in the Southwest, Midwest and Southeast regions of the
United States. SkyTel also offers several one-way messaging coverage options,
including Metro local service, MetroPlus(TM), which provides one-way
messaging coverage over one of twenty-one zones in the United States, and
Nationwide Now, which allows a local, zonal or regional customer of one-way
messaging services to obtain nationwide coverage on demand for specified
periods of time. Currently, a majority of one-way subscribers receive numeric
display service, although alphanumeric service constitutes a growing
component of the SkyTel one-way customer base. For the year ended December
31, 1995, one-way messaging operations in the United States accounted for
approximately 92% of the consolidated revenues of the Company.
As part of its strategic focus, Mtel has sought to become a single
source messaging provider to business users, many of whom have needs for one-
way local and regional messaging services in addition to nationwide and
international services. Mtel believes that its customers' desire for single
source solutions should provide SkyTel with additional opportunities for
incremental growth. To facilitate this strategy, on February 17, 1995, Mtel
acquired USPC in a merger in which each share of USPC common stock was
exchanged for .415 of a share of Mtel Common Stock, or an aggregate of
approximately 1.6 million shares of Mtel Common Stock. USPC provides one-way
local and regional messaging services through contractual arrangements with
substantially all of the commercial mobile radio service providers in the
United States to a customer base comprised primarily of corporations
requiring service in multiple locations. USPC also provides customized,
value-added services which are not generally offered by local or regional
paging companies, such as single point of contact for all sales, service and
support nationwide, optimum selection of radio frequency coverage to maximize
service for each customer's specific area of travel and service, centralized
and customized nationwide billing, computerized maintenance and service
reporting and computerized automatic messaging for centralized dispatch. See
Note 1 of Notes to Consolidated Financial Statements.
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In 1993, SkyTel completed construction of separate transmission
facilities and commenced service on a second common 931 MHz frequency in
almost all markets in which the SkyTel system operates. The addition of this
system on the second common frequency, together with the development of high
speed Flex messaging technology, has enabled SkyTel to increase the capacity
of its one-way messaging system and to provide enhanced messaging and data
transmission services. In the fourth quarter of 1995, the Company also began
to implement a program of exchanging high speed Flex pagers for slower speed
POCSAG pagers in service on the one-way messaging system to increase
capacity. See "Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations - Liquidity and Capital Resources - Use
of Funds."
SkyTel has also been an innovator in and has devoted significant efforts
to developing advanced one-way wireless messaging services that integrate
SkyTel's one-way communications technology with the latest advances in the
computer hardware, software and information industries. In 1993, SkyTel began
supporting Lotus cc: Mail and Microsoft Mail, two of the most widely used
LAN-based e-mail systems in the United States. Users of these e-mail systems
who subscribe for SkyTel service can be alerted of or may actually receive
incoming e-mail messages through SkyTel's one-way messaging system without
having to retrieve the message in the traditional wireline method. In early
1994, SkyTel and Lotus Development Corp. ("Lotus") began to market jointly a
pager gateway that permits users of Lotus's communications software to
receive numeric and alphanumeric messages transmitted through the SkyTel one-
way messaging system. The pager gateway developed by Lotus and SkyTel allows
users to filter and forward e-mail to their wireless receiver and to send
message alerts or changes or additions in the Lotus Notes database.
In 1995, SkyTel integrated its communications technology with the
Internet by offering both a World Wide Web site (WWW) and Internet (SMTP)
gateway. The web site (www.skytel.com) provides information on SkyTel
services worldwide, permits direct interaction with SkyTel customer support
and provides an Internet solution for companies and individuals to originate
and send messages to any SkyTel subscriber via the web site. The Internet
gateway allows an estimated 70 million e-mail users to send messages to a
SkyTel subscriber. SkyTel believes that these Internet offerings provide an
opportunity to SkyTel to form alliances with leading computer software and
hardware vendors for further development of advanced solutions that leverage
off of the potential of the Internet.
In addition, in 1995 SkyTel announced the formation of joint development
and marketing alliances with several companies that SkyTel believes will
expand the capabilities and potential applications of narrowband wireless
communications as well as the marketing and distribution of SkyTel's one-way
messaging products and services. For example, SkyTel and Microsoft
Corporation ("Microsoft") have announced joint development and marketing
activities involving new mobile platforms and support for Microsoft Network
(MSN) users to originate and send messages through both the one-way and two-
way messaging networks. SkyTel and Microsoft have also announced an intention
to utilize the Internet and MSN to co-market SkyTel products and services.
SkyTel is continuing to pursue alliances and joint development and marketing
projects with leading operating system software developers, application
software developers, database and information service providers and hardware
vendors in an effort to increase awareness of SkyTel's messaging
capabilities, expand user applications and meet the needs of the mobile
workforce.
One-Way Messaging Operations. A person desiring to reach a one-way
messaging subscriber can call a toll-free number (1-800-SKYPAGE for numeric
service, 1-800-SKYGRAM for alphanumeric service or a personal 800 number) and
have a message (a telephone number or text message) uplinked to a
communications satellite. That signal is then simultaneously broadcast to
each downlink in the system and transmitted to the subscriber on one of
SkyTel's frequencies through nationwide messaging facilities owned and
operated by SkyTel.
SkyTalk(R) is marketed as an additional feature providing customers with
digital voice message storage and retrieval services which permit a caller to
leave a recorded message for a subscriber on the one-way messaging system by
dialing a toll-free number (1-800-SKYTALK). The message is stored in a
voicemail computer which is linked with SkyTel's central computer in
Washington, D.C. When a message is left, the subscriber is automatically
alerted through the messaging unit and thereafter can retrieve the stored
message by calling the voice message computer utilizing the same toll-free
number. The SkyTalk system can also be accessed from a number of countries
outside the United States by dialing a toll-free telephone number.
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SkyTel's proprietary "Universal Messaging System" technology includes
redundant Digital Alpha 8400 computers which have been installed and linked
together with a satellite backbone and terrestrial delivery system on a
nationwide basis in accordance with SkyTel's design specifications. In
addition, SkyTel operates its one-way messaging network by means of complex
computer software programs specially written, developed and enhanced over the
years by its software engineering staff and contract consultants. A key
element of SkyTel's proprietary software is the manner in which the software
controls, processes and delivers messages to subscribers through an
international network of nationwide messaging systems. This software also
has the ability to integrate and process other types of information such as
electronic mail and facsimile messages. SkyTel's software also applies
customer usage information to generate customer bills, and an extensive
customer database provides valuable information regarding the profiles,
preferences and characteristics of SkyTel's direct customers.
All domestic nationwide and regional messages are routed through one of
SkyTel's operations centers located in Washington, D.C. and Jackson,
Mississippi before being transmitted to the satellite uplink. The Washington,
D.C. operations center also maintains a full backup power plant and
generator, and a direct telephone communications linkup with MCI
Telecommunications Corporation ("MCI"), one of the current vendors of
SkyTel's 800 services. SkyTel's operations centers are also linked to the
AT&T network for 800 and other services. The operations center in Jackson,
Mississippi also serves as the operations center for the Company's
international messaging network. Local messages are generally routed through
local paging systems which have contracted with USPC.
The Company leases satellite capacity and the uplink facilities utilized
in the SkyTel one-way messaging system from SpaceCom Systems, Inc.
("SpaceCom") under an agreement which expires in March 1998, subject to
renewal by mutual agreement of the parties. The downlink facilities used in
connection with the SpaceCom system are owned by the Company. SkyTel also
leases fully redundant satellite capacity and uplink and downlink facilities
from GTE Corporation ("GTE") on a month-to-month basis, and has an option to
purchase downlink facilities from GTE. The Company believes that its
relationships with SpaceCom and GTE are good and that additional
satellite capacity, should it be required, would be available on terms
acceptable to the Company.
Acquisition of SkyTel Minority Interest. On January 13, 1995, Mtel
acquired the outstanding shares of SkyTel common stock that Mtel
did not own in exchange for Mtel Common Stock (the "SkyTel Merger"). Each
share of SkyTel common stock held by the SkyTel stockholders other than Mtel
or its direct or indirect subsidiaries (constituting approximately 9.7% of
the outstanding shares of SkyTel common stock) was converted into the right
to receive approximately 3.4 million shares of Mtel Common Stock in the
SkyTel Merger. As a result of this transaction, all of the issued and
outstanding shares of SkyTel common stock are beneficially owned by Mtel. See
Note 4 of Notes to Consolidated Financial Statements.
SKYTEL 2-WAY(TM)
Overview. On September 19, 1995, the Company commenced commercial
operation of the SkyTel 2-Way(TM) network. The SkyTel 2-Way(TM) network
enables business travelers and consumers to send and receive two-way messages
through the use of a new class of small, low power, light-weight devices,
laptop and palmtop computers and public and private e-mail systems, without
the need to know the location of the sender or receiver at the time of
transmission. The SkyTel 2-Way(TM) network utilizes a proprietary system
architecture designed and developed by Mtel incorporating low-power
subscriber equipment transmission technology and offers various
communications services, including acknowledgement messaging, wireless two-
way messaging and information services. The Company has designed the SkyTel
2-Way(TM) network to be open to developers of software and services that
address the growing wireless communications market. This architecture
strategy for SkyTel 2-Way(TM) is designed to stimulate the development of
products and applications to increase volume on the SkyTel 2-Way(TM) network
and encourage direct sales and marketing support by such developers.
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SkyTel 2-Way(TM) Products and Services. The SkyTel 2-Way(TM) network may
be accessed by dialing a toll-free number (1-800-SKYTEL2) and is currently
operational in approximately 1,300 cities throughout the United States.
Customers on the SkyTel 2-Way(TM) network may currently receive
acknowledgement messaging, wireless two-way messaging and information
services. The Company intends to continue its efforts to expand the
functionality and applications of the SkyTel 2-Way(TM) network. For example,
the Company expects that personal messaging units ("PMUs") will be available
in 1996 that will enable customers to send and receive messages directly from
a PMU. In the third quarter of 1995, Mtel also announced the formation of
joint development and marketing alliances with several companies including
the Hewlett Packard Company ("HP"), Microsoft, Prince Corp. and Sony
Electronics, Inc. ("Sony"). The Company believes that such alliances will
expand the capabilities and potential applications of the SkyTel 2-Way(TM)
network as well as the marketing and distribution of two-way messaging
products and services. In addition, the Company is pursuing alliances and
joint development and marketing efforts with leading operating system
software developers, application software developers, database and
information service providers and hardware vendors in an effort to meet the
two-way messaging needs of the mobile professional.
Mtel utilizes SkyTel's established direct sales channel to market and
distribute SkyTel 2-Way(TM) products and services to its customers. In
addition, in support of the Company's marketing efforts, SkyTel began in late
1995 to offer a software development kit that allows software developers,
corporations and partners to develop unique and differentiated applications
that maximize the capabilities of SkyTel 2-Way(TM).
The Company intends to focus its marketing efforts in 1996 on increasing
the commercial acceptance of two-way messaging services available on the
SkyTel 2-Way(TM) network. Mtel intends to continue to target market segments
with diverse messaging requirements, such as corporate users, business
travelers and users of portable and handheld personal computers. However,
two-way wireless messaging services available to date have had only modest
market acceptance, mostly in specialized vertical market applications. Mtel
believes this is due to slower user acceptance of new technologies and
services, limited applications, large subscriber devices and high costs
associated with other two-way data services.
System Description; Technology. The SkyTel 2-Way(TM) network is a
location independent nationwide network. The Company believes that the
network draws competitive advantages from its technology and infrastructure,
its user-friendly advanced messaging platform, its network operations center
and its intuitive applications. The network operations center manages network
traffic flow, connectivity to information service providers and other
databases, customer profiles and accounts. The SkyTel 2-Way(TM) architecture
is designed to permit almost instant delivery of messages and data
transmissions to any major city in the United States. Another important
feature of the SkyTel 2-Way(TM) network is extended battery usage, which is
achieved by the messaging protocol and characteristics of the SkyTel 2-
Way(TM) proprietary system architecture.
Over-the-air transmissions on the SkyTel 2-Way(TM) network utilize an
innovative multi-carrier modulation technology. The SkyTel 2-Way(TM) network
has demonstrated transmission rates in excess of 24,000 bits per second for
forward network links. This compares with 2,400 bits per second typically
utilized at present by many one-way messaging systems. The higher
transmission speed provides increased system capacity. The SkyTel 2-Way(TM)
network operates with synchronized transmitters on the same frequency within
a given coverage area to optimize building penetration and reduce power
requirements.
The development of the SkyTel 2-Way(TM) network has required the
application of numerous technological innovations in order to develop base
transmitters, receivers and control equipment, software and subscriber
equipment. The Company has worked in conjunction with Motorola, Inc.
("Motorola") to design and develop the transmitters, controllers, base
receivers and PMUs for the SkyTel 2-Way(TM) network. The Company is also
working with Wireless Access, Inc. ("Wireless Access") to design and develop
PMUs with advanced functionality which are expected to be commercially
available in 1996.
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As is the case with the development and introduction of any new
technology, consumer acceptance of the technology may be slow and commercially
acceptable performance levels may not be achieved on a consistent basis until
a period of stabilization and optimization has been completed. The Company
believes that the performance of the SkyTel 2-Way(TM) network to date has not
met the Company's high standards for reliability and performance, and that
system performance has affected the level of customer acceptance of SkyTel
2-Way(TM) services. The Company has placed SkyTel 2-Way(TM) units with a
number of Fortune 1000 companies on a trial basis and is working with these
companies to integrate SkyTel 2-Way(TM) service with their existing
communications systems. Mtel is also continuing its efforts to improve the
reliability and performance of the SkyTel 2-Way(TM) network and has retained
Lockheed Martin, a leading communications systems analyst, to assist Mtel in
the stabilization process and in making further improvements to the SkyTel
2-Way(TM) network. In addition, the Company intends in 1996 to improve the
coverage of the SkyTel 2-Way(TM) network in major metropolitan areas to
further enhance system performance. The Company believes that its marketing
initiatives, together with improved system performance, reliability and
coverage, will result in increasing levels of units in service on the SkyTel
2-Way(TM) network in the second half of 1996. See Note 1 of Notes to
Consolidated Financial Statements for a discussion of certain of the risks and
uncertainties regarding the SkyTel 2-Way(TM) network.
PCS Licenses. In July 1994, the FCC awarded the Company the first
narrowband PCS license for the deployment and commercialization of a two-way,
nationwide wireless data network in the United States pursuant to a Pioneer's
Preference. The Company also acquired two additional paired nationwide
narrowband PCS licenses in an auction of licenses held by the FCC in late
July 1994 for the purchase price of $127.5 million. The acquisition of this
additional spectrum was undertaken in furtherance of the Company's strategy
to maintain its leadership position in the messaging industry over the long
term. The Company believes that the acquisition of the two paired channels
enhances the efficiency of the SkyTel 2-Way(TM) network by permitting the
segregation of inbound and outbound traffic, and that such additional
spectrum will allow the SkyTel 2-Way(TM) network to provide a wider range of
services to the public, including longer message length, bulk airtime
applications and other services which may be developed in the future. The
SkyTel 2-Way(TM) network currently operates on one of these paired channels.
The issuance of the Company's initial PCS license pursuant to the
Pioneer's Preference was conditioned by the FCC, among other things, upon the
payment of a license fee in the amount of approximately $33.0 million. Mtel
filed an appeal challenging the condition requiring payment for this license,
and in March 1996 the United States Court of Appeals for the D.C. Circuit
issued a decision upholding the FCC's authority under the Communications Act
of 1934, as amended (the "Communications Act"), to impose such a fee.
However, the Court remanded the matter to the FCC for consideration of the
propriety of imposing such a fee in light of Mtel's reliance on the FCC's
public pronouncements that no such fee would be imposed and the granting by
the FCC of other paging licenses without the imposition of any fee. Payment
for this license will not be required to be made unless and until such
litigation is finally resolved adversely to Mtel. Mtel does not currently
utilize the frequency covered by this license.
Microsoft Transactions. The development and implementation of the SkyTel
2-Way(TM) network was undertaken by the Company through its Destineer Corp.
("Destineer") subsidiary. In connection with the initial capitalization of
Destineer in July 1994, Mtel, Microsoft and certain other investors entered
into a stockholders agreement pursuant to which they provided capital in the
amount of $152.0 million to fund the development of the SkyTel 2-Way(TM)
network. On September 15, 1995, Mtel completed the exchange of all the shares
of common stock of Destineer beneficially owned by Microsoft and such other
investors for an aggregate of approximately 4.0 million shares of Mtel Common
Stock. See Note 4 of Notes to Consolidated Financial Statements. In
conjunction with the agreement to exchange Destineer common stock for Mtel
Common Stock, the Company and Microsoft agreed to amend a joint technology
and marketing agreement entered into in 1994 to reflect developments at
Microsoft and Mtel and to provide that such agreement would be applicable to
and include SkyTel one-way and SkyTel 2-Way(TM) products and services. In
addition, Microsoft and the Company agreed to amend the warrant agreement
executed in 1994 pursuant to which Microsoft was authorized to purchase up to
6% of the outstanding shares of Destineer based upon the fulfillment of
certain obligations by Microsoft to cover shares of Mtel Common Stock. The
Company believes that the elimination of the interests of the minority
stockholders in SkyTel and Destineer will enable Mtel to more fully leverage
and integrate its resources and achieve certain operational efficiencies. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations - Liquidity and Capital Resources -Sources of Funds - PIK
Preferred Stock" for information relating to an additional investment in the
Company made by Microsoft and Kleiner Perkins Caufield & Byers ("KPCB") in
1996.
INTERNATIONAL
Mtel's international strategy has been to develop one-way messaging and
related telecommunications services in foreign countries where opportunities
exist for significant growth and profitability. Mtel believes that the
underdeveloped telecommunications infrastructure, excellent growth potential
and fragmented local competition existing in many of these countries provides
a significant opportunity for the Company. The Company also believes
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that expansion into international markets enhances one-way messaging coverage
to its customers who travel on an international basis, leverages existing
proprietary systems and resources and improves economies of scale. In this
context, the Company has sought to: (i) encourage the allocation of
the 931 MHz frequency for nationwide and international one-way messaging
services in selected foreign countries; (ii) obtain equity participation in
businesses licensed to operate nationwide and local one-way messaging systems
in selected countries outside the United States; and (iii) transfer its
technological and marketing expertise to affiliated messaging and other
businesses in selected foreign countries.
The Company also owns and operates an international network which
interconnects one-way messaging systems on the 931 MHz frequency in various
countries utilizing Mtel's proprietary messaging software. The Company's
international network currently interconnects the systems in the United
States, Mexico, Argentina, Brazil, Canada, Colombia, Hong Kong, Indonesia
Malaysia, Norway, Peru, Singapore, Bermuda, the Bahamas, Ecuador, and
Guatemala. The Company expects that the systems in Costa Rica, El Salvador,
the Dominican Republic, Malta, Paraguay, Philippines, Uruguay and Venezuela
will be interconnected to Mtel's international one-way messaging network in
1996. Although the Company believes that it possesses the technology and
management expertise to implement its international development strategy, the
Company cannot predict the extent to which its international one-way
messaging network will be commercially accepted.
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<PAGE>
The following table sets forth information as of December 31, 1995
regarding the Company's international operations and investments:
<TABLE>
<CAPTION>
MTEL SYSTEMS
December 31, 1995
-----------------------------
Approximate Actual Proportional
Population Mtel Commencement of Units in Units in
Country (in millions) Partner Ownership Operations Service Service
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
U.K. 58.3 Mercury Communications Ltd., 29.0% November 1992 199,423 57,833
and Motorola Ltd.(1)
Mexico 94.0 Radio Telefonia Movil 49.0% February 1992 73,653 36,090
Metropolitana S.A. de C.V.(2)
Brazil 160.7 Victori Comunicacoes S.A.(3) 19.0% July 1993 90,898 17,271
Indonesia 203.6 PT Indokom Primanusa and 19.0% October 1993 32,950 6,261
Singapore Telecom
Paraguay 5.4 BEPSA Communications S.R.L. 40.0% February 1993 13,771 5,508
Telecom Malaysia Berhod and
Malaysia 19.7 Sector Sdn Bhd. 25.0% October 1993 7,221 1,805
Argentina 34.3 N/A 100.0% April 1994 16,058 16,058
Colombia 36.2 N/A 98.0%(4) June 1994 12,058 11,817
Peru 24.1 Tele 2000 S.A. 45.0% October 1994 11,148 5,017
Ecuador 10.9 Isaias Group 50.0% May 1995 3,210 1,605
Hong Kong 5.5 N/A 100.0%(5) June 1995 10,502 10,502
Malta 0.4 Telemalta Corporation 40.0% April 1995 1,424 570
Distribuidora de Repuestos
Guatemala 11.0 Europeos, S.A. 50.0% October 1995 2,861 1,431
Uruguay 3.2 Radio Aviso, S.A. 90.0%(6) September 1995 4,547 4,092
Dominican 7.5 Transmissiones y 50.0% Planned for 1996 N/A N/A
Republic Proyecciones, S.A.
Philippines 73.3 PowerPAGE 40.0% Planned for 1996 N/A N/A
Puerto Rico(7) 3.8 N/A 100.0% Planned for 1996 N/A N/A
Venezuela 21.0 Movilnet 50.0% Planned for 1996 N/A N/A
</TABLE>
(1) In 1995, the Company determined that its interest in Mercury Paging, Ltd.
("MPL") was a non-strategic asset because the MPL system does not operate
on a 931 MHz frequency and the Company, together with the other
shareholders, have determined to sell MPL.
(2) A wholly owned subsidiary of Grupo Televisa, a media and telecommunications
conglomerate based in Mexico City.
(3) Victori Comunicacoes SA is owned by Laboratorio Digital Ltda., Globo
Participaces Ltda., Italcable and Telespazio.
(4) Senior management owns the remaining interest.
(5) Mtel acquired the 24.5% equity interest owned by Singapore Telecom
International Pte. Ltd. in March 1995.
(6) The Company's interest in a paging operation in Uruguay was acquired in
September 1995.
(7) The Company's subsidiary in Puerto Rico will serve as an exclusive reseller
and system manager pursuant to an agreement with SkyTel.
The following table sets forth information as of December 31, 1995 regarding
the Company's interconnect arrangements with network operators in countries
outside the United States:
<TABLE>
<CAPTION>
MTEL INTERCONNECT AGREEMENTS
Commencement
Population of
Country (in millions) Interconnect Agreement With Agreement
------------- ------------------------------------------------- ----------------
<S> <C> <C> <C>
Canada........... 28.4 Rogers Cantel Mobil, Inc. February 1991
Norway........... 4.3 Tele-Mobile AS February 1994
Singapore........ 2.9 Singapore Telecommunications, Ltd. November 1992
Bahamas.......... 0.3 Bahamas Telecommunications Corp. October 1993
Bermuda.......... 0.1 Telecommunications (Bermuda and West Indies) Ltd. June 1993
Shanghai, China 1,203.1 Shanghai Guo Mai Communications, Co., Ltd. Planned for 1996
</TABLE>
8
<PAGE>
The Company intends to continue to pursue the allocation of the 931 MHz
frequency for local, regional, nationwide and international one-way messaging
services in selected markets and to acquire equity participations or enter into
licensing arrangements, as appropriate, for the purpose of constructing and
operating one-way messaging systems that provide local, regional, nationwide
and international messaging services. Mtel's future international development
efforts, however, will be dependent upon the availability of adequate sources
of capital. The Company intends to fund a substantial portion of the capital
requirements relating to the continued development of its international one-way
messaging operations in Latin America and Asia through the sale of equity
securities of subsidiaries formed for the purpose of holding the Company's
investments in operations in these geographic areas, although the Company
currently has no agreements with respect to any such equity sales and there can
be no assurance that any such equity sales will be completed. The international
operations of the Company's subsidiaries and joint ventures have generated
operating losses to date. See "Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations" for additional information
regarding the Company's international operations and investments.
Mtel's operations and investments in certain foreign countries are generally
subject to the risks of political, economic or social instability, including
the possibility of expropriation, confiscatory taxation or other adverse
regulatory or legislative developments, limitations on the removal of
investment income, capital and other assets (including fees charged by Mtel for
licensed technology) and exchange rate fluctuations. Mtel's international
operations and joint ventures also experience significant competition in the
countries in which they operate. Mtel cannot predict whether any of such
factors will occur in the future or the extent to which such factors would have
a material adverse effect on Mtel's international operations, and the existence
of any such factors will be taken into account in determining whether to
continue the Company's international development efforts in any country or
region. Mtel's international operations and joint ventures are generally
subject to regulation and require governmental authorizations in the countries
in which such operations are conducted, and changes in such regulation, the
enactment of legislation or the allocation of spectrum for competing services
could adversely affect Mtel's international development efforts. See Notes 1
and 5 of Notes to Consolidated Financial Statements for financial information
regarding the Company's international operations.
OTHER SERVICES
As of December 31, 1995, the Company provided telephone answering services
("TAS") to approximately 5,980 customers in eight cities. To receive TAS, the
subscriber's telephone line is call forwarded to a computer or to a switchboard
at one of the Company's answering service bureaus, enabling an operator to
answer the subscriber's telephone. Service is available on an 8, 12 or 24 hour
basis or as otherwise needed. TAS is a mature business which the Company
believes has less growth potential than the Company's other businesses.
Further, TAS operations are more labor intensive as compared to the Company's
other businesses. As a result, the Company may determine to sell TAS
operations in the future. For the year ended December 31, 1995, TAS operations
accounted for approximately 2.5% of the consolidated revenues of the Company.
The Company was one of the eight original equity participants in American
Mobile Satellite Corporation ("AMSC") and was the beneficial owner of
approximately 3.0% of the outstanding shares of common stock of AMSC as of
December 31, 1995. AMSC provides mobile telephone, fax and data services to the
land mobile, maritime, aeronautical and fixed site market through its mobile
satellite system. The Company has determined that AMSC is not a strategic
investment and intends to divest its remaining shares of AMSC common stock in
the first half of 1996.
The Company is the beneficial owner of convertible preferred stock which is
convertible into approximately 4.5% of the common stock of Wireless Access, a
company engaged in the business of developing wireless integration for mobile
computing and is currently developing PMUs for SkyTel 2-Way(TM).
MARKETING
Customers of SkyTel's one-way and SkyTel 2-Way(TM) messaging services are
generally professional and management personnel, government agencies and many
of the corporations in the Fortune 1000 whose personnel travel extensively and
require access to important information. SkyTel has established a direct
marketing and sales capability, developed marketing arrangements with selected
unaffiliated resellers, including local and regional messaging companies, and
entered into joint development and marketing agreements with select companies.
Direct Sales. Through its direct sales force, which was expanded
significantly in 1994 and 1995, SkyTel focuses on serving as a single source
provider of local, regional and nationwide one-way and two-way messaging
services as well as one-way international messaging services to large corporate
and national accounts. The Company believes that its efforts to establish a
highly-professional, dedicated, advanced application oriented direct sales
force differentiates SkyTel from its
9
<PAGE>
competitors. In addition, in 1995 Mtel completed the acquisition of USPC, a
transaction that combines USPC's Fortune 1000 market presence and customer base
with SkyTel's and strengthens SkyTel's ability to provide full service single
vendor solutions in bundled packages to such accounts. As of December 31,
1995, SkyTel maintained direct sales offices in 24 metropolitan areas. SkyTel
also maintains customer service, telemarketing and other marketing functions in
its Jackson, Mississippi and Washington, D.C. offices.
SkyTel's direct sales efforts have been successful in achieving lower
customer churn rates as well as higher average revenues per one-way messaging
unit in service than its reseller channel of distribution. The Company believes
this is due to its highly trained direct sales force in addition to its value-
added sales approach featuring bundled product packages and field based
customer support resources. In addition, SkyTel's direct customized billing
functions and efficient 24-hour customer service have reinforced the success of
its direct sales efforts. However, the Company's overall churn rates in 1995
increased, primarily as a result of the disconnect rate of units placed in
service by MCI which became a reseller of one-way messaging services and new
alternate distribution channels. The Company is implementing programs designed
to reduce churn rates in these distribution channels in 1996.
SkyTel also generates direct sales through its telemarketing group located in
Jackson, Mississippi, which responds to inquiries generated by its national
advertising and promotional programs, focuses on outbound sales calls to
smaller companies and mobile professionals and qualifies corporate account
leads for referral to SkyTel's direct corporate account sales force. SkyTel
also maintains an airport marketing program utilizing kiosks located inside
airport terminals to provide services to frequent travelers and capture leads
for follow-up by the corporate account and telemarketing sales forces.
Currently, SkyTel operates from two locations in the Hartsfield Atlanta
International Airport as well as locations in the Cincinnati, Salt Lake City
and San Jose airports, and plans to open other locations in the future.
Resellers. SkyTel's one-way messaging services are also marketed through
approximately 120 resellers which market such services from over 800 sales
locations. Resellers of SkyTel's regional and nationwide one-way messaging
services include major paging companies such as MobileMedia Communications,
Inc. (formerly Metromedia Paging Services, Inc. "MobileMedia"), AT&T Wireless
Services, Inc. ("AT&T"), American Paging, Inc., Westlink, Inc. and GTE, each of
which offers SkyTel's one-way messaging services in conjunction with paging
services provided on their own paging systems. Approximately 34% of SkyTel's
revenues for the year ended December 31, 1995 is attributable to one-way
messaging units placed in service by resellers. SkyTel's agreements with
resellers of one-way messaging services are generally for one to three year
terms and are automatically renewed for additional one-year periods unless
terminated by either party upon at least 90 days' written notice prior to the
expiration of the then current term. Such reseller agreements also generally
provide that, in the event of termination, SkyTel may, at its option, purchase
the reseller's customer contracts, associated receivables and messaging
equipment for a negotiated price. In the absence of SkyTel's exercise of such
option, the reseller may transfer its customers to another carrier's system.
SkyTel generally also has a right of first refusal in the event that, at any
time during the term of the agreement, the reseller wishes to assign or sell
its customer accounts to a third party. SkyTel is in the process of
implementing a new reseller agreement that combines both SkyTel's traditional
one-way messaging services and the SkyTel 2-Way(TM) messaging services.
Resellers who elect to be bound by such terms generally will receive more
favorable pricing than those resellers that choose otherwise. Wholesale rates
are made available by SkyTel to its resellers.
SkyTel entered into a reseller agreement with MCI pursuant to which MCI began
in the second quarter of 1995 to sell SkyTel one-way messaging services under
MCI's own branded name (Network MCI Paging) to its business customers. The
reseller agreement with MCI is for a term of two years which expires on
December 31, 1996, subject to automatic renewal for additional one-year periods
unless either party provides notice of termination at least forty-five days
prior to the expiration of the then current term. Upon termination, units
placed in service by MCI may be transferred to another paging provider. For the
year ended December 31, 1995, units placed in service by MCI represented
approximately 22% of the net pager sales of the Company. There can be no
assurance that net pager sales by MCI will achieve the same levels in 1996 or
future periods. See "Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations - Results of Operations."
Retail Channel. In the fourth quarter of 1995, the Company began distributing
its one-way and two-way messaging services through a distribution agreement
with Sony. Under the agreement, Sony's Consumer Products Group sales
organization sells SkyTel's one-way messaging services and SkyTel 2-Way(TM)
messaging services through its network of consumer electronic retailers. At
December 31, 1995, the Company's messaging services were being distributed in
approximately 500 consumer retail outlets nationwide. The number of consumer
retail outlets distributing the Company's services is expected to increase
significantly in 1996.
Alternate Distribution Channels. SkyTel continues to use individual sales
agents to sell and distribute its services throughout the United States. These
sales agents are located in major metropolitan areas and primarily sell basic
SkyTel one-way messaging services. The Company believes that the agent sales
channel provides SkyTel the opportunity
10
<PAGE>
to broaden its own direct sales coverage. In 1995, SkyTel also developed a
sales channel that focuses on selling to the trade association marketplace.
As of December 31, 1995, the trade association program entered into agreements
with 150 trade associations with a combined membership of approximately 1.5
million members.
Advertising and Marketing Alliances. SkyTel supports the marketing efforts
of its direct sales force and resellers with advertising and sales support in
broadcast and print media, trade shows, events, direct mail and telephone
marketing. In addition, SkyTel has conducted joint marketing programs with
companies that provide other services to similar target audiences and has
recently begun to enter into several joint development and marketing agreements
with manufacturers of palmtop and handheld computers.
Pricing. SkyTel's one-way and two-way subscribers and resellers are billed
monthly for service and for equipment rental, when applicable, in accordance
with SkyTel's written service contracts. For SkyTel's one-way messaging
services, the full monthly fixed service charge for nationwide numeric display
service is generally $39.00, which includes equipment rental and 200 messages.
Additional messages may be received at a charge of $0.25 per message. Numeric
display service may also be obtained on a regional basis only for $25.00 per
month. SkyWord alphanumeric service is generally offered on a nationwide basis
for $69.00 per month and on a regional basis for $49.00 per month, which
includes equipment rental and messages up to 2,000 characters. Additional
messages may be received at a charge of $0.03 per character. In addition to
basic messaging services, SkyTel offers its customers a variety of other
services, including SkyTalk(R) (a voice message storage and retrieval service),
SkyFax(R) (a fax store and forward service), and SkyQuote(R) (a stock market
quotation service), which are available at prices generally ranging from $5.00
to $20.00 per month. In addition, SkyTel provides its local and regional
customers the option to add, for an additional charge, nationwide coverage on
an as needed basis. Volume discounts for large customers and discounts for
customers that agree to contracts for longer terms are available.
The full monthly fixed service charge for SkyTel 2-Way(TM) messaging services
is generally $24.95, which includes 200 messages, SkyNews(R) (a daily news
headline service) and multi-state coverage. Additional messages may be received
at a charge of $0.50 per message, and additional coverage options may be
obtained at an additional cost. SkyTel 2-Way(TM) PMUs may either be leased or
purchased.
The term of SkyTel's service contracts vary and, in certain cases, may be
terminable by either party upon 30 days' notice after an initial term, although
a number of large customers have service contracts for fixed terms.
International coverage can be added for an additional charge.
COMPETITION
The SkyTel one-way messaging system operates on one of the three common
carrier frequencies originally allocated by the FCC specifically for nationwide
network one-way messaging services. SkyTel commenced operation in the third
quarter of 1993 of separate transmission facilities on a second frequency in
virtually all markets in which the SkyTel common carrier frequency is
operational. A nationwide one-way messaging system on a common carrier
frequency dedicated for nationwide use by the FCC is also operated by
MobileMedia in most markets in which the SkyTel one-way messaging system
provides service, utilizes MobileMedia's existing local and regional one-way
paging network and competes directly with SkyTel. Motorola operates the third
nationwide common carrier frequency, but does not offer traditional nationwide
one-way messaging service on its system. Motorola offers one-way electronic
mail service to portable receivers (a service which has been discontinued for
new subscribers), as well as a sports score service.
A number of other companies (including Paging Network, Inc. ("PageNet"),
Airtouch, Inc., AT&T and certain Bell operating companies) are offering, or
have announced plans to offer, nationwide and expanded regional services that
compete, or will compete, directly with SkyTel's one-way messaging products and
services. Certain of these companies have succeeded in establishing a
significant market presence. In addition, several of these companies currently
resell SkyTel one-way messaging services, and Mtel cannot predict the extent to
which competing nationwide one-way messaging services by such resellers will
affect SkyTel's subscriber base.
The Company believes that competition for subscribers for nationwide one-way
messaging services in the United States has been based primarily on the quality
and breadth of service offered and the geographic area covered by the system.
The Company believes that the quality of service of the SkyTel one-way
messaging system compares favorably with that of its competitors and that
SkyTel's geographic coverage is comparable to the coverage of most of its
11
<PAGE>
competitors. In late 1993, PageNet announced the availability of a competing
nationwide one-way messaging service at prices significantly lower than those
offered at the time by SkyTel, and the Company believes that additional
competitors offering or planning to offer nationwide one-way messaging services
in the United States will continue to emphasize pricing as a significant
competitive factor. SkyTel began in early 1994 to implement reduced pricing
for its one-way messaging services designed to accelerate growth in units in
service. See "Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations."
Certain of SkyTel's competitors in the United States such as AT&T, Motorola
and PageNet possess substantially greater financial resources than the Company
and could have a substantial competitive impact on SkyTel.
The Company acknowledges that cellular telephone service may be perceived as
being competitive with SkyTel's one-way and SkyTel 2-Way(TM) services.
However, the Company believes that for its primary target market, the mobile
professional, certain inconveniences associated with cellular roaming are
overcome by using nationwide messaging as a complement to cellular service.
Nationwide messaging service provides instant notification and screening of
calls without the need to know the party's location. The calls can then be
returned via the cellular telephone at the convenience of the user, thereby
minimizing expensive roamer access fees and long-distance call charges. The
Company further believes that the complementary aspects of the two services are
demonstrated by the fact that certain cellular providers are resellers of
SkyTel's services and that a significant portion of SkyTel's customers are also
cellular users.
In July 1994, the FCC held its first spectrum auction which included ten
nationwide narrowband PCS licenses. Certain companies such as AT&T and
PageNet acquired multiple frequencies in such auction, as did the Company. In
addition, in November 1994, the FCC completed its auction of regional
narrowband PCS spectrum. Four companies acquired licenses in each of the five
regions and, as a result, will be able to interconnect all five regions and
provide nationwide narrowband PCS service. It is anticipated that the companies
that acquired narrowband PCS spectrum may offer services similar to SkyTel 2-
Way(TM), although Mtel cannot predict the extent to which these companies will
compete. The FCC has also conducted auctions of broadband PCS spectrum and is
currently conducting auctions of Block C broadband PCS spectrum. Mtel cannot
predict the number of competitors that will emerge as a result of these
auctions or the extent to which the services offered by successful participants
in these auctions will compete with the services offered by SkyTel 2-Way (TM).
The Company also expects to experience competition from companies providing
wireless messaging services based on technology that is different from SkyTel
2-Way(TM) technology including: (i) the existing two-way data networks operated
by Ardis and RAM; (ii) specialized mobile radio services ("SMR") such as Nextel
Communications Corporation's ESMR network; (iii) cellular and paging carriers
and (iv) cellular digital packet data ("CDPD"), a protocol to send data over
existing analog cellular networks. SMR and existing two-way services primarily
offer integrated vertical dispatch applications (used in taxi, courier and
trucking services) and have indicated that they intend to offer mobile
telephone, dispatch, alphanumeric type messaging and wireless data from the
same device. AT&T has announced that it is developing a new messaging protocol
that can be used for two-way messaging services which would compete with
Motorola's Flex messaging protocols, one of which is currently utilized by the
SkyTel 2-Way(TM) network.
Continuing technological advances in the communications industry, as well as
potential regulatory and legislative developments, make it impossible to
predict the extent of future competition in the businesses in which Mtel
operates. Such technological advances and regulatory and legislative
developments may, for example, make available other alternatives to the
services provided by the Company, thereby creating additional sources of
competition. In addition, future entrants into the market which possess
significantly greater financial resources than Mtel could have a significant,
adverse competitive impact upon the Company.
The Company's international subsidiaries and joint ventures generally
experience significant competition in the international markets in which such
subsidiaries and joint ventures operate. In many countries, the markets are
generally characterized by fragmented, local messaging providers and
competition is based primarily on price.
12
<PAGE>
REGULATION
SkyTel's one-way and two-way messaging operations in the United States, as
well as most of Mtel's other domestic businesses, are subject to regulation by
the FCC under the Communications Act, and may be conducted only on frequencies
assigned by the FCC for use by the Company. SkyTel's one-way messaging
operations are currently conducted in the 931 MHz frequency band over one
frequency licensed to SkyTel by the FCC specifically for nationwide network
messaging and another frequency which SkyTel has been authorized to operate in
almost all of the markets in which it operates. The SkyTel 2-Way(TM) network
currently operates in the 930 MHz frquency band licensed to the Company by the
FCC for nationwide narrowband PCS services. See "SkyTel 2-Way(TM)-PCS
Licenses."
The FCC has adopted rules generally revising the classification of licensees
of land mobile radio services. Traditionally, the FCC has classified licensees
of land mobile radio services as either common carriers or private mobile
carriers. Pursuant to the FCC's rules, all land mobile radio licensees
will be classified either as Commercial Mobile Radio Service licensees or
Private Mobile Radio Service licensees. Those carriers, like the Company and
its competitors, who make service available to the public on a for-profit basis
through interconnection with the public switched telephone network are
classified as Commercial Mobile Radio Service licensees. The Company believes
that these rules will have the effect of removing certain regulatory advantages
that private mobile carriers have enjoyed to date, although private mobile
carriers will not be subject to the new Commercial Mobile Radio Service
regulations until after August 10, 1996.
The FCC recently proposed new rules regarding the licensing of non-nationwide
paging frequencies. The current rules provide for the granting of non-
nationwide paging frequencies on a transmitter-by-transmitter basis. Pursuant
to the proposed new rules, the FCC would grant non-nationwide paging
frequencies on a geographic area basis. The FCC also recently announced that
it will no longer grant 929 and 931 MHz non-nationwide licenses until the FCC
has issued definitive rules on such geographic licensing. In light of the
proposed rules and the FCC's announcements, SkyTel is actively seeking to have
its second one-way messaging frequency designated as a nationwide messaging
frequency.
In March 1994, the FCC adopted new rules pursuant to which the FCC will
utilize competitive bidding to select Commercial Mobile Radio Service licensees
when more than one entity has timely filed an application for the same license.
These competitive bidding rules could require that FCC licensees make
significant investments in order to obtain spectrum.
The FCC has allocated spectrum in the 901-902 MHz, 930-931 MHz, and 940-941
MHz frequency bands for advanced two-way messaging, characterized by the FCC to
constitute narrowband PCS. In a separate phase of that same proceeding, the
FCC allocated spectrum in the 1.8-2.2 GHz band for broadband PCS, which
involves primarily two-way mobile voice and data services. See "Competition."
In July 1994, the FCC awarded the Company an unpaired narrowband PCS license
pursuant to a Pioneer's Preference. However, the issuance of the Company's
initial nationwide narrowband PCS license was conditioned by the FCC upon the
payment of a license fee in the amount of approximately $33.0 million. The FCC
also conditioned the license upon Mtel substantially using the innovative
technology for which it was granted the Pioneer's Preference and upon Mtel
meeting certain coverage requirements. This FCC license also restricts Mtel
from transferring control of the license for a period of three years or until
certain coverage requirements are met. Mtel filed an appeal challenging the
condition requiring payment for this license, and in March 1996, the United
States Court of Appeals for the D.C. Circuit issued a decision upholding the
FCC's authority under the Communications Act to impose such a fee. However, the
Court remanded the matter to the FCC for consideration of the propriety of
imposing such a fee in light of Mtel's reliance on the FCC's public
pronouncements that no such fee would be imposed and the granting by the FCC
13
<PAGE>
of other paging licenses without the imposition of any fee. Payment for this
license will not be required to be made unless and until such litigation is
finally resolved adversely to Mtel. Mtel does not currently utilize the
frequency covered by this license.
The Company was also the high bidder for two additional paired nationwide
narrowband PCS licenses in the FCC's first auction of spectrum held in July
1994. In September 1994, the Company was awarded these two licenses. See
"SkyTel 2-Way(TM)-PCS Licenses."
The FCC licenses for SkyTel's one-way nationwide messaging operations
expire in 1999, and the nationwide narrowband PCS licenses expire in 2004. The
Company's other FCC licenses are subject to renewal on various dates through
2004. FCC rules provide for the continuing effectiveness of licenses when
renewal applications have been filed in a timely manner as has been the case
with respect to the Company. The Company believes that renewal applications
generally are granted upon a showing of compliance with FCC regulations and the
provision of adequate service to the public. All FCC licenses may be revoked
and license renewal applications may be denied for cause.
The Company is also subject to interconnection costs imposed by the FCC.
However, the FCC has initiated an interconnection proceeding that could have
the effect of eliminating such interconnection costs.
The Communications Act prohibits an alien from serving as an officer or
director of, and prohibits aliens and foreign governments or representatives
thereof from owning more than a 20% equity interest in, a company such as Mtel
which directly holds FCC licenses. In the event that the Company transfers all
of the FCC licenses which it directly holds to one or more of its subsidiaries,
the Communications Act would generally not permit aliens and foreign
governments or their representatives to own more than a 25% equity interest in
the Company.
As a result of the Telecom Act of 1996, the ability of state public utility
or public service commissions to regulate intrastate wireless messaging
services has been significantly curtailed. As a result, states are limited in
regulating entry through indirect obstacles and will be restricted in applying
RF emission standards different from those adopted on a federal level.
The United States Congress is considering the auctioning of toll-free 888
numbers which are to be implemented to relieve the shortage of available toll-
free 800 numbers. A decision to sell toll-free 888 numbers may hinder the
Company's ability to obtain toll-free numbers for its messaging operations
at marginal cost as is currently the case.
The Company's international subsidiaries and joint ventures generally require
governmental authorizations in each country to provide nationwide and
international messaging services. In addition, the Company is required in
certain countries to obtain governmental approvals prior to making an
investment in a subsidiary or joint venture.
Changes in the regulation of or the enactment of legislation affecting Mtel's
domestic or international operations or the allocation of spectrum for services
that compete with such businesses could adversely affect Mtel's results of
operations.
SOURCES OF EQUIPMENT
The infrastructure equipment and satellite capacity the Company uses in
providing its principal communications services generally are available from
multiple sources, and the Company anticipates that such equipment and satellite
capacity will be readily available in the foreseeable future. High speed Flex
pagers which the Company is purchasing exclusively in order to improve capacity
on its one-way messaging system were available only from a single supplier in
1995, and the Company has experienced delays in shipments of Flex pagers in the
same year. The Company believes that Flex pagers will be available in
sufficient quantities in 1996. PMUs for use on the SkyTel 2-Way(TM) network are
currently available from only one supplier, although additional suppliers are
expected to begin manufacturing PMUs during 1996.
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TRADEMARKS, PATENTS AND COPYRIGHTS
The Company holds a number of United States trademarks and service marks,
including the following federally registered marks: ACX; MESSAGE CARD; MOBILE
TELECOMMUNICATION TECHNOLOGIES CORP.; MTEL; SKYGATE; SKYLOOK; SKYMAIL; SKYNEWS;
SKYPAGER; SKYQUOTE; SKYSTREAM; SKYTALK; SKYTALK PLUS and SKYTEL. In addition,
the Company owns common law rights in the United States to a number of other
marks and holds a number of pending applications for trademarks and service
marks in the United States, including: DESTINEER; NATIONWIDE NOW; SKY REPLY;
SKYGRAM; SKYTEL 2-WAY; SKYTEL ACCESS; SKYTEL LOCAL; SKYTEL METRO and SKYWORD
ACCESS. The Company also holds numerous registrations and pending applications
for their trademarks and service marks throughout the world, including
countries in which it has international operations.
The Company holds several United States patents related to various aspects of
its telecommunications businesses. For example, in 1992, the Company was
issued a United States patent for the national paging control computer
subscriber interface equipment that is used in connection with the SkyTel
system. The Company also holds a United States patent for a mobile paging
call-back system. This technology integrates portable cellular radio
telephones with paging (including nationwide paging) and permits incoming
paging calls to be displayed on cellular telephones. The subscriber can then
complete a telephone call to the displayed number by touching only one button
on the cellular telephone. The Company was recently notified that it would be
granted another United States patent covering networks and services that use
this integrated cellular telephone/pager technology. The Company also holds
several United States patents and patent applications relating to air-to-ground
and ground-to-air telephone calling systems and services.
The Company is expanding its patent portfolio and has filed various patent
applications with the United States Patent and Trademark Office, including
applications relating to paging networks and services, the SkyTel 2-Way(TM)
network and two-way wireless services. The Company also holds patents and
patent applications to protect its technologies in several foreign countries.
The Company is the copyright owner of works of authorship it has
created on its behalf, including computer software, brochures,
advertisements, manuals and similar materials.
EMPLOYEES
The Company and its subsidiaries employed a total of approximately 2,650 full
and part-time personnel as of December 31, 1995, none of whom is represented by
organized labor.
ITEM 2. PROPERTIES
The Company currently leases a total of approximately 149,515 square feet of
office space in the Mtel Centre complex in Jackson, Mississippi, which serves
as the Company's principal executive offices (the "Mtel Centre Complex")
pursuant to a lease entered into in August 1995. The lease for space in the
Mtel Centre Complex has a monthly rental rate of $164,688 and expires on July
31, 2005. The Company also leases approximately 155,956 square feet of space in
Jackson, Mississippi for customer service, information services and inventory
storage pursuant to leases entered into during the period from 1991 to 1996.
Such leases have an average aggregate monthly rental rate of $123,223 and begin
to expire on June 30, 1997.
SkyTel currently leases approximately 41,200 square feet of office space in
downtown Washington, D.C., pursuant to a lease which commenced on July 1, 1991.
The lease term is for ten years and has an average monthly rental rate of
$108,140 plus SkyTel's proportionate share of operating costs and taxes. SkyTel
has the option to renew the lease after June 30, 2001 for one five-year period
at 95% of the then current market rate. During 1992, SkyTel also leased
approximately 23,870 square feet of office space in New York City having an
average aggregate monthly rental rate of approximately $67,035. The term of
this lease expires on December 31, 1999. The Company also leases approximately
10,000 square feet of office space in Manchester, England which was leased in
conjunction with its former paging
15
<PAGE>
operations in the United Kingdom. The lease term expires in July 2015 and has
a monthly rental rate of approximately (Pounds)8,700. Approximately 25% of
this office space is being subleased by the Company to MPL.
The Company and its subsidiaries own or lease office space in approximately
31 cities in 15 states which is used in conjunction with its nationwide
messaging and telephone answering service operations. These office leases
provide for monthly rental rates ranging from $450 to $19,000. The Company also
leases antenna sites which are used primarily in conjunction with its messaging
operations. Antenna sites typically comprise relatively few square feet and are
located in most cases on building rooftops, towers or other fixed structures.
As of December 31, 1995, the Company leased approximately 1,700 antenna sites
in the United States in connection with its one-way messaging operations and
approximately 3,000 antenna sites for the SkyTel 2-Way(TM) network for monthly
rental rates ranging from approximately $50 to $1,400, which antenna leases are
for various terms.
ITEM 3. LEGAL PROCEEDINGS
On January 6, 1994, three stockholders of the Company filed civil complaints
in the United States District Court for the Southern District of Mississippi:
Barbara E. Cheles v. John N. Palmer, Jai P. Bhagat, J. Robert Fugate and Mobile
Telecommunication Technologies, Corp., Civil Action No. 3:94CV8WS; Wade Jackson
v. Mobile Telecommunication Technologies Corp., John N. Palmer, J. Robert
Fugate and David W. Garrison, Civil Action No. 3:94CV7BN; and Alan Levin,
Trustee for Winslow's Pharmacy, Inc. Profit Sharing Plan v. Mobile
Telecommunication Technologies Corp., John N. Palmer and J. Robert Fugate,
Civil Action No. 3:94CV6LN. On January 10 and 13, 1994, two additional civil
complaints were filed in the same court: Rochelle Agris and Richard Beladino v.
John N. Palmer, Jai P. Bhagat, J. Robert Fugate and Mobile Telecommunication
Technologies, Corp., Civil Action No. 3:94CV16LN, and Eugene S. Conn v. Mobile
Telecommunication Technologies Corp., John N. Palmer and J. Robert Fugate,
Civil Action No. 3:94CV22BRN. These complaints alleged, generally, that the
defendants violated Section 10(b) of the Securities Exchange Act of 1934 (the
"Exchange Act") and Rule 10b-5 thereunder and Section 20 of the Exchange Act
because of certain alleged material misstatements and omissions in the
Company's filings and public statements and that, as a result, the market price
of the Company's common stock was maintained at an artificially high level.
The plaintiffs also asserted claims based upon common law theories of fraud and
negligent misrepresentation. After the United States District Court for the
Southern District of Mississippi consolidated these actions on April 8, 1994,
the plaintiffs filed a Consolidated Amended Complaint on May 11, 1994. The
plaintiffs sought unspecified damages and to have the consolidated cases
certified as a class action. The defendants moved to dismiss the Consolidated
Amended Complaint on June 20, 1994, and the parties completed briefing that
motion on September 2, 1994. On November 7, 1995, the Court granted the
Defendants' Motion to Dismiss in its entirety. On February 5, 1996, the
plaintiffs filed a notice of appeal but agreed to withdraw the appeal
immediately thereafter without any settlement payment. On February 6, 1996, the
United States District Court for the Southern District of Mississippi entered
an Order of Dismissal thereby terminating all of these stockholder suits.
Except as set forth above, there are no material legal or regulatory
proceedings involving the Company except license applications and renewals and
other regulatory proceedings incident to the Company's business. See "Item 1.
Business--SkyTel 2-Way(TM)--PCS Licenses."
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
EXECUTIVE OFFICERS OF THE REGISTRANT
Set forth below is information concerning the executive officers of the
Company as of March 27, 1996. Mr. John N. Palmer serves as Chairman of the
Board, and currently serves as acting Chief Executive Officer, of the Company
for a seven-year term pursuant to an employment agreement with the Company that
commenced as of April 4, 1989. The Company has entered into an employment
agreement with Mr. Jai P. Bhagat which provides for Mr. Bhagat's employment as
Vice Chairman of the Company for a five-year term that commenced as of April 4,
1989.
16
<PAGE>
The Company has also entered into employment agreements with Messrs. Leonard G.
Kriss, John E. Welsh III and Calvin C. LaRoche that provide for their
employment as officers of the Company for two-year terms that commenced as of
February 1, 1993, December 13, 1992 and June 1, 1994, respectively. Each
employment agreement between the Company and its officers described above
provides for a one-year automatic extension of the term at the end of each year
during the term unless the Company or such officer elects not to have the term
so extended.
Jai P. Bhagat, age 49, has served as Vice Chairman of the Company since May
1995 and as Executive Vice President and a Director since October 1988. Mr.
Bhagat has also served as President and Chief Executive Officer of Destineer
since May 1994 and as President and Chief Executive Office of SkyTel since May
1995. Mr. Bhagat is a past Chairman, and currently serves on the Boards of
Directors of AMSC and the Personal Communications Industry Association, a
national association representing the mobile communications industry.
Thomas R. Ferguson, age 37, has served as Treasurer of the Company since May
1994. Mr. Ferguson, a certified public accountant, served as Director of
Finance of the Company from August 1991 to May 1994. Prior to joining Mtel, he
served as Controller for Gulf States Canners, Inc.
Masood Garahi, age 36, has served as Vice President and Chief Technology
Officer of the Company since May 1994. Mr. Garahi has served in various
capacities with subsidiaries of the Company since June 1989.
Leonard G. Kriss, age 46, has served as Senior Vice President, General
Counsel and Secretary of the Company since February 1993, and currently serves
on the Board of Directors of AMSC. Prior to joining the Company, Mr. Kriss was
a practicing corporate attorney and a partner in the law firm of Jones, Day,
Reavis & Pogue which serves as outside legal counsel for the Company with
respect to certain matters.
Calvin C. LaRoche, age 50, has served as President and Chief Executive
Officer of Mtel International since June 1994. Prior to joining Mtel
International, Mr. LaRoche was employed by International Business Machines
Corporation for 24 years, most recently as Director of Strategic Development.
Elizabeth Vickers McCullouch, age 51, has served as Vice President,
Controller and Assistant Secretary of the Company since October 1988.
Ernest A. Oswalt, age 57, has served as Vice President of the Company since
October 1988.
John N. Palmer, age 61, has served as the Chairman of the Board of Directors
of the Company since October 1988, acting Chief Executive Officer of the
Company since January 4, 1996 and Chief Executive Officer of the Company
from October 1988 to May 1995. Mr. Palmer previously served as Chairman
of the Board, President and Chief Executive Officer of MCCA from 1973
to April 1989.
Robert T. Pike, age 49, has served as Senior Vice President of Human
Resources of the Company since October 1995. Prior to joining Mtel, Mr. Pike
was employed for approximately six years by MCI both as a Director and Vice
President of Human Resources.
John E. Welsh III, age 45, has served as Vice Chairman of the Company since
May 1995, acting Chief Financial Officer of the Company since February
1996, Managing Director of the Company since December 1992 and as a Director of
the Company since September 1992. Mr. Welsh was a principal in
Seaport Capital, Inc., a financial advisory and merchant banking firm, from
January 1992 to December 31, 1994. From 1983 through December 1991,
Mr. Welsh was a Managing Director of the investment banking group of
Prudential Securities, Inc.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Common Stock of the Company is traded in the over-the-counter market
and quoted on the Nasdaq National Market System under the symbol MTEL. As of
March 1, 1996, the Common Stock was held by approximately 3,925 holders of
record. The table below sets forth the reported high and low sales prices for
the Common Stock on the Nasdaq National Market System for the years ended
December 31, 1994 and 1995. This information does not include retail mark-ups,
mark-downs or commissions.
17
<PAGE>
<TABLE>
<CAPTION>
1994 1995
--------- ----------
High Low High Low
---- --------- ------- -------
<S> <C> <C> <C> <C>
First Quarter... $ 26 1/8 / $ 15 7/8 $23 3/8 / $18 3/4
Second Quarter.. 19 / 16 7/8 27 7/8 / 21 7/8
Third Quarter... 23 3/4 / 17 3/8 35 5/8 / 26 3/8
Fourth Quarter.. 22 3/16 / 14 13/16 34 5/16 / 19 5/8
</TABLE>
The Company has never paid dividends on the Common Stock and does not
intend to pay dividends on the Common Stock in the foreseeable future. The
Board of Directors of the Company intends to retain any earnings to provide
funds for the operation and expansion of the Company's businesses. Certain
covenants in SkyTel's bank credit facility, as amended, and the indenture
relating to the 13.5% Senior Notes due 2002 prohibit the payment of cash
dividends on the Common Stock. See "Item 7. Management's Discussion and
Analysis of Financial Condition and Results of Operations - Sources of Funds."
ITEM 6. SELECTED FINANCIAL DATA
The following table summarizes selected financial data for the Company and
should be read in conjunction with the Consolidated Financial Statements,
related notes and other financial information appearing elsewhere in this
Annual Report on Form 10-K. The consolidated statement of operations data and
consolidated balance sheet data for each of the five years in the period ended
December 31, 1995 have been derived from the Consolidated Financial Statements
for those periods. The Company's Consolidated Financial Statements for each of
the five years in the period ended December 31, 1995 have been audited by
Arthur Andersen LLP, independent public accountants, whose report with respect
to the Consolidated Financial Statements as of December 31, 1994 and 1995 and
for each of the years in the three-year period ended December 31, 1995 appears
elsewhere in this Annual Report on Form 10-K. See "Item 7. Management's
Discussion and Analysis of Financial Condition and Results of Operations."
18
<PAGE>
<TABLE>
<CAPTION>
Year Ended December 31,
---------------------------------------------------------
1991 1992 1993 1994 1995
----------------------------------------------------------
(Dollars in thousands, except per share data)
CONSOLIDATED STATEMENT OF OPERATIONS DATA:/1/
<S> <C> <C> <C> <C> <C>
Revenues:
SkyTel One-Way................................. $ 72,719 $ 98,816 $131,595 $150,455 $225,146
SkyTel 2-Way(TM)............................... - - - - 1,213
International/2/............................... 14,293 13,411 80 2,485 10,121
Other.......................................... 15,530 13,837 12,790 10,330 9,511
-------- -------- -------- -------- --------
Total revenues................................. 102,542 126,064 144,465 163,270 245,991
-------- -------- -------- -------- --------
Operating income (loss)........................ (7,530) 3,938 13,547 (24,579) (58,422)
Interest income (expense), net................. (2,965) (2,922) (2,691) 1,758 1,180
Income (loss) before income taxes and
equity income (loss)........................... (7,170) 2,694 14,949 (21,893) (53,230)
Equity in income (losses) of investments/2/.... (2,075) (5,418) 2,705 3,849 946
-------- -------- -------- -------- --------
Net income (loss).............................. $ (9,912) $(2,798) $16,963 $(19,846) $ (52,027)
Preferred dividend requirement................. -- -- (1,697) (8,438) (8,438)
-------- -------- -------- -------- --------
Net income (loss) available to common
stockholders.................................. $ (9,912) $ (2,798) $ 15,266 $(28,284) $ (60,465)
======== ======== ======== ======== =========
Income (loss) per common share................ $ (0.31) $ (0.08) $0.39 $(0.77) $ (1.19)
======== ======== ======== ======== =========
</TABLE>
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEET DATA:/1/
<S> <C> <C> <C> <C> <C>
Working capital............................... $ (2,047) $ 53,496 $218,410 $185,551 $ (29,446)
Total assets.................................. 132,491 194,434 406,052 715,471 851,414
Long-term debt................................ 37,857 99,902 99,398 273,629 333,259
Total stockholders' investment................ 74,226 75,677 278,717 366,077 423,540
Total common shares outstanding............... 33,840 34,780 35,818 45,647 54,135
</TABLE>
------
(1) The 1991 through 1994 amounts have been restated to reflect the February
1995 acquisition of USPC which was accounted for as a pooling of
interests.
(2) Revenues-International for the years ended 1991 and 1992 include only the
Company's United Kingdom operations. On November 6, 1992, the Company
combined its messaging operations in the United Kingdom with the
operations of MPL and, as a result, exchanged all of the outstanding
shares of its messaging subsidiary for 29% of the outstanding shares of
MPL. From the date of the transaction, the Company has reported its share
of the profits and losses of MPL under the equity method of accounting.
Revenues-International in 1994 and 1995 include the revenues from the
Company's 100%-owned subsidiary in Argentina and its 98%-owned subsidiary
in Colombia which commenced commercial operation in June 1994. Revenues-
International in 1995 also include the revenues from the Company's 100%-
owned subsidiary in Hong Kong which commenced commercial operation in June
1995 and its 90%-owned subsidiary in Uruguay which was acquired in
September 1995.
19
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following is a discussion of the consolidated financial condition and
results of operations of Mtel for the three years ended December 31, 1995 and
certain factors that will affect Mtel's financial condition. Mtel's principal
operations include one-way messaging services in the United States, two-way
messaging services on the SkyTel 2-Way(TM) network and international one-way
messaging operations. See Note 1 of Notes to Consolidated Financial Statements
for a discussion of certain risks and uncertainties involving the Company's
ability to generate future positive operating cash flows and operating income,
the March 1996 amendment of the bank credit facility and the impact of certain
events and transactions required by such amendment on the availability of the
capital resources needed by the Company to complete its business plans.
In January 1994, the Company implemented a strategy intended to accelerate
subscriber growth in the one-way messaging business through price reductions,
the expansion of marketing efforts and other operational initiatives. These
initiatives have resulted in a 103% and 57% increase in one-way messaging
units in service and a 50% and 14% increase in revenues from one-way messaging
operations in 1995 and 1994, respectively. Although the near-term effect of
the strategic plan was to reduce cash flows from one-way operations in 1994
due to the reduction of average revenues per unit and the increase in selling,
general and administrative expenses, cash flows from one-way operations
increased 282% in 1995. In addition, cash flows from one-way messaging
operations as a percentage of revenues increased to 21.9% in 1995 from 8.6% in
1994, and 28.7% in the fourth quarter of 1995 as compared to 2.4% in the
fourth quarter of 1994.
On September 19, 1995, the Company launched commercial service on the SkyTel
2-Way(TM) network. Prior to September 19, 1995, substantially all of the costs
of developing and constructing the SkyTel 2-Way(TM) network were capitalized
in accordance with generally accepted accounting principles. Subsequent to
September 19, 1995, the Company has expensed all costs associated with the
operation of the SkyTel 2-Way(TM) network, has begun to depreciate and
amortize the infrastructure, spectrum costs and other capitalized costs and
has discontinued the capitalization of interest cost associated with
borrowings used to fund the construction and development of the SkyTel 2-
Way(TM) network. The Company expects to incur net losses on a consolidated
basis in 1996 and 1997, primarily as a result of start-up losses from and
depreciation and amortization related to SkyTel 2-Way(TM) operations. See
"Results of Operations - Expenses - Selling, General and Administrative
Expenses."
Certain statements set forth in Management's Discussion and Analysis of
Financial Condition and Results of Operations constitute forward looking
statements within the meaning of Section 27A of the Securities Act of 1993, as
amended, and are subject to the safe harbor created by such section. When
appropriate, certain factors that could cause results to differ materially
from those projected in the forward looking statements are enumerated. This
Management's Discussion and Analysis of Financial Condition and Results of
Operations should be read in conjunction with the Company's consolidated
financial statements and the notes thereto.
RESULTS OF OPERATIONS
REVENUES
Revenues on a consolidated basis increased 51% in 1995 as compared to 1994
and 13% in 1994 as compared to 1993, with revenues from one-way messaging
operations increasing 50% in 1995 as compared to 1994 and 14% in 1994 as
compared to 1993. These increases in revenues were attributable to increases
in the number of one-way paging and voice messaging units in service which
increased 103% in 1995 as compared to 1994 and 57% in 1994 as compared to
1993. The Company believes that these increases in one-way units in service
and revenues resulted from the implementation of the strategic plan in January
1994 as well as the increased productivity of SkyTel's expanded direct sales
force and alternate distribution channels. In addition, MCI began to resell
SkyTel's one-way messaging services in the first quarter of 1995 to its
business customers under its own brand name and accounted for approximately
22% of total net one-way paging units sold during 1995. Revenues from
subscribers on the SkyTel 2-Way(TM) network, which commenced operation on
September 19, 1995 were not material in 1995.
Average revenue per one-way messaging unit declined from $30.38 in 1994 to
$27.92 in 1995 as a result of product mix, which included a greater percentage
of local and regional services, and discounts granted to major corporate
accounts and resellers, including MCI. The Company expects to experience
further declines in average revenues per one-way
20
<PAGE>
messaging unit in 1996 and future periods as a result of an increasing
percentage of local and regional services and increasing sales by resellers.
As a part of the strategic plan announced in 1994, SkyTel began to offer a
bundled package of nationwide and local messaging services to Fortune 1000
companies in order to further penetrate the national accounts market and to
respond to customer requests for single source solutions to their messaging
needs. In order to facilitate this strategy, on February 17, 1995, the
Company acquired USPC in a merger in which each share of USPC common stock was
exchanged for .415 of a share of Mtel Common Stock, or an aggregate of
approximately 1.6 million shares of Mtel Common Stock having a value of
approximately $30.5 million. USPC provides local and regional messaging
services through contractual arrangements with substantially all of the
commercial mobile radio service providers in the United States to a customer
base comprised primarily of corporations requiring service from multiple
providers in multiple locations. USPC provides customized, value-added
services such as a single point of contact for all sales, service and support
nationwide, optimum selection of radio frequency coverage to maximize service
for each customer's specific area of travel and service, centralized and
customized nationwide billing, computerized maintenance and service reporting
and computerized automatic messaging for centralized dispatch. The acquisition
of USPC has been accounted for as a pooling of interests and, accordingly, the
financial statements of Mtel have been restated to include the results of USPC
for all periods presented.
Mtel's consolidated revenues in 1995 and 1994 included international
revenues recorded by the Company's wholly-owned subsidiary in Argentina and
98%-owned subsidiary in Colombia that commenced commercial nationwide and
international one-way messaging operations on the 931 MHz frequency in April
1994 and June 1994, respectively. In addition, consolidated revenues in 1995
included revenues recorded by the Company's wholly-owned subsidiary in Hong
Kong which commenced commercial operation in June 1995 and by the Company's
90%-owned subsidiary in Uruguay which was acquired in September 1995.
Consolidated revenues from these operations in 1995 were $8.6 million as
compared to $1.4 million in 1994.
In 1995 and 1994, revenues from one-way messaging operations in the United
States provided approximately 92% of Mtel's consolidated revenues as compared
to 91% in 1993, and revenues from international messaging operations provided
approximately 4% of Mtel's consolidated revenues in 1995 as compared to 2% in
1994. Other Mtel operations provided approximately 4% of the Company's
consolidated revenues in 1995 as compared to 6% in 1994 and 9% of revenues in
1993.
EXPENSES
Expenses include operating expenses, selling, general and administrative
expenses and depreciation and amortization.
Operating Expenses. Operating expenses primarily consisted of salaries,
telephone costs and transmitter and receiver site rentals associated with the
Company's one-way and two-way messaging operations in the United States and
international messaging operations, as well as expenses associated with the
maintenance of the Company's operating equipment and facilities. Operating
expenses on a consolidated basis increased 59% in 1995 as compared to 1994 and
34% in 1994 as compared to 1993. These increases primarily reflect increased
telephone and system costs associated with the increasing one-way messaging
subscriber base and the inclusion of operating expenses from the Company's
international messaging operations in Argentina and Colombia for a full year.
In addition, the increase in consolidated operating expenses in 1995 reflected
approximately $5.5 million of operating expenses attributable to the SkyTel 2-
Way(TM) network as well as operating expenses related to the international
operations in Hong Kong. As a percentage of revenues, operating expenses on a
consolidated basis increased to 28% in 1995 as compared to 27% in 1994 and 23%
in 1993.
Operating expenses related to the one-way messaging system increased 46% in
1995 as compared to 1994 and 37% in 1994 as compared to 1993, and as a
percentage of revenues was 24% in 1995 as compared to 25% in 1994 and 21% in
1993. Operating expenses of the Company's international subsidiaries increased
192% in 1995 as compared to 1994, but decreased as a percentage of revenues to
50% in 1995 as compared to 70% in 1994.
21
<PAGE>
Operating expenses during 1996 and future periods will significantly
increase because of the inclusion of operating expenses related to the SkyTel
2-Way(TM) network for a full year which, because of system design and
functionality, have significantly higher fixed operating expenses than the
Company's one-way messaging operations. In addition, the Company expects to
incur increased operating expenses during 1996 and future periods as a result
of the continuing expansion of the one-way messaging subscriber base and the
addition of transmission facilities in the second half of 1996 in certain
major metropolitan areas in the United States to supplement the capacity of
the one-way messaging network in the United States.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses include marketing and advertising costs related to
domestic and international messaging operations, personnel costs associated
with SkyTel's direct sales and marketing staff and customer support operations
and corporate overhead costs, primarily salaries and administrative expenses.
On a consolidated basis, these expenses increased 43% in 1995 as compared to
1994 and 51% in 1994 as compared to 1993. The increase in 1995 primarily
reflects additional costs associated with customer support operations, such as
customer service, operator dispatch billing and collections which resulted
from the continuing increase in units in service on the SkyTel one-way
messaging system in the United States and the one-way resale efforts of MCI,
and selling expenses incurred in the fourth quarter of 1995 relating to the
SkyTel 2-Way(TM) network. These increases also reflect costs associated with
the expansion of SkyTel's direct sales force during 1994 and 1995 as part of
the implementation of the strategic plan announced in January 1994 and the
inclusion of selling, general and administrative expenses relating to the
Company's messaging operations in Argentina, Colombia and Hong Kong. As a
percentage of revenues, selling, general and administrative expenses on a
consolidated basis was 71% in 1995 as compared to 75% in 1994 and 56% in 1993.
Selling, general and administrative expenses related to one-way messaging
operations increased 21% in 1995 as compared to 1994 and 45.1% in 1994 as
compared to 1993. International selling, general and administrative expenses
increased 113% in 1995 as compared to 1994.
The Company expects selling, general and administrative expenses related to
its one-way messaging business to increase in 1996 as a result of the
continuing increase in one-way messaging units in service. In addition,
selling, general and administrative expenses on a consolidated basis will
increase significantly in 1996 and future periods as a result of the inclusion
of such expenses related to the SkyTel 2-Way(TM) network and the Company's
international operations in Hong Kong and Uruguay for a full year.
In 1995, the Company also incurred one-time costs in the amount of
approximately $18.3 million that consisted primarily of promotional and
marketing costs related to the launch of the SkyTel 2-Way(TM) network. Such
costs were incurred in addition to the advertising and marketing costs
associated with on-going sales and marketing activities and will not recur.
Depreciation and Amortization Expenses. Depreciation and amortization
expenses increased 90% in 1995 as compared to 1994 and 26% in 1994 as compared
to 1993. The increase in 1995 is attributable, in large part, to depreciation
of one-way messaging units and depreciation and amortization of the network
infrastructure, spectrum costs and other capitalized costs related to the
SkyTel 2-Way(TM) network subsequent to commercial launch on September 19,
1995. Depreciation and amortization expenses in 1995 also reflect the
consolidation of messaging operations in Argentina and Colombia for a full
year and the consolidation of operations in Hong Kong in the second half of
1995. The increase in 1994 primarily reflects the depreciation of property and
equipment associated with a second 931 MHz frequency for one-way messaging
operations in the United States. These expenses will continue to increase in
1996 and future periods as a result of the inclusion of depreciation and
amortization of network infrastructure, spectrum costs and other capitalized
costs related to the SkyTel 2-Way(TM) network for a full year and the
construction of additional transmission facilities on a third frequency in
certain major metropolitan areas to supplement the Company's one-way messaging
capacity which is scheduled to commence in the second half of 1996. As a
percentage of revenues, depreciation and amortization expenses on a
consolidated basis increased to 17% in 1995 as compared to 14% in 1994 and 12%
in 1993.
OPERATING INCOME (LOSS)
The Company reported a consolidated operating loss of $58.4 million in 1995
as compared to an operating loss of $24.6 million in 1994 and operating income
of $13.5 million in 1993. One-way messaging operations recorded operating
income
22
<PAGE>
of $21.2 million in 1995 as compared to an operating loss of $4.6 million in
1994 and operating income of $21.8 million in 1993. SkyTel 2-Way(TM)
operations recorded an operating loss of $54.3 million in 1995, and
international operations recorded an operating loss of $21.4 million in 1995
and $10.8 million in 1994. The 1995 consolidated operating loss also reflects
one-time costs of $18.3 million, consisting primarily of promotional and
marketing expenses incurred in connection with the commercial launch of the
SkyTel 2-Way(TM) network. The Company expects to report operating losses on a
consolidated basis in 1996 and 1997 as a result of the inclusion of operating
losses related to the SkyTel 2-Way(TM) operations and to the international
messaging operations in Hong Kong and Uruguay for a full year. However, the
Company expects SkyTel's one-way messaging business to continue to report
operating income in 1996 and future periods as a result of continued growth in
units in service.
INTEREST EXPENSE AND INTEREST INCOME
Interest expense increased 171% in 1995 as compared to 1994 and decreased
24% in 1994 as compared to 1993. Interest expense in 1995 primarily reflects
interest accrued on $265 million principal amount of 13.5% Senior Notes due
2002 (the "Senior Notes") issued in December 1994, the proceeds of which
(after funding an escrow account in the amount of $93.6 million to provide for
the payment of interest on the Senior Notes for the first three years) were
used primarily to fund equipment purchases and development and construction
costs related to the SkyTel 2-Way(TM) network. A significant portion of
interest costs related to the SkyTel 2-Way(TM) network incurred prior to
September 19, 1995 was capitalized by the Company. Interest expense in 1994
and 1993 primarily reflects interest accrued on the 6.75% Convertible
Subordinated Debentures issued by the Company in May 1992 (the "Debentures"),
substantially all of which were converted into shares of common stock of the
Company in December 1994. Although total interest costs in 1994 and 1993
remained relatively constant, the decrease in interest expense in 1994
primarily reflects the capitalization of that portion of interest attributable
to the PCS licenses acquired and the development of the SkyTel 2-Way(TM)
network. See Note 2 of Notes to Consolidated Financial Statements.
In December 1995, the Company established a $250 million secured revolving
credit facility with a syndicate of banks. At December 31, 1995, the Company
had borrowings of $65.5 million outstanding under this credit facility.
Interest expense in 1996 will increase as the result of additional borrowings
under the revolving credit facility. See "Liquidity and Capital Resources -
Sources of Funds" for a discussion of certain covenant violations and
amendments to the bank loan agreement.
In accordance with Statement of Financial Accounting Standards ("SFAS") No.
34, the Company capitalizes interest expense related to equity investments and
the purchase of certain assets which constitute activities preliminary to the
commencement of the investee's or purchaser's planned principal operations.
The Company capitalized $25.9 million, $2.9 million and $1.7 million in
interest costs in 1995, 1994 and 1993, respectively. In 1995, capitalized
interest of $22.9 million related to costs associated with the
SkyTel 2-Way(TM) network.
Interest expense in 1995, 1994 and 1993 was offset by interest income of
$12.9 million, $6.1 million and $3.0 million, respectively. Interest income in
1995 represented income generated by the investment of the net proceeds from
the sale of the Senior Notes not immediately applied by the Company, including
the amount held in escrow for the payment of interest on the Senior Notes. In
1994, interest income was primarily attributable to income generated by the
investment of the net proceeds from the sale of the Preferred Stock completed
in October 1993. See "Liquidity and Capital Resources - Sources of Funds."
PROVISION FOR INCOME TAXES
Mtel reported net losses during each of the years ended December 31, 1995
and 1994 and, accordingly, no provision for federal income taxes has been made
for such periods. Although the Company reported net income for the year ended
December 31, 1993, the Company made no provision for federal income taxes
because of accumulated net operating loss carryforwards from prior years. The
Company's provision for income taxes reflects state and local income taxes.
PREFERRED STOCK DIVIDENDS
The Company accrued an aggregate of approximately $8.4 million in each of
1995 and 1994 and $1.7 million in 1993 representing dividends on its Preferred
Stock issued in October 1993. Although dividends on the Preferred Stock are
not treated as an expense on
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the Company's consolidated statements of operations and, therefore, do not
affect reported net income, the amount of such dividends is deducted from net
income for the purpose of determining net income (loss) per common share.
EQUITY INCOME FROM INVESTMENTS
The Company generally records its share of operating results of
international joint ventures in which it holds an ownership interest of 20% to
50% using the equity method of accounting. The Company recorded equity income
attributable to such international joint ventures of $1.2 million in 1995,
$3.8 million in 1994 and $2.7 million in 1993. Equity income attributable to
the Company's 49% equity interest in Comunicaciones Mtel, S.A. de C.V.
("CMtel") which operates in Mexico was $1.1 million, $1.6 million and $1.2
million for the years ended December 31, 1995, 1994 and 1993, respectively,
and equity income attributable to the Company's 29% equity interest in MPL
which operates in the United Kingdom was $2.6 million, $2.7 million and $1.7
million, respectively, for such periods. This equity income was offset by
start-up equity losses from the Company's other international operations. The
Company generally accounts for its investments in international joint ventures
in which it holds less than a 20% equity interest using the cost method of
accounting. See "Liquidity and Capital Resources - Sources of Funds - Asset
Dispositions."
NET INCOME (LOSS)
The Company reported net losses of $52.0 million in 1995 as compared to net
losses of $19.8 million in 1994 and net income of $17.0 million in 1993,
which, when combined with the effect of the dividends paid on the Preferred
Stock, resulted in a net loss per common share of $1.19 in 1995 as compared to
net loss per common share of $0.77 in 1994 and net income per common share of
$0.39 in 1993. Net losses in 1995 were offset by a gain of $2.5 million
related to the sale of a portion of the Company's investment in AMSC. Net
losses in 1994 included a non-recurring charge of $3.1 million related to the
conversion offer for the Company's Debentures which was completed in December
1994 and were offset by a non-recurring gain of $4.7 million from the sale of
the Company's digital microwave system that operated in the Los Angeles area
and two specialized mobile radio service operations. Net income in 1993
included a non-recurring gain of $4.0 million from the sale of the Company's
equity interest in a joint venture in Thailand which did not operate on the
931 MHz frequency and was not deemed to be a strategic investment. Revenues
from the assets and operations sold in 1993, 1994 and 1995 were not material.
See "Liquidity and Capital Resources."
The Company expects to incur net losses in 1996 and 1997 as a result of
continuing start-up losses from its SkyTel 2-Way(TM) and international
operations.
CURRENCY EXCHANGE RATES
As the Company increases its level of international investment and the
number of countries outside the United States in which it operates, the
Company's exposure to adverse trends in exchange rates relative to local
currencies increases. Management periodically reviews its exchange rate risks
and takes certain actions to reduce such risks. The Company has not
previously used derivative financial instruments to hedge its foreign currency
exchange rate risks due, in part, to the lack of availability of appropriate
hedging instruments in most of the countries in which Mtel has investments.
LIQUIDITY AND CAPITAL RESOURCES
USES OF FUNDS
One-Way Messaging. Mtel has required significant capital during the three-
year period ended December 31, 1995 to fund the development and expansion of
the SkyTel one-way messaging system in the United States. The Company
expended $90.1 million, $35.5 million and $35.4 million in 1995, 1994 and
1993, respectively, for these purposes. Approximately $59.2 million and $16.3
million of these capital expenditures in 1995 and 1994, respectively, related
to the procurement of
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messaging units to support SkyTel's increasing one-way subscriber base. Pager
procurement in 1995 also included an inventory of one-way units to support the
resale efforts of MCI and additional high speed Flex pagers which were
exchanged for slower-speed POCSAG units then in service on the one-way
messaging system to alleviate capacity constraints. The Flex/POCSAG exchange
program, coupled with slower than expected returns of discontinued one-way
pagers initially placed in service by MCI, has resulted in a larger than
expected pager inventory at December 31, 1995. The Company intends to
redeploy this inventory through sales to the Company's international
subsidiaries or joint ventures, or through sales to wholesale distributors of
pagers and through USPC. In 1993, the Company incurred capital expenditures
of $15.2 million in connection with the construction of facilities to utilize
a second 931 MHz frequency which significantly increased SkyTel's one-way
system capacity in the United States.
As of December 31, 1995, the Company had no formal commitments for capital
expenditures related to the SkyTel one-way messaging system, but management
anticipates that capital expenditures in 1996 will be approximately $101.0
million. A significant portion of these capital expenditures will be used for
the procurement of one-way messaging units, including the continuation of the
Flex/POCSAG pager exchange program through the first half of 1996 to achieve
further improvement in the capacity of its one-way messaging system. In
addition, in the second half of 1996, the Company intends to construct
additional transmission facilities on a third frequency in certain major
metropolitan areas to supplement its one-way messaging capacity and estimates
that the cost associated with such construction will be approximately $15.0
million.
SkyTel 2-Way(TM). In September 1995, the Company commenced commercial
operation of its SkyTel 2-Way(TM) network. The Company incurred capital
expenditures for equipment, development and construction costs related to the
SkyTel 2-Way(TM) network of $162.3 million, $49.3 million and $13.0 million in
the years ended December 31, 1995, 1994 and 1993, respectively. Development
costs in 1995 included approximately $7.3 million incurred subsequent to
commercial launch to optimize and improve the performance and reliability of
the SkyTel 2-Way(TM) network. The Company also expended $14.7 million in 1995
to purchase two-way personal messaging units ("PMUs"). In addition to the
equipment, development and construction costs described above, the Company
incurred costs of $127.5 million for the purchase of additional nationwide
narrowband PCS spectrum for its SkyTel 2-Way(TM) network in an FCC auction
held in July 1994.
In 1996, the Company intends to improve and expand the coverage of the
SkyTel 2-Way(TM) network in certain major metropolitan areas and to continue
its efforts to optimize and improve the performance and reliability of the
SkyTel 2-Way(TM) network. The Company anticipates that capital expenditures
for these purposes in 1996 will total approximately $43.0 million. In
addition, the Company expects to incur capital expenditures of approximately
$14.0 million for the procurement of PMUs in 1996. The Company has entered
into a supply and development agreement with Wireless Access pursuant to which
Wireless Access is designing and manufacturing PMUs for the SkyTel 2-Way(TM)
network. The Company's total commitment under this agreement with Wireless
Access is $18.0 million, with approximately 50% of this amount expected to be
payable in the first half of 1996 and the remainder contingent upon future
product development by Wireless Access. The Company expects that SkyTel 2-
Way(TM) operations will generate operating losses through 1997. See "Business
- SkyTel 2-Way(TM)."
The Company's initial nationwide narrowband PCS license was granted by the
FCC pursuant to a Pioneer's Preference and such grant was conditioned by the
FCC upon the payment by Mtel of a license fee in the amount of approximately
$33.0 million. Mtel filed an appeal challenging the condition requiring
payment for this license, and in March 1996 the United States Court of Appeals
for the D.C. Circuit issued a decision upholding the FCC's authority under the
Communications Act to impose such a fee. However, the Court remanded the
matter to the FCC for consideration of the propriety of requiring the payment
of such a fee in light of Mtel's reliance on the FCC's public pronouncements
that no such fee would be imposed and the granting by the FCC of other paging
licenses without the imposition of any fee. Payment for this license will not
be required to be made unless and until such litigation is definitively
resolved adversely to Mtel. The SkyTel 2-Way network does not currently
operate on the frequency covered by this license.
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International. The Company required approximately $23.2 million and $14.1
million in 1995 and 1994, respectively, to fund the capital expenditures and
initial working capital requirements of its operations in Argentina, Colombia,
Hong Kong and Uruguay where the licenses are held by 100%, 98%, 100% and 90%
owned subsidiaries of the Company, respectively. The Company also provided
capital of approximately $5.6 million and $6.2 million in 1995 and 1994,
respectively, to fund its proportionate share of capital required by the
international joint ventures in which it holds a 50% or less equity interest.
This capital was used to fund capital expenditures and initial working capital
requirements of joint ventures in Brazil, Indonesia, Malaysia, Mexico, Peru
and certain other countries.
In 1996, the Company anticipates that it will require approximately $24.4
million to fund the capital expenditures and working capital requirements of
its international subsidiaries and capital contributions to its international
joint ventures. However, capital requirements related to its international
operations may vary and will depend upon (i) general trends in the one-way
messaging industry in each particular country; (ii) exchange rates of each
such country's currency; and (iii) the success achieved by each of the
Company's international subsidiaries and joint ventures. In addition, the
Company cannot predict with certainty the timing or amount of any additional
investment that may be required in connection with further international
development efforts since this will be dependent upon the timing of foreign
government regulatory decisions, the capital structure of any new
international operations or investments and related funding obligations, and
the rate of further development of international messaging operations.
Earnings Before Fixed Charges and Preferred Cash Dividends. Mtel's fixed
charges and preferred cash dividends exceeded its earnings before fixed
charges and preferred cash dividends by approximately $87.6 million and $33.2
million for the years ended December 31, 1995 and 1994, respectively. The
Company's earnings exceeded fixed charges and preferred cash dividends by
approximately $11.6 million for the year ended December 31, 1993. It is
expected that Mtel's fixed charges and preferred cash dividends will continue
to exceed its earnings before fixed charges and preferred cash dividends at
least through the end of 1996.
SOURCES OF FUNDS
The Company has funded a substantial portion of its capital requirements
during the three years ended December 31, 1995 with the net proceeds from the
sale of the Senior Notes and the Preferred Stock, borrowings under SkyTel's
bank credit facilities, net cash provided by operations and, to a lesser
extent, the proceeds from the sale of non-strategic assets. For the years
ended December 31, 1995, 1994, and 1993, respectively, the Company had net
cash flows from operations of $10.6 million, $2.2 million and $30.7 million.
While revenues continued to increase during each of the years ended December
31, 1995, 1994 and 1993, price reductions for one-way messaging services,
increased selling, general and administrative expenses associated with one-way
messaging services and start-up losses associated with the SkyTel 2-Way(TM)
network and international operations in Argentina, Colombia, Hong Kong and
Uruguay reduced operating cash flows in 1995 and 1994.
The Company intends to fund its capital requirements in 1996 and 1997 from
borrowings under SkyTel's bank credit facility entered into in December 1995,
as amended on March 29, 1996, the proceeds from the sale of the Company's PIK
Preferred Stock (as defined below), net cash provided by operations and the
proceeds from the sale of non-strategic assets. In addition, the Company
intends to fund a substantial portion of its international capital
requirements in Latin America and Asia through the sale of equity securities
in subsidiaries formed for the purpose of holding the Company's investments in
operations in these geographic areas, although the Company currently has no
agreements with respect to any such equity sales and there can be no assurance
that any such equity sales will be completed. The amendments to the SkyTel
bank loan agreement, executed in March 1996, requires the Company to complete
the sale of equity securities in each of these subsidiaries by prescribed
dates.
Borrowings under SkyTel's bank credit facility may be limited by
certain covenants contained in the indenture relating to the Senior Notes,
which limit the total indebtedness that may be incurred by the Company
based primarily on the number of one-way and two-way messaging units
placed in service since September 30, 1994. The Company believes that it
may be required to solicit the consent of the holders of the Senior
Notes to amend these covenants in 1996 in order to increase the total
indebtedness authorized under the indenture. If such consents are not
obtained or are delayed, the Company's ability to borrow under SkyTel's
bank credit facility could be limited. Any amendment to the indenture
relating to the Senior Notes will require the consent of the lending banks.
As a result of higher than projected capital expenditures in the
fourth quarter of 1995, primarily related to the purchase of pagers to support
one-way sales, the purchase of Flex pagers to alleviate capacity constraints
on the one-way network and higher than expected development costs associated
with the SkyTel 2-Way (TM) network, SkyTel incurred higher than expected
borrowings under its bank credit facility. The capital expenditures and
resulting borrowings caused SkyTel to be in violation of a capital expenditure
covenant in its bank loan agreement as of December 31, 1995 and a leverage
maintenance covenant during the first quarter of 1996, and resulted in a
temporary suspension of the Company's borrowing availability under the bank
credit facility. On March 29, 1996, the lending banks waived these covenant
violations and agreed to certain amendments to the bank loan agreement to
provide additional operational flexibility under the bank credit facility.
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Set forth below is a description of the major sources of capital available
to the Company for the three years ended December 31, 1995, as well as sources
of capital currently available to the Company. The following summary does not
purport to be complete and is qualified in its entirety by reference to the
various agreements and documents referenced below, each of which (with the
exception of agreements relating to the PIK Preferred Stock) has been filed or
incorporated by reference as an exhibit to this Annual Report on Form 10-K.
Bank Credit Facility. In December 1995, SkyTel established a $250 million
secured revolving credit facility with a syndicate of financial institutions
led by Chemical Bank, as administrative agent, Credit Lyonnais New York Branch
as documentation agent and J.P. Morgan Securities Inc. as co-syndication
agent. As part of the bank credit facility, SkyTel is also provided with
access to letters of credit from Credit Lyonnais New York Branch in an amount
up to $20 million. Borrowings under the credit facility may be used for
capital expenditures, working capital and other general corporate purposes.
The bank loan agreement was amended in March 1996 as described below.
SkyTel may incur borrowings under the credit facility until its maturity
date on December 31, 2001 although total borrowings may also be limited by
certain covenants contained in the indenture relating to the Senior Notes. The
$250 million commitment available to SkyTel for borrowings under the facility
reduces quarterly commencing on March 31, 1999. The quarterly reductions in
the commitment are $22,500,000 for each quarter in 1999, $27,500,000 for each
quarter in 2000 and $12,500,000 for each quarter in 2001. If on the date of
any such reduction in the commitment, outstanding borrowings exceed the
commitment amount (as so reduced), SkyTel is obligated to repay the amount of
such excess. The credit facility also provides that the commitment will be
reduced by 75% of excess cash flow and 50% of the amount of net proceeds from
the issuance of equity by SkyTel, the Company and certain of their
subsidiaries (subject to certain exclusions for specified amounts of net
proceeds from the sale of equity securities of specified subsidiaries and up
to $60 million of the Company's PIK Preferred Stock), 100% of the amount of
net proceeds from the issuance by Mtel of any subordinated debt and the amount
of any net proceeds from the sale of MPL that are not otherwise applied to
capital expenditures, working capital and other corporate purposes of Mtel in
the United States within 265 days of the receipt of such proceeds.
As of December 31, 1995, SkyTel had $65.5 million in borrowings
outstanding under the bank credit facility. Letters of credit in the amount of
$4.8 million have been issued under the credit facility as of December 31,
1995, and the credit available under the facility has been reduced by a
corresponding amount. Borrowings under the bank credit facility bear interest
at the option of SkyTel at (a) the alternate base rate (which is the greater
of Chemical Bank's prime rate, the Federal Funds rate plus 1/2 of 1% or the
base certificate of deposit rate plus 1%) or (b) the London Interbank Offered
Rate ("LIBOR"), in each case plus an additional margin ranging from 1% to 1
1/2% for alternate base rate loans and 2% to 2 1/2% for London Interbank
Offered Rate loans, in each case based upon the ratio of the Company's
consolidated total debt to the combined annualized cash flows of SkyTel and
USPC for the two preceding quarters.
Borrowings are guaranteed by the Company and its subsidiaries that are
incorporated in or operate within the United States. Indebtedness under the
credit facility is secured by a first priority lien on and security interest
in substantially all of the assets of the Company, SkyTel and the subsidiary
guarantors, including pledges of capital stock and notes evidencing
intercompany indebtedness. The loan agreement relating to the bank credit
facility, as amended, contains extensive covenants, including covenants
limiting the incurrence of additional indebtedness and restricting the payment
of cash dividends by both SkyTel and the Company, and requires SkyTel and the
Company to comply with various financial ratios and to achieve certain
operating results during the term of the bank credit facility. In addition,
the loan agreement, as amended, provides that on or after December 30, 1999,
if the terms of the indenture relating to the Senior Notes provides that
SkyTel is no longer permitted to incur indebtedness under the credit facility,
and so long as the Company complies with certain conditions, the obligations
of SkyTel under the bank credit facility shall be assumed by the Company and
SkyTel and each of the subsidiary guarantors shall be released from their
obligation under the bank loan agreement. See Note 6 of Notes to Consolidated
Financial Statements.
Amendment to Bank Credit Facility. On March 29, 1996, the Company and the
various lenders participating in SkyTel's bank credit facility entered into an
amendment to the loan agreement which had the effect of curing the Company's
then existing covenant violations and amending certain covenants to provide
operational flexibility. As a result of the amendment, borrowings under the
credit facility through March 31, 1997 will bear interest at the alternate
base rate plus 1 3/4% of the LIBOR rate plus 2 3/4% through March 31, 1997.
Thereafter, the rate of interest on borrowings will return to the level set
forth in the original loan agreement described above. In addition, the
amendment requires the Company to complete the following transactions on or
before the dates indicated: (i) on or before May 15, 1996, the Company must
complete the sale of such number of shares of PIK Preferred Stock as will
result in the Company receiving gross proceeds of $50.0 million; (ii) on or
before June 30, 1996, the Company must complete its previously planned sales
of its equity interest in MPL and the sale of equity securities of a
subsidiary formed for the purpose of holding the Company's investments in
operations in Latin America and receive certain minimum proceeds; and (iii) on
or before December 31, 1996, the Company must complete its previously planned
sale of equity securities of a subsidiary to be formed for the purpose of
holding the Company's investments in operations in Asia and receive certain
minimum proceeds. Microsoft and Kleiner Perkins Caufield & Byers ("KPCB") have
agreed to purchased $25.0 million and $5.0 million, respectively, of the
Company's PIK Preferred Stock and the Company is
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involved in discussions with other prospective investors regarding the
purchase of an additional $20 to $30 million of PIK Preferred Stock. The
Company has also initiated discussions with prospective purchasers regarding
the transactions described above.
PIK Preferred Stock. In March 1996, Microsoft and KPCB agreed to purchase
30,000 shares of the Company's Cumulative Convertible Accruing PIK Preferred
Stock (the "PIK Preferred Stock") resulting in gross proceeds to the Company
of $30.0 million. The proceeds from the sale of the PIK Preferred Stock will
be used for general corporate purposes including the continued development and
optimization of the SkyTel 2-Way(TM) network. Holders of the PIK Preferred
Stock will be entitled to receive dividends out of funds legally available
therefor at an annual rate of 7.5% (or $75 per share of PIK Preferred Stock),
payable quarterly on each March 15, June 15, September 15 and December 15. The
Company will have the option, however, to pay dividends on the PIK Preferred
Stock through the date, of the fifth anniversary of the date of issuance or
until cash dividends are permitted under the Company's bank credit facility or
the indenture relating to the Senior Notes in the form of additional shares of
PIK Preferred Stock. Dividends on the PIK Preferred Stock will be cumulative
and will accrue from the date of original issue.
The PIK Preferred Stock will rank junior in right of payment to the
Company's outstanding Preferred Stock. In the event of any liquidation,
dissolution or winding up of the Company, holders of PIK Preferred Stock will
be entitled to receive, following payment in full to the holders of the
Preferred Stock of all amounts to which such holders are entitled, a
liquidation preference in the amount of $1,000 per share of PIK Preferred
Stock, plus accrued and unpaid dividends, before any payment is made or assets
are distributed to holders of Mtel Common Stock or any other class of stock of
the Company ranking junior to the PIK Preferred Stock as to rights upon
liquidation, dissolution or winding up of the Company. Except as required by
law or with respect to the creation or amendment of senior classes of
preferred stock, holders of PIK Preferred Stock will not have voting rights
unless quarterly dividends on the Company's $2.25 Cumulative Convertible
Exchangeable Preferred Stock are in arrears for two consecutive quarters, in
which case, the number of directors of the Company will be increased by one
and holders of PIK Preferred Stock, voting separately as a class, will be
entitled to elect one director until the dividend arrearage has been paid. In
the event quarterly dividends on the Company's $2.25 Cumulative Convertible
Exchangeable Preferred Stock are in arrears for four consecutive quarters, the
number of directors of the Company will be increased again by one, and holders
of PIK Preferred Stock will be entitled to elect an additional director.
Each share of PIK Preferred Stock will be convertible at the option of the
holder into shares of Mtel Common Stock at a conversion price of $17.90 per
share of Mtel Common Stock, subject to adjustment upon the occurrence of
certain events. Following the second anniversary of the date of issuance of
the PIK Preferred Stock, the Company may redeem, in whole or in part, the
outstanding PIK Preferred Stock at a price of $1,000 per share plus accrued
and unpaid dividends. The bank credit facility, as amended, and the indenture
relating to the Senior Notes prohibit the voluntary redemption of the PIK
Preferred Stock. Commencing on the seventh anniversary of the date of issuance
of the PIK Preferred Stock and continuing through the tenth anniversary
thereof, the Company must redeem 7,500 shares of PIK Preferred Stock at a
price of $1,000 per share, along with accrued and unpaid dividends thereon.
Senior Notes. In December 1994, Mtel issued $265 million principal
amount of 13.5% Senior Notes due December 15, 2002 in a public offering
underwritten by Bear, Stearns & Co. Inc., Alex. Brown & Sons Incorporated and
J.P. Morgan Securities Inc. (the "Senior Notes Offering"). The net proceeds
received by Mtel from the sale of the Senior Notes, after deducting the
underwriting discount and expenses of the Senior Notes Offering, were $255.7
million.
The indenture relating to the Senior Notes required the Company to deposit
approximately $93.6 million of the net proceeds to purchase a portfolio of
securities, initially consisting of U.S. government securities (including any
securities substituted in respect thereof, the "Pledged Securities"), to
provide for the payment of interest on the Senior Notes through December 15,
1997 and, under certain circumstances, as security for repayment of the
principal of the Senior Notes. Proceeds from the sale of the Pledged
Securities may be used by the Company to make interest payments on the Senior
Notes through December 15, 1997. Interest on the Senior Notes is payable semi-
annually, in cash, on June 15 and December 15 of each year, commencing on June
15, 1995.
The remaining net proceeds received from the sale of the Senior Notes was
used to fund capital expenditures and initial working capital requirements
related to the SkyTel 2-Way(TM) Network.
The Senior Notes are senior obligations of the Company, rank senior in
right of payment to all subordinated indebtedness of the Company, other than
the Debentures as to which the Senior Notes rank pari passu, and are to be
pari passu in right of payment to all of the Company's existing and future
senior indebtedness, including the Company's guarantee of SkyTel's bank credit
facility (as described above). However, the Company's guarantee of the bank
credit facility is secured by a security interest in and lien on
substantially all of the assets of the Company (other than the Pledged
Securities) and
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accordingly will rank senior to the Senior Notes to the extent of such
security. In addition, the Company serves primarily as a holding company for
its operating subsidiaries, and therefore the Senior Notes will be effectively
subordinated to all liabilities of the Company's subsidiaries, including trade
payables and the bank credit facility.
The Senior Notes are subject to redemption at the option of the Company,
in whole or in part, at any time on or after December 15, 1998, at established
redemption prices plus accrued and unpaid interest, if any, to the date of
redemption. In addition, at any time prior to December 15, 1997, at the option
of the Company, Senior Notes in an amount not to exceed 25% of the original
principal amount of the Senior Notes may be redeemed at a redemption price
equal to 114.5% of the principal amount of the Senior Notes, plus accrued and
unpaid interest, if any, to the date of redemption, with the proceeds from the
sale of at least $75.0 million of certain equity securities to a strategic
equity investor meeting certain qualifications; provided, that Senior Notes in
an amount equal to at least 75% of the original principal amount of the Senior
Notes remain outstanding following any such redemption.
In the event of a change of control, holders of the Senior Notes will have
the right to require the Company to repurchase their Notes, in whole or in
part, at a price equal to 101% of the aggregate principal amount thereof, plus
accrued and unpaid interest, if any, to the date of purchase. There can be no
assurance that the Company would have the financial resources necessary to
repurchase the Senior Notes upon a change of control.
The indenture relating to the Senior Notes contains certain covenants
that, among other things, limit the ability of the Company and its
subsidiaries to incur certain additional indebtedness, pay dividends or make
other distributions, repurchase equity interests or subordinated indebtedness,
make certain other restricted payments, create certain liens, engage in any
business other than the telecommunications business, enter into certain
transactions with affiliates, sell assets, issue or sell equity interests or
enter into certain mergers and consolidations.
Conversion Offer. In December 1994, to facilitate the offering of the
Senior Notes, the Company completed an offer to induce conversion of the
Debentures (the "Conversion Offer") pursuant to which the Company paid a
premium of $45.00 (the "Conversion Premium"), in addition to the issuance of
100 shares of Mtel Common Stock issuable in accordance with the terms of the
Debentures, upon the conversion of each $1,000 principal amount of Debentures.
A total of approximately $82.2 million in aggregate principal amount of
Debentures (representing approximately 97% of the total outstanding
Debentures) were converted in the Conversion Offer. As a result, approximately
8.2 million shares of Mtel Common Stock were issued in connection with the
Conversion Offer and the Company paid a total Conversion Premium of
approximately $3.1 million in connection therewith.
$2.25 Cumulative Convertible Exchangeable Preferred Stock. In October
1993, the Company completed the sale of 3,750,000 shares of the Preferred
Stock, resulting in net proceeds to the Company of approximately $181.3
million. The net proceeds from the sale of the Preferred Stock were used to
fund development costs associated with the SkyTel 2-Way(TM) network.
Holders of the Preferred Stock are entitled to receive cash dividends out
of funds legally available therefor at an annual rate of $2.25 per share of
Preferred Stock which are payable quarterly on each January 15, April 15, July
15 and October 15 when and if declared by the Board of Directors of the
Company. Dividends on the Preferred Stock are cumulative and will accrue from
the date of original issuance. Except as required by law or with respect to
the creation or amendment of senior classes of preferred stock, holders of
Preferred Stock will hold no voting rights unless six quarterly dividends on
the Preferred Stock are in arrears, in which case the number of directors of
the Company will be increased by two and the holders of the Preferred Stock,
voting separately as a class with the shares of any parity preferred stock
having similar rights, will be entitled to elect two directors to serve until
the dividend arrearage has been paid. In the event of any liquidation,
dissolution or winding up of the Company, holders of the Preferred Stock are
entitled to a liquidation preference in the amount of $50 per share of
Preferred Stock, plus accrued and unpaid dividends, before any payment is made
or assets are distributed to holders of PIK Preferred, Mtel Common Stock or
any other class of stock of the Company ranking junior to the Preferred Stock
as to rights upon liquidation, dissolution or winding up of the Company.
Each share of Preferred Stock may be converted at the option of the holder
into shares of Mtel Common Stock at a conversion rate of 1.1111 shares of Mtel
Common Stock for each share of Preferred Stock, subject to adjustment under
29
<PAGE>
certain conditions. The Preferred Stock is also exchangeable, in whole but not
in part, at the option of the Company beginning on October 15, 1995, for the
Company's 4.5% Convertible Subordinated Debentures due 2003 at a rate of $50
principal amount of such debentures for each share of Preferred Stock.
Dispositions of Non-Strategic Assets. The Company continually reviews its
strategic business objectives with respect to its businesses and investments
and may consider from time to time, subject to any restrictions contained in
the bank credit facility and the indenture relating to the Senior Notes, the
disposition of certain non-strategic assets. During the first quarter of
1996, the Company completed the disposition of a portion of its shares of AMSC
Common Stock resulting in total net proceeds of $8.9 million, and the Company
intends to liquidate its remaining investment in AMSC in the second quarter of
1996. In addition, the Company, in conjunction with the other stockholders of
MPL, has determined to sell all of the issued and outstanding shares of MPL.
The Company has determined that MPL is a non-strategic asset because it does
not operate on the 931 MHz frequency.
In 1994, the Company completed the sale of its digital point-to-point
microwave system that operates in the Los Angeles area and its two SMR
operations, resulting in a nonrecurring gain of approximately $4.7 million in
1994. In August 1993, Mtel sold its 20% equity interest in a company which
provides nationwide messaging services on VHF frequencies (150-173MHz) in
Thailand. The Company sold its interest to Singapore Telecom for $7.3 million
and recorded a gain of approximately $4.0 million in 1993 as a result of this
transaction.
Additional Financings. Although the Company believes that the sources of
capital described above will be sufficient to meet projected capital
requirements through 1997, the Company may be required to engage in other
financings, the timing, nature, amount and source of which cannot presently be
determined, based on its operating results, its borrowing availability under
the bank credit facility and the indenture relating to the Senior Notes,
the successful completion of sales of equity securities in subsidiaries formed
for the purpose of holding the Company's investments in operations in Latin
America and Asia and sales of certain non-strategic assets. The Company may
also consider the sale of equity securities of certain subsidiaries or
business combinations involving certain subsidiaries as potential sources of
capital. In addition, the Company may enter into joint ventures or other
arrangements with strategic business partners and may determine to issue
equity securities in connection therewith. However, except as described
herein, the Company had no agreements or commitments with respect to any such
transaction as of March 29, 1996.
RECENTLY ISSUED ACCOUNTING STANDARDS
On January 1, 1994, the Company adopted SFAS No. 115 "Accounting for
Certain Investments in Debt and Equity Securities." The adoption of this
statement did not have a material effect on the Company's financial position
or results of operations. The Company has also adopted, to the extent
applicable, the provisions of SFAS No. 119 "Disclosure about Derivative
Financial Instruments and Fair Value of Financial Instruments." The Company
has not previously used derivative financial instruments to hedge its foreign
currency exchange rate risks due, in part, to the lack of availability of
appropriate hedging instruments in most of the countries in which Mtel has
investments.
In 1995, the Financial Accounting Standards Board (the "FASB") issued SFAS
No. 121 "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets To Be Disposed Of." This statement requires that long-lived assets be
reviewed for recoverability based on estimates of future net cash flows if
events or circumstances give rise to questions as to the ability of the
company to realize its investment in such long-lived assets. The statement is
effective for fiscal years beginning after December 15, 1995. The Company
will adopt the statement for the year ending December 31, 1996, and has not
yet determined the impact of such adoption on its financial statements. See
Note 1 of Notes to Consolidated Financial Statements for a discussion of
matters that could significantly influence the estimated future cash flows
used by the Company to perform the evaluations required under SFAS No. 121.
In October 1995, the FASB issued SFAS No. 123 "Accounting for Stock-Based
Compensation." This statement establishes financial accounting and reporting
standards for stock-based employee compensation plans and is effective for
fiscal years beginning after December 15, 1995. This statement also allows an
entity to continue to measure compensation costs for those plans using the
intrinsic value based method of accounting prescribed by Accounting Principles
Board Opinion No. 25, "Accounting for Stock Issued to Employees." However,
entities electing to remain with the accounting in Opinion
30
<PAGE>
No. 25 must make pro forma disclosures as if the fair value method of
accounting defined in SFAS No. 123 had been applied. The Company has not
determined whether it will elect to remain with the accounting in Opinion No.
25. The impact of the adoption of this statement on the Company's
consolidated financial statements has not been determined.
31
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Page
----
Report of Independent Public Accountants.......................... F-2
Consolidated Financial Statements-
Balance Sheets-December 31, 1994 and 1995......................... F-3
Statements of Operations for the three years ended December 31,
1995.............................................................. F-4
Statements of Changes in Stockholders' Investment
for the three years ended December 31, 1995........................ F-5
Statements of Cash Flows for the three years ended December 31,
1995.............................................................. F-6
Notes to Consolidated Financial Statements........................ F-7
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
With the exception of information relating to the executive officers of
the Company which is provided in Part I hereof, all information required by
Part III (Items 10, 11, 12 and 13) is incorporated by reference to the
Company's definitive proxy statement relating to the 1996 Annual Meeting of
Stockholders.
32
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, FINANCIAL STATEMENT SCHEDULES AND
REPORTS ON FORM 8-K
(a) 1. Financial Statements. See Index to Consolidated Financial Statements on
Page F-1 hereof.
2. Financial Statement Schedules of the Company.
II Valuation and Qualifying Accounts........................... FA-1
Report of Independent Public Accountants on Financial Statement
Schedule of the Company........................................ FA-2
Schedules other than that listed above are omitted because of the absence of
conditions under which they are required or because the information is
included in the financial statements or notes thereto.
3. Exhibits required by Item 601 of Regulation S-K.
The following exhibits are filed as part of this Annual Report. Where such
filing is made by incorporation by reference (I/B/R) to a previously filed
statement or report, such statement or report is identified in parentheses.
There are omitted from the exhibits filed with this Annual Report certain
promissory notes, conditional sales contracts and other instruments and
agreements with respect to long-term debt of the Company, none of which
authorizes securities in a total amount that exceeds 10% of the total assets
of the Company on a consolidated basis. Pursuant to Item 601(b)(4)(iii) of
Regulation S-K, the Company hereby agrees to file with the Securities and
Exchange Commission copies of all such omitted promissory notes, conditional
sales contracts and other instruments and agreements as the Commission
requests.
<TABLE>
<CAPTION>
Exhibit Sequential
No. Description Page No.
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
3.1 Restated Certificate of Incorporation of the Company (Exhibit 3.3 to the Registration
Statement on Form 10 filed on November 18, 1988 and effective on December 29,
1988).................................................................................. I/B/R
3.2 Bylaws of the Company, as amended (Exhibit 3.4 to the Registration Statement on
Form 10 of the Company filed on November 18, 1988 and effective on December 29,
1988).................................................................................. I/B/R
4.1 Certificate of Designations of Series C Junior Participating Preferred Stock of the Company
(Exhibit 3 to the Registration Statement on Form 8-A of the Company filed on August 3,
1989).................................................................................. I/B/R
4.2 Rights Agreement dated as of July 26, 1989 between the Company and NCNB Texas
National Bank (Exhibit 2 to the Registration Statement on Form 8-A of the Company
filed on August 3, 1989)............................................................... I/B/R
4.3 Form of Right Certificate of the Company (Exhibit 1 to the Registration Statement on
Form 8-A of the Company filed on August 3, 1989)....................................... I/B/R
4.4 Indenture dated as of May 28, 1992 between the Company and NationsBank of Texas,
N.A., as Trustee, relating to the Company's 6.75% Convertible Subordinated
Debentures due May 15, 2002, including as an exhibit thereto the form of Debenture
(Exhibits 4.3 and 28 to the Company's Quarterly Report on Form 10-Q for the quarter
ended September 30, 1992).............................................................. I/B/R
4.5 Form of Indenture between the Company and Texas Commerce Bank National
Association, as Trustee, relating to the 13.5% Senior Notes due 2002, including as an
exhibit thereto the form of the Note (Exhibit 4.8 to the Company's Registration
Statement on Form S-3 filed on November 10, 1994 and effective on December 21,
1994)................................................................................. I/B/R
4.6 Certificate of Designations of the $2.25 Cumulative Convertible Exchangeable Preferred
Stock of the Company (Exhibit 4.1 to the Company's Quarterly Report on Form 10-Q
for the quarter ended September 30, 1993).............................................. I/B/R
4.7 Credit, Security, Guaranty and Pledge Agreement dated as of December 21, 1995 by and
among the Company, the lenders referred to therein, Chemical Bank, Credit Lyonnais
New York Branch and J.P. Morgan Securities, Inc........................................
4.8 Contribution Agreement of the Company dated as of December 21, 1995 entered into in
connection with the Credit, Security, Guaranty and Pledge Agreement dated as of
December 21, 1995 by and among the Company, the lenders referred to therein, Chemical
Bank, Credit Lyonnais New York Branch and J.P. Morgan Securities, Inc..................
4.9 Patent and Security Agreement of the Company dated as of December 21, 1995 entered
into in connection with the Credit, Security, Guaranty and Pledge Agreement dated as
of December 21, 1995 by and among the Company, the lenders referred to therein,
Chemical Bank, Credit Lyonnais New York Branch and J.P. Morgan Securities, Inc........
4.10 Trademark Security Agreement of the Company dated as of December 21, 1995 entered into
in connection with the Credit, Security, Guaranty and Pledge Agreement dated as of
December 21, 1995 by and among the Company, the lenders referred to therein,
Chemical Bank, Credit Lyonnais New York Branch and J.P. Morgan Securities, Inc........
4.11 Copyright Security Agreement of the Company dated as of December 21, 1995 entered
into in connection with the Credit, Security, Guaranty and Pledge Agreement dated as
of December 21, 1995 by and among the Company, the lenders referred to therein,
Chemical Bank, Credit Lyonnais New York Branch and J.P. Morgan Securities, Inc.......
4.12 Subordination Agreement dated as of December 21, 1995 by and among the Company
and Chemical Bank.....................................................................
4.13 Amendment No. 1 dated as of March 27, 1996 to the Credit, Security, Guaranty and Pledge
Agreement dated as of December 21, 1995 by and among the Company, the lenders
referred to therein, Chemical Bank, Credit Lyonnais New York Branch and J.P.
Morgan Securities, Inc................................................................
</TABLE>
33
<PAGE>
<TABLE>
<CAPTION>
Exhibit Sequential
No. Description Page No.
- -------- ---------------------------------------------------------------------------------------------- -------------
<S> <C> <C>
10.1* Employment Agreement dated November 19, 1988 between the Company and John N.
Palmer (Exhibit 10.9 to the Registration Statement on Form 10 of the Company filed
on November 18, 1988 and effective on December 29, 1988)..................................... I/B/R
10.2* Employment Agreement dated November 19, 1988 between the Company and Jai P.
Bhagat (Exhibit 10.12 to the Registration Statement on Form 10 of the Company filed
on November 18, 1988 and effective on December 29, 1988)..................................... I/B/R
10.3* Employment Agreement dated November 19, 1988 between the Company and J. Robert
Fugate (Exhibit 10.15 to the Registration Statement on Form 10 of the Company filed
on November 18, 1988 and effective on December 29, 1988)..................................... I/B/R
10.4* Form of Indemnification Agreement (Exhibit 10.16 to the Registration Statement on
Form 10 of the Company filed on November 18, 1988 and effective on December 29,
1988)........................................................................................ I/B/R
10.5* 1988 Executive Incentive Plan, as amended, of the Company including as exhibits
thereto the forms of non-qualified and incentive stock option agreements (Exhibit 10.18
to the Registration Statement on Form 10 of the Company filed on November 18, 1988
and effective on December 29, 1988).......................................................... I/B/R
10.6* Form of Non-Qualified Stock Option Agreement for non-officer directors of the
Company (Exhibit 10.19 to the Registration Statement on Form 10 of the Company
filed on November 18, 1988 and effective on December 29, 1988)............................... I/B/R
10.7* 1990 Executive Incentive Plan of the Company including as an exhibit thereto the form
of non-qualified stock option agreement (Exhibit 10.16 to the Company's Annual Report
on Form 10-K for the year ended December 31, 1990)........................................... I/B/R
10.8 Services Agreement dated January 24, 1991 between Rogers Cantel Mobile, SkyTel
Corp. and Mtel International, Inc. (Exhibit 10.31 to the Company's Annual Report on
Form 10-K for the year ended December 31, 1991).............................................. I/B/R
10.9 Form of Reseller Agreement of SkyTel (Exhibit 10.24 to the Company's Annual Report
on Form 10-K for the year ended December 31, 1991)........................................... I/B/R
10.10 Joint Venture Agreement dated as of April 11, 1991 by and between Mtel International,
Inc. and Radio Telefonia Movil Metropolitana, S.A. de C.V. (Exhibit 10.27 to the
Company's Annual Report on Form 10-K for the year ended December 31, 1991)................... I/B/R
10.11 Shareholders' Agreement dated November 6, 1992 by and among Mercury
Communications Limited, Motorola Limited, Mtel (U.K.) Limited and Mercury Paging
Limited (Exhibit 2.2 to the Company's Current Report on Form 8-K dated November
6, 1992)..................................................................................... I/B/R
</TABLE>
34
<PAGE>
<TABLE>
<CAPTION>
Exhibit Sequential
No. Description Page No.
- -------- ------------------------------------------------------------------------------------------------ --------------
<S> <C> <C>
10.12* Employment Agreement dated as of December 14, 1992 between the Company and
John E. Welsh III (Exhibit 10.28 to the Company's Annual Report on Form 10-K for
the year ended December 31, 1992)......................................................... I/B/R
10.13* Employment Agreement dated as of December 24, 1992 between the Company and
Leonard G. Kriss (Exhibit 10.29 to the Company's Annual Report on Form 10-K for
the year ended December 31, 1992)......................................................... I/B/R
10.14* Short-Term Management Incentive Plan (Exhibit 10.30 to the Company's Annual
Report on Form 10-K for the year ended December 31, 1992)................................. I/B/R
10.15* Long-Term Management Incentive Plan (Exhibit 10.31 to the Company's Annual
Report on Form 10-K for the year ended December 31, 1992)................................. I/B/R
10.16* Employment Agreement dated as of January 11, 1994 between the Company and M.
Bernard Puckett (Exhibit 10.30 to the Company's Annual Report on Form 10-K for the
year ended December 31, 1993)............................................................. I/B/R
10.17 Amended and Restated Stockholders Agreement dated as of December 1, 1993 by and
among American Mobile Satellite Corporation, Hughes Communications Satellite
Services, Inc., Space Technologies Investments, Inc., Satellite Communications
Investments Corporation, Transit Communications, Inc., Satellite Mobile Telephone
Company, L.P., Mtel Space Technologies Corporation, Mtel Space Technologies, L.P.,
and Singapore Telecommunications Ltd. and certain other holders of common stock of
American Mobile Satellite Corporation (Exhibit 10.31 to the Company's Annual Report
on Form 10-K for the year ended December 31, 1993)........................................ I/B/R
10.18 Right of First Offer Agreement dated November 30, 1993 by and among American
Mobile Satellite Corporation, Hughes Communications Satellite Services, Inc., Space
Technologies Investments, Inc., Satellite Communications Investments Corporation,
Transit Communications, Inc., Satellite Mobile Telephone Company, L.P., Mtel Space
Technologies Corporation, Mtel Space Technologies, L.P., and Singapore
Telecommunications Ltd. (Exhibit 10.32 to the Company's Annual Report on Form 10-K for
the year ended December 31, 1993)......................................................... I/B/R
10.19 Letter Agreement dated October 11, 1993 by and among American Mobile Satellite Corporation, Hughes
Communications Satellite Services, Inc., Space Technologies
Investments, Inc., Mtel Space Technologies Corporation, and Singapore
Telecommunications Ltd. (Exhibit 10.33 to the Company's Annual Report on Form
10-K for the year ended December 31, 1993)................................................ I/B/R
10.20 Principal Stockholder Holdback and Waiver Agreement by and among Mtel Space
Technologies Corporation, Mtel Space Technologies, L.P. and Donaldson Lufkin &
Jenrette Securities Corporation relating to common stock of American Mobile Satellite
Corporation (Exhibit 99(d) to the Company's Schedule 13D filed January 9, 1994
relating to American Mobile Satellite Corporation)........................................ I/B/R
</TABLE>
35
<PAGE>
<TABLE>
<CAPTION>
Exhibit Sequential
No. Description Page No.
- ---------- ------------------------------------------------------------------------------------------- --------------
<S> <C> <C>
10.21 Form of Stockholders Agreement among the Company, SkyTel and Sky Acquisition
Corp. (Exhibit 10.37 to the Company's Registration Statement on Form S-4 filed on
October 26, 1994 and effective on December 14, 1994)....................................... I/B/R
10.22 Amended and Restated Merger Agreement and Plan of Reorganization dated as of
September 21, 1994, by and among the Company, Dixon Acquisition Corp. and United
States Paging Corporation (Exhibit 2 to the Registration Statement of the Company,
Registration No. 33-85612, filed on October 27, 1994)...................................... I/B/R
10.23 Technology Development and Marketing Agreement dated March 23, 1994, by and
between Microsoft Corporation and Nationwide Wireless Network Corp. (Exhibit 10.2
to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30,
1994)...................................................................................... I/B/R
10.24 Form of Nationwide Wireless Network Corp. Warrant Certificate (Exhibit 10.3 to the
Company's Quarterly Report on Form 10-Q for the quarter ended September 30,
1994)...................................................................................... I/B/R
10.25 Form of Underwriting Agreement among Bear, Stearns & Co. Inc., Alex. Brown &
Sons Incorporated and J.P. Morgan Securities Inc., as Underwriters, and the Company
(Exhibit 1 to the Company's Registration Statement on Form S-3 filed on November 10,
1994 and effective on December 21, 1994)................................................... I/B/R
10.26* Employment Agreement dated June 1, 1994 between the Company and Calvin C.
LaRoche (Exhibit 10.32 to the Company's Annual Report on Form 10-K for the year ended
December 31, 1994)......................................................................... I/B/R
10.27 MCI Special Customer Arrangement between the Company and MCI Telecommunications Corporation
dated as of August 22, 1994 (Exhibit 10.33 to the Company's Annual Report on
Form 10-K for the year ended December 31, 1994)............................................ I/B/R
10.28 First Amendment to MCI Special Customer Arrangement between the Company and
MCI Telecommunications Corporation dated as of January 9, 1995 (Exhibit 10.34
to the Company's Annual Report on Form 10-K for the year ended December 31, 1994).......... I/B/R
10.29* Amended 1990 Executive Plan of the Company (Exhibit 10.1 to the Company's Quarterly Report
on Form 10-Q for the quarter ended June 30, 1995).......................................... I/B/R
10.30 Lease Agreement dated June 14, 1995 by and between Security Centre, Inc. and the
Company....................................................................................
10.31 Stock Exchange Agreement dated as of July 19, 1995 by and among the Company,
Microsoft Corporation, Kleiner Perkins Caufield & Byers VI, L.P., KPCB VI
Founders Fund, L.P., William H. Gates, Paul G. Allen, Integral Capital Partners,
L.P. and Integral Capital Partners International C.V.......................................
10.32 Stockholder Agreement dated as of September 15, 1995 by and between the Company and
Microsoft Corporation......................................................................
10.33* Amended and Restated Employment Agreement dated as of January 1, 1996 by and between
the Company and M. Bernard Puckett.........................................................
11.1 Statement of Computation of Per Share Earnings.............................................
21.1 Subsidiaries of the Company................................................................
23.1 Consent of Arthur Andersen LLP.............................................................
27.1 Financial Data Schedule....................................................................
(b) Reports on Form 8-K........................................................................
None.
</TABLE>
- ------
* Identifies each exhibit that is a "management contract or compensatory plan
or arrangement" required to be filed as an exhibit to this Annual Report on
Form 10-K pursuant to Item 14(c) of Form 10-K.
36
<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 of the undersigned, thereunto duly authorized.
MOBILE TELECOMMUNICATION
TECHNOLOGIES CORP.
By: /s/John N. Palmer
--------------------------
John N. Palmer
Chairman of the Board and
Acting Chief Executive Officer
Date: March 27, 1996
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.
<TABLE>
<CAPTION>
Signatures Title Date
<S> <C> <C>
/s/ John N. Palmer
-------------------- Chairman of the Board and March 27, 1996
John N. Palmer Acting Chief Executive Officer
(Principal Executive Officer)
/s/ John E. Welsh III
-------------------- Vice Chairman and Acting Chief March 27, 1996
John E. Welsh III Financial Officer (Principal Financial
and Accounting Officer)
-------------------- Director March , 1996
Haley Barbour
/s/ Thomas G. Barksdale
-------------------- Director March 27, 1996
Thomas G. Barksdale
/s/ Jai P. Bhagat
-------------------- Director March 27, 1996
Jai P. Bhagat
/s/ Gregory B. Maffei
-------------------- Director March 27, 1996
Gregory B. Maffei
/s/ R. Faser Triplett
-------------------- Director March 27, 1996
R. Faser Triplett
/s/ E. Lee Walker
-------------------- Director March 27, 1996
E. Lee Walker
</TABLE>
<PAGE>
MOBILE TELECOMMUNICATION TECHNOLOGIES CORP. AND SUBSIDIARIES
- --------------------------------------------------------------------------------
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Report of Independent Public Accountants ..................................................................... F-2
Consolidated Financial Statements--
Balance Sheets--December 31, 1994 and 1995................................................................ F-3
Statements of Operations for the three years ended December 31, 1995...................................... F-4
Statements of Changes in Stockholders' Investment for the three years ended December 31, 1995............. F-5
Statements of Cash Flows for the three years ended December 31, 1995...................................... F-6
Notes to Consolidated Financial Statements................................................................ F-7
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
----------------------------------------
To the Board of Directors of
Mobile Telecommunication Technologies Corp.:
We have audited the accompanying consolidated balance sheets of Mobile
Telecommunication Technologies Corp. (a Delaware corporation) and subsidiaries
as of December 31, 1995 and 1994, and the related consolidated statements of
operations, changes in stockholders' investment and cash flows for each of the
years in the three year period then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements 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.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Mobile Telecommunication
Technologies Corp. and subsidiaries as of December 31, 1995 and 1994, and the
results of their operations and their cash flows for each of the years in the
three year period then ended in conformity with generally accepted accounting
principles.
ARTHUR ANDERSEN LLP
Jackson, Mississippi,
April 1, 1996.
F-2
<PAGE>
CONSOLIDATED BALANCE SHEETS
MOBILE TELECOMMUNICATION TECHNOLOGIES CORP. AND SUBSIDIARIES
<TABLE>
<CAPTION>
DECEMBER 31,
1994 1995
<S> <C> <C>
ASSETS:
Current assets-
Cash and cash equivalents $145,620,779 $ 9,612,734
Short-term investments 53,689,435 -
Accounts receivable, net of allowance for bad debts 20,337,010 46,313,031
Other receivables 5,656,971 5,488,392
Other current assets 4,770,851 3,700,019
------------ -------------
Total current assets 230,075,046 65,114,176
------------ -------------
Messaging networks-
Property and equipment, net 119,320,547 294,626,442
Certificates of authority and license cost 144,716,785 159,101,539
Network construction and development costs 41,962,816 88,145,489
------------ -------------
Total messaging networks 306,000,148 541,873,470
------------ -------------
Goodwill 5,072,998 88,144,574
Investment in unconsolidated international ventures 59,409,759 68,043,591
Other assets-
Securities restricted for debt service 93,597,038 64,101,245
Other 21,315,943 24,136,475
------------ -------------
Total other assets 114,912,981 88,237,720
------------ -------------
$715,470,932 $ 851,413,531
============ =============
LIABILITIES AND STOCKHOLDERS' INVESTMENT:
Current liabilities-
Current maturities of long-term debt $ 49,820 $ 1,278,426
Accounts payable 24,761,990 67,507,668
Accrued liabilities 19,712,350 25,773,967
------------ -------------
Total current liabilities 44,524,160 94,560,061
------------ -------------
Long-term debt, net of current maturities 273,628,967 333,258,720
Minority interest 31,240,992 54,501
Commitments and contingencies
Stockholders' investment-
Preferred stock, par value $.01 per share;
25,000,000 shares authorized; 3,750,000 shares of
$2.25 Cumulative Convertible Exchangeable Preferred
Stock outstanding in 1994 and 1995 ($187,500,000
aggregate liquidation value) 37,500 37,500
Common stock, par value $.01 per share;
75,000,000 shares authorized; shares outstanding:
45,646,719 in 1994 and 54,134,711 in 1995 456,467 541,347
Additional paid-in capital 439,038,067 557,837,759
Accumulated deficit (72,919,024) (133,383,935)
Cumulative translation adjustment (536,197) (1,492,422)
------------ -------------
Total stockholders' investment 366,076,813 423,540,249
------------ -------------
$715,470,932 $ 851,413,531
============ =============
</TABLE>
The accompanying notes are an integral part of these statements.
F-3
<PAGE>
CONSOLIDATED STATEMENTS OF OPERATIONS
MOBILE TELECOMMUNICATION TECHNOLOGIES CORP. AND SUBSIDIARIES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1993 1994 1995
<S> <C> <C> <C>
Revenues:
U.S. operations $144,384,642 $160,785,180 $235,870,191
International operations 80,374 2,484,744 10,120,802
------------ ------------ ------------
144,465,016 163,269,924 245,990,993
Expenses:
Operating 32,588,591 43,532,259 69,000,425
Selling, general and administrative 80,631,606 122,023,417 174,761,708
SkyTel 2-Way(TM) launch costs - - 18,341,352
Depreciation and amortization 17,697,285 22,293,429 42,309,249
------------ ------------ ------------
130,917,482 187,849,105 304,412,734
------------ ------------ ------------
Operating income (loss) 13,547,534 (24,579,181) (58,421,741)
Interest income 3,002,583 6,089,188 12,935,133
Interest expense (5,693,863) (4,331,435) (11,754,931)
Gain on sale of assets 4,087,571 4,732,392 2,689,150
Debenture conversion cost - (3,061,399) -
Other income (expense) 57,700 (742,650) 1,322,800
------------ ------------ ------------
Income (loss) before income taxes and
equity income 15,001,525 (21,893,085) (53,229,589)
Provision (benefit) for income taxes 743,749 1,802,612 (256,494)
Equity in income from investments 2,704,838 3,849,212 945,684
------------ ------------ ------------
Net income (loss) $ 16,962,614 $(19,846,485) $(52,027,411)
Preferred dividend requirement 1,696,671 8,437,500 8,437,500
------------ ------------ ------------
Net income (loss) available to common
stockholders $ 15,265,943 $(28,283,985) $(60,464,911)
============ ============ ============
Net income (loss) per common share $0.39 $(0.77) $(1.19)
============ ============ ============
</TABLE>
The accompanying notes are an integral part of these statements.
F-4
<PAGE>
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' INVESTMENT
MOBILE TELECOMMUNICATION TECHNOLOGIES CORP. AND SUBSIDIARIES
<TABLE>
<CAPTION>
CUMULATIVE
PREFERRED STOCK COMMON STOCK ADDITIONAL ACCUMULATED TRANSLATION
SHARES AMOUNT SHARES AMOUNT PAID-IN CAPITAL DEFICIT ADJUSTMENT
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1992 - $ - 34,780,226 $347,802 $135,991,431 $ (59,900,982) $ (885,182)
Net income - - - - - 16,962,614 -
Sale of preferred stock,
net of issuance costs
of $6,171,000 3,750,000 37,500 - - 181,291,500 - -
Preferred stock dividend
requirement - - - - - (1,696,671) -
Exercise of stock options - - 897,048 8,971 5,194,430 - -
Conversion of convertible
subordinated debt into
common stock - - 140,500 1,405 1,403,595 - -
Currency translation adjustment - - - - - - (39,821)
---------- ------- ---------- -------- ------------ ------------- -----------
Balance, December 31, 1993 3,750,000 37,500 35,817,774 358,178 323,880,956 (44,635,039) (925,003)
Net loss - - - - - (19,846,485) -
Preferred stock dividend
requirement - - - - - (8,437,500) -
Exercise of stock options - - 246,368 2,463 1,522,342 - -
Conversion of convertible
subordinated debt into
common stock - - 9,550,133 95,501 88,861,535 - -
Employee Stock Purchase Plan - - 32,444 325 478,982 - -
Sale of Destineer stock - - - - 24,317,008 - -
Issuance costs from 1993
sale of preferred stock - - - - (22,756) - -
Currency translation adjustment - - - - - - 388,806
---------- ------- ---------- -------- ------------ -------------- -----------
Balance, December 31, 1994 3,750,000 37,500 45,646,719 456,467 439,038,067 (72,919,024) (536,197)
Net loss - - - - - (52,027,411) -
Preferred stock dividend
requirement - - - - - (8,437,500) -
Exercise of stock options - - 936,379 9,364 6,910,988 - -
Conversion of convertible
subordinated debt into
common stock - - 116,500 1,165 1,163,835 - -
Employee Stock Purchase Plan - - 43,140 431 625,991 - -
Acquisition of SkyTel
minority interest - - 3,390,573 33,906 49,266,094 - -
Acquisition of Destineer
minority interest - - 4,001,400 40,014 60,832,784 - -
Currency translation adjustment - - - - - - (956,225)
---------- ------- ---------- -------- ------------ -------------- -----------
Balance, December 31, 1995 3,750,000 $37,500 54,134,711 $541,347 $557,837,759 $(133,383,935) $(1,492,422)
========== ======= ========== ======== ============ ============== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
F-5
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
MOBILE TELECOMMUNICATION TECHNOLOGIES CORP. AND SUBSIDIARIES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1993 1994 1995
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 16,962,614 $ (19,846,485) $ (52,027,411)
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depreciation and amortization 17,697,285 22,293,429 42,309,249
Provision for losses on accounts receivable 1,465,437 2,314,397 6,880,223
Amortization of debt issuance costs 467,732 394,480 1,164,359
Foreign currency transaction (gain) loss (4,950) 656 13,735
Gain on sale of assets (4,087,571) (4,732,392) (2,689,150)
Losses attributable to minority interests - - (1,336,535)
Equity in (income) from investments (2,704,838) (3,849,212) (945,684)
Change in assets and liabilities:
(Increase) in accounts receivable (4,745,450) (889,439) (32,856,244)
(Increase) decrease in other current assets (3,302,023) (9,554,466) 1,239,411
Increase in accounts payable and
accrued liabilities 8,930,797 16,086,369 48,807,295
------------ ------------- -------------
Net Cash Provided By Operating Activities 30,679,033 2,217,337 10,559,248
------------ ------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from asset sales 8,062,483 10,335,242 3,840,250
Capital expenditures (51,943,105) (227,666,624) (277,307,997)
(Increase) in investment in
unconsolidated international ventures (13,074,372) (20,566,441) (12,267,681)
(Increase) decrease in other assets 7,146,063 (98,546,131) 24,359,802
(Increase) decrease in short-term investments (49,697,172) 40,643,039 53,689,435
------------ ------------- -------------
Net Cash Used In Investing Activities (99,506,103) (295,800,915) (207,686,191)
------------ ------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on long-term debt (7,620,439) (284,793) (42,792,056)
Issuance of debt 6,182,335 266,530,614 103,636,680
Sale of Destineer stock - 50,225,000 -
Payment of dividends on preferred stock - (8,406,084) (8,437,500)
Sale of stock and exercise of stock options 186,545,609 1,981,304 8,711,774
------------ ------------- -------------
Net Cash Provided By Financing Activities 185,107,505 310,046,041 61,118,898
Effect of exchange rate changes on cash 5,036 61 -
------------ ------------- -------------
Net increase (decrease) in cash and cash equivalents 116,285,471 16,462,524 (136,008,045)
Cash and cash equivalents-beginning of year 12,872,784 129,158,255 145,620,779
------------ ------------- -------------
Cash and cash equivalents-end of year $129,158,255 $ 145,620,779 $ 9,612,734
============ ============= =============
</TABLE>
The accompanying notes are an integral part of these statements.
F-6
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MOBILE TELECOMMUNICATION TECHNOLOGIES CORP. AND SUBSIDIARIES
(1) ORGANIZATION AND NATURE OF OPERATIONS; RISKS AND UNCERTAINTIES:
ORGANIZATION AND NATURE OF OPERATIONS
Mobile Telecommunication Technologies Corp. ("Mtel" or the "Company") is a
leading provider of nationwide messaging services in the United States.
Mtel's wholly-owned subsidiary, SkyTel Corp. ("SkyTel"), operates a one-way
nationwide messaging system in the United States whereby subscribers can be
reached in thousands of towns and cities in the United States by means of a
dedicated 931 MHz frequency licensed by the Federal Communications Commission
("FCC"), a ground-based transmitter system, leased satellite facilities and
proprietary network software.
On September 19, 1995, the Company launched commercial operation of SkyTel 2-
Way(TM), the first two-way nationwide wireless messaging network in the
United States, which enables subscribers to send and receive two-way messages
through the use of a new class of small low-power, light-weight devices, as
well as laptop and palmtop computers, without the need to know the location
of the sender or receiver at the time of transmission. SkyTel 2-Way(TM)
utilizes a proprietary system architecture designed and developed by Mtel and
offers a broad range of communications services, including acknowledgment
paging, wireless two-way messaging and information services. Mtel's 100%-
owned subsidiary Destineer Corp. ("Destineer") owns the FCC license utilized
by the SkyTel 2-Way(TM) network.
Mtel, through its 100%-owned subsidiary Mtel International, Inc. ("Mtel
International"), operates or has investments in entities that operate one-way
wireless messaging systems in 14 countries worldwide. Mtel also provides its
subscribers with access to an international messaging network that utilizes
Mtel's proprietary technology and interconnects the systems operated by Mtel
and its joint ventures with systems in Canada, Singapore and other countries.
On February 17, 1995, Mtel acquired United States Paging Corporation ("USPC")
in a merger in which USPC stockholders received 1.6 million shares of Mtel
Common Stock having an aggregate value of approximately $30.5 million. USPC
provides local and regional paging services with centralized and customized
nationwide billing, computerized maintenance and service reporting and
computerized automatic messaging for centralized dispatch. The merger has
been accounted for as a pooling of interests and, accordingly, the financial
statements of Mtel have been restated to include the results of USPC for all
periods presented. On a stand alone basis, USPC had revenues and net income
for the year ended December 31, 1993 of $15.5 million and $0.2 million,
respectively, and revenues and net losses of $16.9 million and $1.3 million,
respectively, for the year ended December 31, 1994.
Mtel is also engaged in a variety of other telecommunications-related
businesses including air-to-ground telecommunications operations, telephone
answering services ("TAS") and other investments.
RISKS AND UNCERTAINTIES
The Company has incurred substantial operating losses in 1994 and 1995 and
negative cash flows from operations in 1995 which have been driven by start-
up losses associated with the introduction of
F-7
<PAGE>
SkyTel 2-Way(TM) and the Company's continuing international development
efforts. Additionally, substantial capital expenditures were required during
1994 and 1995 related to the acquisition of narrowband personal communication
services ("PCS") licenses, construction and development of the SkyTel 2-
Way(TM) network, the purchase of messaging units required to support
significant growth in SkyTel one-way units in service and international
development activities. Management expects the Company to incur operating
losses in 1996 and 1997 primarily as a result of continuing start-up losses
related to SkyTel 2-Way(TM) and losses associated with international
operations, most of which are also in the early stages of development.
The Company's business plan calls for substantial growth in its SkyTel one-
way and SkyTel 2-Way(TM) subscriber bases and for continued development and
expansion of the SkyTel 2-Way(TM) network. This growth requires the
availability of significant capital resources to fund capital expenditures
for network expansion and messaging unit additions. Growth in the subscriber
bases of both one-way messaging and SkyTel 2-Way(TM) will also be required in
order for the Company to achieve consolidated operating profitability and
positive operating cash flows. Management believes that the Company can
achieve the anticipated growth in its subscriber base and that the required
capital resources will be available to fund expected capital expenditures and
operating losses. However, if such subscriber growth is not achieved or
adequate capital resources are not available, the Company may not be able to
complete its business plan or remain in compliance with its borrowing
agreements.
As discussed above, the Company began commercial operation of its SkyTel 2-
Way(TM) messaging network in September 1995 and incurred losses attributable
to SkyTel 2-Way(TM) of $62.2 million during 1995. The Company anticipates
that SkyTel 2-Way(TM) will continue to incur losses during 1996 and 1997. The
Company has invested approximately $378.8 million in assets and spectrum
related to the SkyTel 2-Way(TM) network at December 31, 1995, and the Company
expects to incur significant capital expenditures to complete development and
expansion of the network and the related subscriber base. Management believes
that the Company's investment in the assets of SkyTel 2-Way(TM) will be
recovered through future operating cash flows of SkyTel 2-Way(TM). The
ability of SkyTel 2-Way(TM) to generate sufficient levels of operating cash
flow is dependent on the addition of a significant number of units in service
and the availability of sufficient capital resources to continue the
development of the network and fund its operating losses. Management's
estimates of the cash flows generated by SkyTel 2-Way(TM) and the capital
resources needed and available to complete its development could change, and
such change could differ materially from the estimates used to evaluate the
Company's ability to realize its investment. See Note 2 regarding the
significance of the use of estimates in the Company's financial statements.
As a result of higher than expected capital expenditures in the fourth
quarter of 1995 related to the purchase of pagers to support the increasing
one-way messaging subscriber base and to alleviate capacity constraints on
the SkyTel one-way messaging network, together with costs incurred in
connection with the construction, development and launch of SkyTel 2-Way(TM),
the Company was in violation of a capital expenditure covenant in its bank
loan agreement as of December 31, 1995 (see Note 6). Additional borrowings in
January 1996 caused the Company to violate a leverage maintenance covenant.
As a result of these covenant violations, the Company's borrowing
availability under the bank credit facility was temporarily suspended. The
Company obtained waivers of these covenant violations from the lending banks
on March 29, 1996.
On March 29, 1996, the lending banks and the Company entered into an
Amended Credit Facility (as defined in Note 6). The Amended Credit Facility
required as a condition to its effectiveness that the Company sell equity
securities resulting in gross proceeds to the Company of at least $25
million. Microsoft Corporation ("Microsoft") and Kleiner Perkins Caufield &
Byers ("KPCB") have agreed to purchase $25.0 million and $5.0 million,
respectively, of the Company's Pay-in-Kind ("PIK") Preferred Stock. See Note
8. The Amended Credit Facility provides the Company operating flexibility
with respect to certain objectively measurable covenants, but requires that
certain transactions involving the sale of additional equity securities of
the Company, the sale of certain non-strategic assets and the sale of equity
in certain international activities be completed by specific dates. These
required transactions are as follows: (i) by May 15, 1996, the Company must
complete the sale of equity securities in the Company (in addition to the
equity purchased by Microsoft and KPCB) resulting in gross proceeds of at
least $20 million, (ii) by June 30, 1996, the Company must complete the sale
of the Company's interest in Mercury Paging Ltd.
F-8
<PAGE>
("MPL") for certain minimum net cash proceeds (see Note 5), (iii) by June 30,
1996, the Company must complete the sale of equity securities in a
subsidiary of the Company formed for the purpose of holding the Company's
Latin American investments for certain minimum net cash proceeds and (iv) by
December 31, 1996, the Company must complete the sale of equity securities in
a subsidiary of the Company formed for the purpose of holding Asian
investments for certain minimum net cash proceeds. Each of the above
transactions, except for the sale of equity in the Company, were being
pursued by the Company as part of its business plans prior to the execution
of the Amended Credit Facility. The Company has initiated steps such as the
engagement of financial advisors to complete each of the required
transactions within the specified time periods and management believes that
each required transaction will be completed. However, failure to meet any of
the above conditions will result in an event of default which could
accelerate the maturity of the borrowings under the Amended Credit Facility
and other debt instruments.
Certain covenants in the indenture relating to the Senior Notes limit the
total indebtedness that may be incurred by the Company based primarily on the
number of one-way and two-way messaging units placed in service since
September 30, 1994. The Company believes that it may be required to solicit
the consent of the holders of the Senior Notes to amend these covenants in
1996 in order to increase the total indebtedness authorized under these
indenture covenants. However, if such consents are not obtained or are
delayed, the Company's ability to borrow under the Amended Credit Facility
could be limited. Any amendment to the indenture relating to the Senior Notes
will require the consent of the lending banks.
(2) BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES:
Principles of Consolidation - The consolidated financial statements include
the accounts of Mtel and its majority-owned subsidiaries. All significant
intercompany transactions and balances have been eliminated in consolidation.
Cash Equivalents and Short-term Investments - Mtel considers all cash
investments purchased with a maturity of three months or less to be cash
equivalents. Short-term investments consist of highly liquid securities,
including direct obligations of the United States government and money market
securities with a minimum A rating and a maturity of more than three months
when purchased. The Company uses these short-term investments in its cash
management program. Short-term investments are stated at cost plus accrued
interest, which approximates market value.
Accounts Receivable - Accounts receivable balances are net of allowances for
losses of $2,350,000 and $5,596,000 as of December 31, 1994 and 1995,
respectively.
F-9
<PAGE>
Property and Equipment - Property is recorded at cost net of accumulated
depreciation. Depreciation is provided using the straight-line method over
the following estimated useful lives:
<TABLE>
<S> <C>
Communications equipment 4 to 10 years
Buildings and other property 3 to 20 years
</TABLE>
Maintenance and repairs are expensed as incurred. Replacements and
betterments are capitalized. The cost and related reserves of assets sold or
retired are removed from the accounts and any resulting gain or loss is
reflected in the accompanying statements of operations.
Goodwill - Goodwill represents the excess cost over net tangible assets
acquired, primarily as a result of the acquisition of SkyTel and Destineer
minority interests (see Note 4) and TAS business combinations. Goodwill
associated with acquisitions within the United States are amortized over 40
years. Goodwill associated with acquisitions of international paging
operations are amortized over 5 years. Accumulated amortization related to
goodwill at December 31, 1994 and 1995 was $3,365,000 and $4,946,000,
respectively.
Interest Capitalization - In accordance with Statement of Financial
Accounting Standards ("SFAS") No. 34, Mtel capitalizes interest expense
related to equity investments and the construction or purchase of certain
assets which constitute activities preliminary to the commencement of the
planned principal operation. Interest capitalized in the years ended December
31, 1993, 1994 and 1995 was $1,700,000, $2,900,000 and $25,900,000,
respectively.
Revenue Recognition - Revenue is recorded at the time of customer usage.
Per Share Amounts - Net income per share in 1993 is determined by dividing
net income available to common stockholders by the weighted average number of
common shares outstanding during the year after giving effect for dilutive
effects of common stock equivalents arising from stock options and
convertible subordinated debt. Net loss per share in 1994 and 1995 is
determined by dividing the net loss available to common stockholders by the
weighted average number of common shares outstanding during the year with no
effect given to common stock equivalents because such effect would be
antidilutive. Weighted average common shares and common stock equivalents
used for the purpose of calculating net income (loss) per share for 1993,
1994 and 1995 were 39,443,124, 36,831,880, and 50,812,475, respectively.
Primary and fully diluted per share amounts were the same for each of the
years presented.
Foreign Currency - The assets and liabilities of international subsidiaries
and equity investments in joint ventures are translated into U.S. dollars
using the year-end exchange rate; revenues and expenses are translated at the
average rate for the year. Foreign currency translation adjustments are
charged to a separate component of stockholders' investment. Financial
results of international subsidiaries and equity investments in joint
ventures in countries with highly inflationary economies are translated using
a combination of current and historical exchange rates and any adjustments
are included in net earnings for the period. Foreign currency realized and
unrealized gains and losses for the periods presented were not material.
F-10
<PAGE>
Income Taxes - Effective January 1, 1993, the Company adopted SFAS No. 109
"Accounting for Income Taxes." The adoption of this statement did not have a
material effect on the Company's financial position or results of operations.
Mtel's deferred tax asset as of December 31, 1995 is primarily attributable
to cumulative net operating loss carryforwards for federal income tax
purposes of $127.3 million which expire in various amounts during 2003
through 2010. The deferred tax liability is primarily attributable to
accelerated depreciation and amortization for tax purposes. A valuation
allowance has been provided for the full net deferred tax asset because
utilization of cumulative net operating loss carryforwards is dependent on
the Company generating future taxable income of sufficient amounts to offset
such cumulative losses. The provision (benefit) for income taxes in 1993,
1994 and 1995 is primarily attributable to state income taxes.
The following represents the Company's deferred tax asset, deferred tax
liability and related valuation allowance at December 31, 1994 and 1995:
<TABLE>
<CAPTION>
1994 1995
<S> <C> <C>
Deferred tax asset $ 34,957,000 $ 57,894,000
Deferred tax liability (16,090,000) (23,246,000)
Valuation allowance (18,867,000) (34,648,000)
------------- -------------
Net deferred tax asset $ - $ -
============= =============
</TABLE>
Fair Value of Financial Instruments - The carrying amounts at December 31,
1995 and 1994 for cash, short-term investments, accounts receivable, accounts
payable and accrued liabilities are a reasonable estimate of their fair
values. For 1995, the fair value of each of the other classes of financial
instruments is estimated based on quoted market prices for the same or
similar instruments. The carrying value and fair value at December 31, 1995
for Securities Restricted for Debt Service were $64,101,000 and $67,036,000,
respectively. The carrying value and fair value at December 31, 1995 for the
13.5% Senior Notes were $265,000,000 and $294,150,000, respectively. The
carrying value and fair value at December 31, 1995 for financial instruments
included in Other Assets were $5,005,000 and $23,315,000, respectively. For
1994, the carrying values of each of these classes of financial instruments
approximated their fair value.
Recently Issued Accounting Standards - On January 1, 1994, the Company
adopted SFAS No. 115 "Accounting for Certain Investments in Debt and Equity
Securities." The adoption of this statement did not have a material effect on
the Company's financial position or results of operations. The Company has
also adopted, to the extent applicable, the provisions of SFAS No. 119
"Disclosure about Derivative Financial Instruments and Fair Value of
Financial Instruments." The Company has not previously used derivative
financial instruments to hedge its foreign currency exchange rate risks due,
in part, to the lack of availability of appropriate hedging instruments in
most of the countries in which Mtel has investments.
In October 1995, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 121 "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets To Be Disposed Of". This statement requires that long-lived
assets be reviewed for recoverability based on estimates of future net cash
flows if events or circumstances give rise to questions as to the ability of
the company to realize its investment in such long-lived assets. The
statement is effective for fiscal years beginning after December 15, 1995.
The Company will adopt the statement for the year ending
F-11
<PAGE>
December 31, 1996 and has not yet determined the impact of such adoption on
its financial statements. The matters discussed in Note 1 could significantly
influence the estimated future cash flows used by the Company to perform the
evaluations required under SFAS No. 121.
In October 1995, the FASB issued SFAS No. 123 "Accounting for Stock-Based
Compensation." This statement establishes financial accounting and reporting
standards for stock-based employee compensation plans and is effective for
fiscal years beginning after December 15, 1995. This statement also allows an
entity to continue to measure compensation costs for those plans using the
intrinsic value based method of accounting prescribed by Accounting
Principles Board Opinion No. 25 "Accounting for Stock Issued to Employees."
However, entities electing to remain with the accounting in Opinion No. 25
must make pro forma disclosures as if the fair value method of accounting
defined in SFAS No. 123 had been applied. The Company has not determined
whether it will elect to remain with the accounting in Opinion No. 25. The
impact of the adoption of this statement on the Company's consolidated
financial statements has not been determined.
SkyTel 2-Way(TM) Launch Costs - SkyTel 2-Way(TM) launch costs represent
primarily promotional and marketing costs incurred by the Company in 1995 in
connection with the commencement of commercial operation of SkyTel 2-
Way(TM). Such costs were incurred in addition to the advertising and
marketing costs incurred in connection with on-going sales and marketing
activities and are not expected to recur.
Use of Estimates - Financial statements prepared in accordance with generally
accepted accounting principles require the use of management estimates. The
most significant estimates included in these financial statements relate to
the estimated economic lives of and the Company's ability to realize its
investment in certain licenses, equipment and software which comprise the
Company's messaging networks. See Note 3. Specifically, the Company has
incurred significant costs to acquire licenses and to construct the SkyTel 2-
Way(TM) network. The Company estimates that this cost will be recovered
through operating cash flows generated from SkyTel 2-Way(TM). As discussed
above, SkyTel 2-Way(TM) commenced commercial operation in September 1995. In
addition, the Company has made significant investments in certain
international messaging activities which have not yet become profitable and
which may require substantial additional investments to become fully
developed (see Note 5). Management's estimates as to the extent and timing of
cash flows generated by SkyTel 2-Way(TM) and certain international activities
could change, and such change could differ materially from the estimates
which were used to evaluate the Company's ability to realize its investments
in the SkyTel 2-Way(TM) network and certain of its international activities
at December 31, 1995.
Prior Year Balances - Certain reclassifications have been made to previously
reported balances to conform to current year presentation.
(3) MESSAGING NETWORKS:
Mtel continues to pursue its plan of developing nationwide and international
messaging networks through investments in the United States and certain
international locations. Costs incurred by the
F-12
<PAGE>
Company in establishing and constructing messaging networks in the United
States and by the Company's majority owned subsidiaries in countries outside
the United States include, among other things, property and equipment,
internally developed software, legal organizational costs, costs of acquiring
required licenses and certain other costs of establishing business
operations.
The following provides additional details with respect to the elements of the
Company's messaging networks. See also Note 10 for additional information
concerning the Company's business segments.
Property and Equipment - Property and equipment consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
1994 1995
<S> <C> <C>
Land $ 282,796 $ 282,581
Buildings 3,723,430 4,126,749
Communications equipment 125,495,139 297,395,410
Other 37,731,863 70,033,621
------------ ------------
167,233,228 371,838,361
Accumulated depreciation (47,912,681) (77,211,919)
------------ ------------
$119,320,547 $294,626,442
============ ============
</TABLE>
Certificates of Authority and License Cost - Certificates of authority are
primarily attributable to costs associated with obtaining one-way paging
licenses and PCS licenses. Costs associated with licenses within the United
States are amortized over periods not exceeding 40 years. Costs associated
with obtaining licenses for international paging operations are amortized
over 5 years. Accumulated amortization related to certificates of authority
and license cost at December 31, 1994 and 1995 was $2,968,000 and $6,309,000,
respectively.
Destineer acquired two nationwide narrowband PCS licenses in an auction of
licenses held by the FCC in July 1994 at a cost of approximately $127.5
million. Effective with the September 1995 commercial launch of SkyTel 2-
Way(TM), the Company began amortizing the cost of the license currently being
used to provide SkyTel 2-Way(TM) service (approximately $80 million) over a
40 year period. The Company will begin to amortize the cost
of the acquired PCS license (approximately $47.5 million) that is not
currently being used when the related frequency becomes operational. In July
1994, Destineer was granted by the FCC, pursuant to a Pioneer's Preference,
the first nationwide narrowband PCS license for the deployment and
commercialization of a two-way, nationwide wireless data network in the
United States. However, the issuance of Destineer's initial narrowband PCS
license was conditioned by the FCC upon the payment of a license fee of
approximately $33.0 million. Mtel filed an appeal challenging the condition
requiring payment for the license and in March 1996 the United States
District Court for the D.C. Circuit issued a decision upholding the FCC's
authority under the Communications Act to impose such a fee. However, the
Court remanded the matter to the FCC for consideration of the propriety of
imposing such a fee in light of Mtel's reliance on the FCC's public
pronouncements that no such fee would be imposed and the granting by the FCC
of other paging licenses without the imposition of any fee. Payment for the
license will not be
F-13
<PAGE>
required to be made unless and until such litigation is definitively resolved
adversely to the Company. Mtel does not currently utilize the frequency
related to this conditional license.
Network Construction and Development Costs - Network construction and
development costs represent the costs associated with the construction and
development of the SkyTel one-way messaging network and the SkyTel 2-Way(TM)
network. These costs include software development costs, site acquisition and
development costs, capitalized interest costs and other related costs.
Network construction and development costs are amortized over periods not
exceeding 10 years. Accumulated amortization related to network construction
and development costs at December 31, 1994 and 1995 was $2,295,000 and
$8,466,000, respectively.
(4) ACQUISITION OF MINORITY INTEREST:
On January 13, 1995, Mtel acquired the 9.7% of the outstanding shares of
SkyTel common stock that Mtel did not already own in a transaction in which
the minority stockholders of SkyTel received approximately 3.4 million shares
of Mtel Common Stock with a fair value of approximately $49 million. The
transaction was accounted for as the purchase of minority interest and
resulted in goodwill of approximately $49 million. As a result of this
transaction, all of the issued and outstanding shares of SkyTel common stock
are owned by Mtel.
On September 15, 1995, Mtel acquired the 19.9% of the outstanding shares of
common stock of Destineer that it did not already own in a transaction in
which the minority stockholders of Destineer received approximately 4.0
million shares of Mtel Common Stock with a fair value of approximately $85
million. The transaction resulted in goodwill of approximately $31 million.
As a result of this transaction, all of the issued and outstanding shares of
Destineer common stock are owned by Mtel.
If the SkyTel and Destineer minority interest acquisitions had occurred on
January 1, 1994, the unaudited proforma net loss and net loss per common
share for the years ended December 31, 1995 and 1994 would have been $53.9
million and $1.17 per share and $22.5 million and $0.70 per share,
respectively.
(5) INTERNATIONAL INVESTMENTS:
Mtel has equity investments in unconsolidated joint ventures that operate
one-way wireless messaging systems in 10 countries outside the United States.
Costs incurred by the Company in establishing its international relationships
include property and equipment, software development costs, organizational
costs and other costs of establishing business operations. Such costs are
generally capitalized by Mtel until such time as the investee becomes
operational, or a relationship is abandoned. If the relationship is
abandoned, the capitalized costs are charged to expense. Once operations are
established by the investee, Mtel classifies such costs based on the type of
investment and determines the method of accounting for its investment based
on, among other things, its ownership percentage and its ability to exercise
significant influence over the investee's operations and management.
Mtel provides one-way wireless messaging services through 100%-owned
subsidiaries in Argentina and Hong Kong, a 98%-owned subsidiary in Colombia
and a 90%-owned subsidiary in Uruguay. Accordingly, the results of operations
in these countries are included in the Company's consolidated
F-14
<PAGE>
financial statements. The Company's ownership percentages in other countries
range from 19% to 50%. Investments in which Mtel holds an ownership
percentage of 20% to 50% are generally accounted for using the equity method.
Any excess of Mtel's capitalized costs over the underlying book value of the
Company's ownership in international operations (other than the United
Kingdom) is treated as an intangible asset and is generally amortized over a
five year period beginning when the investee becomes operational. Costs in
excess of the underlying book value of Mtel's United Kingdom investment is
amortized over a 40 year period. The Company's largest unconsolidated
international equity investments are in the United Kingdom and Mexico.
UNITED KINGDOM
Mtel owns a 29% equity interest in MPL which provides nationwide paging
services in the United Kingdom. Mtel recorded equity income from MPL of
approximately $1.7 million, $2.7 million and $2.6 million for the years ended
December 31, 1993, 1994 and 1995, respectively. For the year ended December
31, 1995, Mtel received dividends of approximately $1.2 million from MPL. As
of December 31, 1994 and 1995, the carrying value of Mtel's investment in MPL
was $23,767,000 and $24,995,000, respectively.
The shareholders of MPL have announced their intention to sell all of the
shares of MPL. It is anticipated that the sale will occur during 1996, and
that no significant gain or loss will be realized by the Company as a result
of such sale.
MEXICO
The Company owns a 49% equity interest, and Grupo Televisa, a media
conglomerate based in Mexico City, owns a 51% equity interest, in
Comunicaciones Mtel, S.A. de C.V. ("CMtel") which provides nationwide paging
services in Mexico. Mtel recorded equity income of approximately $1.2
million, $1.6 million and $1.1 million for the years ended December 31, 1993,
1994 and 1995, respectively, from its investment in CMtel. As of December 31,
1994 and 1995, the carrying value of Mtel's investment in CMtel was
$6,796,000 and $8,960,000, respectively.
OTHER
The Company holds 50% or less equity investments in several other
international joint ventures which are in various stages of operations. For
those entities which have commenced operations, other than MPL and CMtel, the
Company's net investment at December 31, 1995 was approximately $10,128,000
as compared to approximately $8,293,000 at December 31, 1994. At December 31,
1995, these investments included operations in Paraguay, Peru, Ecuador,
Guatemala, Brazil, Malta, Malaysia and Indonesia. Aggregate losses from 50%
or less owned investments accounted for using the equity method, other than
MPL and CMtel, were approximately $2,533,000, $442,000 and $194,000 for the
years ended December 31, 1995, 1994 and 1993, respectively. The Company's net
investment in international joint ventures which were not yet operational was
approximately $23,961,000 at December 31, 1995 as compared to $19,951,000 at
December 31, 1994.
The Company currently expects that it will require external capital to fund
its one-way paging operations in many of the countries in which it has
investments. Because Mtel operates in a number of countries, capital
requirements may vary and will depend upon (i) general trends in the paging
F-15
<PAGE>
industry in each particular country, (ii) exchange rates of such countries'
currencies and (iii) the success achieved in each country. The Company is
currently seeking equity partners to invest in its development activities in
Latin America and Asia. As a result, the Company's ownership percentage in
certain of its international subsidiaries or investees may be reduced.
The Company's operations and investments in each of its international markets
are generally subject to the risks of political, economic or social
instability, including the possibility of expropriation, confiscatory
taxation or other adverse regulatory or legislative developments, limitations
on the removal of investment income, capital and other assets and exchange
rate fluctuations.
(6) DEBT:
A summary of debt is as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
1994 1995
<S> <C> <C>
13.5% Senior Notes due 2002 $265,000,000 $265,000,000
Bank Credit Facility - 65,500,000
6.75% Convertible subordinated debentures due 2002 2,677,000 1,512,000
Other notes payable 6,001,787 2,525,146
------------ ------------
273,678,787 334,537,146
Less current maturities 49,820 1,278,426
------------ ------------
$273,628,967 $333,258,720
============ =============
</TABLE>
On December 22, 1995, SkyTel obtained a $250 million secured revolving
credit facility (the "Bank Credit Facility") from a syndicate of financial
institutions (the "Bank Group"). The Bank Credit Facility is being used for
capital expenditures, working capital and other general corporate purposes.
Borrowings under the Bank Credit Facility bear interest, at SkyTel's
election, at (i) the London Interbank Offering Rate plus a margin of 200 to
250 basis points or (ii) an alternate base rate (as defined in the credit
facility) plus a margin of 100 to 150 basis points. The margin over the
applicable rate is based on the ratio of Mtel's consolidated indebtedness to
SkyTel's operating cash flow determined on a quarterly basis. The borrowings
outstanding at December 31, 1995 carried a 10% interest rate as of that date.
Borrowings under the Bank Credit Facility are guaranteed by Mtel and its U.S.
subsidiaries and are secured by substantially all of the assets of SkyTel,
Mtel and Mtel's other U.S. subsidiaries. The credit agreement relating to
this facility contains covenants customary for such facilities, including
covenants limiting capital expenditures and additional indebtedness, and
requiring the maintenance of various financial and operating ratios. As of
December 31, 1995, SkyTel was not in compliance with the capital
expenditure limitations of the credit facility, and borrowings incurred under
the facility in January 1996 caused SkyTel to exceed borrowing
limitations. SkyTel has obtained waivers from the Bank Group for each of
these violations of the credit facility. In addition, on March 29, 1996,
SkyTel and the Bank Group completed an amendment to the credit facility (the
"Amended Credit Facility") to provide SkyTel additional operating
flexibility under the covenants of the credit facility.
Other conditions of the Amended Credit Facility require the Company to (i) by
May 15, 1996, complete the sale of equity securities in the Company, in
addition to the equity purchased by Microsoft and KPCB (see Note 8),
resulting in gross proceeds of at least $20 million, (ii) by June 30, 1996,
complete the sale of the Company's interest in MPL for certain minimum net
cash proceeds (see Note 4), (iii) by June 30, 1996, complete the sale of
equity securities in a subsidiary of the Company formed for the purpose of
holding the Company's Latin American investments for certain minimum net cash
proceeds and (iv) by December 31, 1996, complete the sale of equity
securities in a subsidiary of the Company formed for the purpose of holding
Asian investments for certain minimum net cash proceeds.
F-16
<PAGE>
As discussed in Note 8, the Company has entered into agreements for the sale
of $30,000,000 of PIK Preferred Stock, and is currently seeking purchasers
for an additional $20 to $30 million. Management of the Company believes that
all of the conditions of the Amended Credit Facility will be met. However,
failure to meet any of the above conditions will result in an event of
default which could accelerate the maturity of the borrowings under the
Amended Credit Facility and the 13.5% Senior Notes discussed in the following
paragraph. See Notes 5 and 8. The $250 million commitment available to SkyTel
for borrowings under the facility reduces quarterly commencing on March 31,
1999. The quarterly reductions in the total Amended Credit Facility
commitment are $22,500,000 for each quarter in 1999, $27,500,000 for each
quarter in 2000 and $12,500,000 for each quarter in 2001.
On December 30, 1994, the Company completed a public offering of $265,000,000
principal amount of 13.5% Senior Notes (the "Senior Notes") due 2002.
Interest on the Senior Notes is payable semi-annually on June 15 and December
15 of each year. The Company used approximately $93.6 million of the net
proceeds to purchase a portfolio of securities pledged as security for
payment of interest on the Senior Notes through December 15, 1997. The
portfolio is comprised of U.S. government securities with maturities designed
to coincide with the dates that interest on the Senior Notes is payable. The
Senior Notes will mature on December 15, 2002 and are subject to redemption
at the option of the Company, in whole or in part, at any time on or after
December 15, 1998, at a redemption price of par plus a premium (for any
redemption prior to December 15, 2001) and any accrued and unpaid interest,
to the date of redemption. In addition, at any time prior to December 15,
1997, at the option of the Company, up to 25% of the aggregate principal
amount of the Senior Notes may be redeemed at a redemption price equal to
114.5% of the principal amount of the Senior Notes at the date of redemption,
plus accrued and unpaid interest, if any, to the date of redemption, with the
proceeds from the sale of at least $75.0 million of certain equity securities
to a strategic equity investor meeting certain qualifications; provided, that
at least 75% of the aggregate principal amount of the Senior Notes originally
issued in the offering remains outstanding following any such redemption. The
Senior Notes are senior obligations of the Company and rank senior in right
of payments to all subordinated indebtedness of the Company. The Indenture
related to the Senior Notes imposes certain restrictions on additional
indebtedness which the Company may incur. During 1996 management expects to
solicit the consent of the holders of the Senior Notes to increase the
additional borrowing limits under the Indenture; otherwise, the Company's
ability to borrow under the Amended Credit Facility may be limited.
On May 28, 1992, the Company completed an underwritten public offering of
$86,250,000 principal amount of 6.75% Convertible Subordinated Debentures
(the "Debentures") due May 15, 2002. On December 12, 1994, the holders of the
Debentures converted $82.2 million in aggregate principal amount of
Debentures into Mtel Common Stock pursuant to a conversion offer made by the
Company and received, in addition to approximately 8.2 million shares of Mtel
Common Stock, a cash payment equal to approximately $45 per $1,000 face
amount of Debentures. The aggregate amount of this conversion cost, $3.1
million, was charged to expense in 1994. Interest on the remaining Debentures
is payable semi-annually on May 15 and November 15. The Debentures are
convertible into common stock of the Company at $10 per share.
(7) COMMITMENTS AND CONTINGENCIES:
At December 31, 1995, Mtel was committed under noncancelable operating leases
expiring on various dates. The leases are primarily for the rental of office
space, antenna sites and vehicles.
F-17
<PAGE>
Annual commitments for rental payments on such leases in each of the years
ending December 31, 1996 through 2000 and thereafter are as follows:
<TABLE>
<CAPTION>
MINIMUM
RENTAL
YEAR PAYMENTS
<S> <C>
1996 $ 34,338,000
1997 28,924,000
1998 23,599,000
1999 17,904,000
2000 10,747,000
Thereafter 9,637,000
</TABLE>
Rental expense for operating leases was approximately $10,908,000,
$12,980,000 and $22,438,000 during the years ended December 31, 1993, 1994
and 1995, respectively.
The Company currently acquires a significant portion of its high-speed pagers
from a single vendor. The ability of the Company to continue to provide high-
speed pagers to its customers is largely dependent on the vendor's ability to
supply such pagers on a timely basis.
Mtel has entered into an agreement with Wireless Access, Inc. with respect to
the design and manufacture of personal messaging units for the SkyTel 2-
Way(TM) network. The Company's total commitment under this agreement is
approximately $18 million, approximately one-half of which is expected to be
fulfilled in the first half of 1996 with the remainder contingent upon future
product development by Wireless Access, Inc.
In January 1994, five civil complaints were filed against the Company and
certain of its officers and directors. These complaints alleged, generally,
violations of certain federal securities laws and common law causes of action
for fraud and negligent misrepresentation because of certain alleged material
misstatements and omissions in the Company's filings and public statements.
These actions were consolidated in May 1994. On November 8, 1995, the United
States District Court for the Southern District of Mississippi issued a
Memorandum Opinion and Order dismissing in its entirety the consolidated
complaint.
The Company is involved in various other legal matters and claims which are
being defended and handled in the ordinary course of business. None of these
other matters is expected, in the opinion of management, to have a material
adverse effect upon the financial position or results of operations of the
Company.
(8) STOCKHOLDERS' INVESTMENT:
In July 1989, Mtel declared a dividend of one stock purchase right for each
outstanding share of Mtel Common Stock. Under certain conditions, each right
may be exercised to purchase from Mtel one one-hundredth of a share of Mtel
Series C Junior Participating Preferred Stock, $.01 par value per share, at a
price of $30, subject to adjustment. The rights may only be exercised after a
public announcement that a party has acquired or obtained the right to
acquire 20% or more of the
F-18
<PAGE>
outstanding shares of Mtel Common Stock or after commencement of a tender
offer or exchange offer for 20% or more of the outstanding shares of Mtel
Common Stock. The rights, which do not have voting rights, expire in 1999,
and may be redeemed by Mtel at a price of $.01 per right at any time prior to
their expiration or the acquisition of 20% of the outstanding shares of Mtel
Common Stock. In the event that Mtel is acquired in a merger or other
business transaction not approved by the Mtel Board of Directors, each holder
of a right shall have the right to receive that number of shares of Mtel
Common Stock that would have a market value of two times the exercise price
of the right.
On October 19, 1993, the Company sold 3,750,000 shares of $2.25 Cumulative
Convertible Exchangeable Preferred Stock (the "Preferred Stock") at a price
of $50 per share with an aggregate liquidation value of approximately $188
million. The sale of the Preferred Stock was made in a private transaction
exempt from the registration requirements of the federal securities laws. The
Preferred Stock is convertible at any time at the option of the holder into
shares of common stock of the Company at a conversion rate of 1.1111 common
shares for each share of Preferred Stock. The Preferred Stock is mandatorily
redeemable under conditions outside the control of the Company in certain
circumstances and such redemption may be made in common stock of the Company
or cash at the Company's option. Net proceeds to the Company, after deducting
the expenses of the offering and the discounts to the initial purchasers,
were approximately $181 million.
In March 1996, the Company completed agreements to sell 30,000 shares of
its Cumulative Convertible Accruing PIK Preferred Stock (the "PIK Preferred")
to Microsoft and KPCB which will result in proceeds to the Company of $30
million. The proceeds from the sale of the PIK Preferred will be used to fund
the continuing development costs associated with the SkyTel 2-Way(TM) network
and for general corporate purposes. Holders of the PIK Preferred are entitled
to receive dividends out of funds legally available therefor at an annual
rate of 7.5% (or $75 per share of PIK Preferred), payable quarterly on each
March 15, June 15, September 15 and December 15. The Company has the option,
however, to pay dividends on the PIK Preferred through the fifth anniversary
of the date of issuance or until cash dividends are permitted under the
Company's Bank Credit Facility or the indenture pertaining to the Senior
Notes in the form of additional shares of PIK Preferred. Dividends on the PIK
Preferred are cumulative and will accrue from the date of original issue. The
PIK Preferred ranks junior in right of payment to the Company's outstanding
Preferred Stock. Each share of PIK Preferred may be converted at the option
of the holder into shares of Mtel Common Stock at a conversion price of
$17.90 per share of Mtel Common Stock for each share of PIK Preferred,
subject to adjustment upon the occurrence of certain events. The Company is
currently involved in discussions with other prospective investors regarding
the purchase of an additional $20 to $30 million of PIK Preferred. See Note
6.
(9) EXECUTIVE INCENTIVE PLANS:
In October 1988, the Board of Directors of Mtel adopted an Executive
Incentive Plan (the "1988 Plan"). The 1988 Plan provides for the granting of
stock options, stock appreciation rights, performance units and restricted
stock to officers and employees for a maximum of 2,500,000 shares of Mtel
Common Stock. In October 1990, the Board of Directors of Mtel adopted the
1990 Executive Incentive Plan (the "1990 Plan"). The 1990 Plan, as amended by
the vote of the stockholders at the 1995 annual meeting, similarly provides
for the granting of stock options, stock appreciation rights, performance
units and restricted stock not to exceed an additional 6,000,000
F-19
<PAGE>
shares of Mtel Common Stock. Options may be granted under both the 1988 Plan
and 1990 Plan to purchase shares of Mtel Common Stock at a price not less
than the fair market value on the date of grant. Option rights under both the
1988 Plan and the 1990 Plan generally become exercisable as to 33 1/3% of the
shares of Mtel Common Stock covered thereby on the first anniversary of the
date of the grant, and become exercisable as to an additional 33 1/3% 18
months and 24 months after the date of the grant. All options expire ten
years from the date of the grant.
Mtel also has a Long-Term Management Incentive Plan (the "Long-Term Incentive
Plan") which was approved by the stockholders of the Company in its May 1993
annual meeting. The Long-Term Incentive Plan provides for awards consisting
of cash, shares of the Company's common stock or stock options, or any
combination thereof, to officers and key employees of the Company and its
subsidiaries selected for participation by the Compensation Committee of the
Board of Directors. The awards are payable if Mtel's total return to
stockholders over the three-year performance cycle exceeds the rate of return
on a three-year Treasury bill over the performance cycle and meets or exceeds
certain levels of the total rate of return to stockholders of a group of
companies within the radio telecommunications industry group. Mtel has
reserved 500,000 shares from its authorized but unissued shares of common
stock for awards pursuant to the Long-Term Incentive Plan.
In March 1993, the Board of Directors of the Company adopted the Company's
1993 Employee Stock Purchase Plan (the "Stock Purchase Plan") which
authorizes the granting of options to purchase up to 500,000 shares of common
stock of Mtel to the Company's employees. The Stock Purchase Plan was
approved by the stockholders of the Company in its annual meeting held in May
1993. All employees of the Company and its subsidiaries who are not executive
officers of the Company and who have been employed for six months or more are
eligible to elect to be granted options under the Stock Purchase Plan. The
purchase price for optioned stock will be the lesser of (a) 85 percent of the
fair market value of the common stock on the date of grant, or (b) 85 percent
of such fair market value on the date of exercise of the option. Employees
may elect to have up to 10 percent of their compensation withheld from
payroll and applied to purchase common stock under the Stock Purchase Plan. A
total of 32,444 and 43,140 shares of common stock of the Company was issued
under the Stock Purchase Plan during 1994 and 1995, respectively.
In addition, Mtel has granted directors who are not officers of Mtel certain
nonqualified options outside of the Executive Incentive Plans. These
nonqualified stock options become exercisable in accordance with terms
similar to options granted under the Executive Incentive Plans. There was no
compensation expense attributable to these options.
Stock option activity is summarized as follows:
<TABLE>
<CAPTION>
1993 1994 1995
-------------------- -------------------- --------------------
AVERAGE AVERAGE AVERAGE
NUMBER OF EXERCISE NUMBER OF EXERCISE NUMBER OF EXERCISE
OPTIONS PRICE OPTIONS PRICE OPTIONS PRICE
<S> <C> <C> <C> <C> <C> <C>
OUTSTANDING, BEGINNING OF YEAR 4,530,375 $5.66 3,673,700 $ 5.72 4,738,512 $ 9.25
Granted 60,670 8.46 1,373,890 18.08 709,100 24.44
Exercised (897,048) 5.80 (246,368) 16.54 (936,379) 19.44
Canceled (20,297) 9.01 (62,710) 7.42 (29,452) 16.22
</TABLE>
F-20
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
OUTSTANDING, END OF YEAR 3,673,700 $5.72 4,738,512 $ 9.25 4,481,781 $12.13
</TABLE>
Options to purchase 3,200,269 shares of common stock were exercisable at an
average exercise price of $8.19 per share at December 31, 1995.
(10) SEGMENT INFORMATION:
Mtel is principally engaged in the telecommunications business through
SkyTel, SkyTel 2-Way(TM) and Mtel International. The Company's other
businesses include air-to-ground telecommunications operations, telephone
answering services and other investments. For purposes of reporting operating
income (loss) for the Company's business segments, certain indirect
operating, selling and general and administrative costs must be allocated
among the business segments. Such costs are generally allocated among the
SkyTel, SkyTel 2-Way(TM) and International segments based on the percentage
of time spent by the applicable personnel on each segment's activities.
For the year ended December 31, 1994, international revenues, operating
income (loss) and depreciation and amortization are comprised primarily of
the Company's Argentina and Colombia operations. International revenues,
operating income (loss) and depreciation and amortization for the year ended
December 31, 1995 are comprised of the Company's operations in Argentina,
Colombia, Hong Kong and Uruguay. Net Income (Loss) - International for the
years ended December 31, 1993, 1994 and 1995 includes equity income of $2.7
million, $3.8 million and $1.2 million, respectively, relating to its
minority-owned investments in the United Kingdom, Mexico and certain other
countries. Net Income (Loss) - International for 1993 also includes a gain
of $4.0 million from the sale of a Thailand paging company in the third
quarter of 1993. Net Income (Loss) - Other for 1994 includes a gain of $2.5
million from the sale of the Company's digital point-to-point microwave
system and a gain of $2.2 million from the sale of two specialized mobile
radio licenses and assets. Net Income (Loss) - Other for 1995 includes a
$2.5 million gain from the sale of a portion of the Company's stock in a non-
strategic investee.
For periods prior to 1995, interest expense was charged to SkyTel based on
the level of advances from Mtel using a rate of prime plus 1%. Subsequent to
Mtel's acquisition of the minority interests of SkyTel, SkyTel has not been
charged interest on such advances. Interest expense charged to SkyTel by the
Company in 1993 and 1994 was $6,317,000 and $7,380,000, respectively.
No provision or benefit for income taxes has been reflected in the
determination of net income (loss) for the Company's business segments
because the Company incurred no income tax liability on a consolidated basis.
Summarized information about Mtel's operations in its principal segments is
presented below:
<TABLE>
<CAPTION>
DECEMBER 31,
1993 1994 1995
(In thousands of dollars)
<S> <C> <C>
</TABLE>
F-21
<PAGE>
<TABLE>
<S> <C> <C> <C>
REVENUES-
SkyTel $131,595 $150,455 $225,146
SkyTel 2-Way(TM) - - 1,213
International 80 2,485 10,121
Other 12,790 10,330 9,511
-------- -------- --------
$144,465 $163,270 $245,991
OPERATING INCOME (LOSS)-
SkyTel $ 21,750 $ (4,608) $ 21,225
SkyTel 2-Way(TM) (2,148) (4,344) (54,311)
International (962) (10,755) (21,392)
Other (5,093) (4,872) (3,944)
-------- -------- --------
$ 13,547 $(24,579) $(58,422)
DEPRECIATION AND AMORTIZATION-
SkyTel $ 13,547 $ 17,520 $ 27,998
SkyTel 2-Way(TM) - - 6,314
International 945 1,826 4,938
Other 3,205 2,947 3,059
-------- -------- --------
$ 17,697 $ 22,293 $ 42,309
NET INCOME (LOSS)-
SkyTel $ 14,103 $(14,688) $ 20,184
SkyTel 2-Way(TM) (2,148) (4,344) (62,168)
International 6,043 (6,779) (21,380)
Other (1,035) 5,965 11,337
-------- -------- --------
$ 16,963 $(19,846) $(52,027)
TOTAL ASSETS-
SkyTel $ 88,313 $117,708 $254,886
SkyTel 2-Way(TM) 15,765 190,740 378,784
International 69,400 116,449 102,965
Other 232,574 290,574 114,779
-------- -------- --------
$406,052 $715,471 $851,414
CAPITAL EXPENDITURES-
SkyTel $ 35,437 $ 35,483 $ 90,132
SkyTel 2-Way(TM) 12,985 176,808 162,339
International 1,481 11,190 12,978
Other 2,040 4,186 11,859
-------- -------- --------
$ 51,943 $227,667 $277,308
</TABLE>
(11) QUARTERLY FINANCIAL DATA (UNAUDITED):
Selected unaudited quarterly financial data is as follows:
<TABLE>
<CAPTION>
QUARTER ENDED
MARCH 31, JUNE 30, SEPTEMBER 30, DECEMBER 31,
<S> <C> <C> <C>
</TABLE>
F-22
<PAGE>
<TABLE>
<CAPTION>
1994 1995 1994 1995 1994 1995 1994 1995
(In thousands of dollars, except per share data)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues $40,341 $50,628 $38,133 $ 56,864 $39,668 $ 64,423 $ 45,128 $ 74,076
Operating income (loss) $ 1,339 $(5,300) $(7,398) $ (3,946) $(7,794) $ (7,332) $(10,726) $(41,844)
Net income (loss) $ 4,597 $(4,009) $(3,607) $ (993) $(6,334) $ (6,640) $(14,503) $(40,385)
Net income (loss) per
common share $0.07 $(0.13) $(0.16) $ (0.06) $ (0.23) $ (0.17) $ (0.43) $ (0.79)
</TABLE>
Net income per share is determined by dividing net income by the weighted
average number of shares outstanding during the quarter after giving effect
for common stock equivalents arising from stock options and convertible
subordinated debt. In the first quarter of 1994, primary and fully diluted
net income per share were the same. Net loss per share is calculated by
dividing the net loss by the weighted average number of common shares
outstanding during the quarter with no effect given to common stock
equivalents because such effect would be antidilutive.
The operating loss and net loss for the quarter ended December 31, 1995
include the SkyTel 2-Way(TM) launch costs and the first full quarter of
operating costs, depreciation and amortization and interest expense
attributable to the SkyTel 2-Way(TM) network.
(12) SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid by Mtel during the years ended December 31, 1993, 1994 and 1995
amounted to $6,923,000, $6,571,000 and $35,344,000, respectively. No federal
income taxes were paid during these years. See Note 4 for information on
noncash transactions.
F-23
<PAGE>
MOBILE TELECOMMUNICATION TECHNOLOGIES CORP. AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
SCHEDULE II
<TABLE>
<CAPTION>
Balance of Charge to Balance at
beginning costs and Accounts end of
Description of period expenses written off Deductions period
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Allowance for doubtful accounts:
1993 930,284 1,465,437 1,087,661 0 1,308,060
1994 1,308,060 2,314,397 1,271,881 0 2,350,576
1995 2,350,576 6,880,223 3,634,408 0 5,596,391
</TABLE>
FA-1
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
ON FINANCIAL STATEMENT SCHEDULE
To Mobile Telecommunication Technologies Corp.:
We have audited in accordance with generally accepted auditing standards, the
consolidated financial statements of Mobile Telecommunication Technologies Corp.
included in this Form 10-K, and have issued our report thereon dated April 1,
1996. Our audit was made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying financial statement
schedule II is the responsibility of the Company's management and is presented
for purposes of complying with the Securities and Exchange Commission's rules
and is not part of the basic financial statements. This financial statement
schedule has been subjected to the auditing procedures applied in the audit of
the basic financial statements and, in our opinion, fairly states in all
material respects the financial data required to be set forth therein in
relation to the basic financial statements taken as a whole.
ARTHUR ANDERSEN LLP
Jackson, Mississippi,
April 1, 1996,
FA-2
<PAGE>
EXHIBIT 4.7
- --------------------------------------------------------------------------------
CREDIT, SECURITY, GUARANTY AND PLEDGE AGREEMENT
Dated as of December 21, 1995
among
SKYTEL CORP.
and
MOBILE TELECOMMUNICATION TECHNOLOGIES CORP.
AND
ITS SUBSIDIARIES REFERRED TO HEREIN
and
THE LENDERS REFERRED TO HEREIN
and
CHEMICAL BANK
as Administrative Agent
and
CREDIT LYONNAIS NEW YORK BRANCH
as Documentation Agent
and
J.P. MORGAN SECURITIES INC.
as Co-Syndication Agent
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<PAGE>
SCHEDULES
- ---------
1 Table of Commitments
2 Excluded Equity Interests
3 Guarantors
4 Subordinated Debt
3.1 Foreign Jurisdictions Where Qualified
3.3 Governmental Approvals
3.6(a) Subsidiaries and Investments
3.6(c) Joint Ventures
3.7 Proprietary Rights
3.8 Fictitious Names
3.9 Chief Executive Offices, Location of Records
and Collateral
3.11 Litigation
3.17 Restricted Agreements
3.18 Interest Rate Protection Agreements and
Currency Agreements
3.19 UCC Financing Statements
3.23 Pledged Securities
3.24 FCC Licenses
6.1 Existing Indebtedness and Guaranties
6.6 Existing Liens
11.1 Minority Investments
EXHIBITS
- --------
A Form of Note
B Form of Opinion of Counsel to the Credit Parties
C Form of Contribution Agreement
D Form of Patent Security Agreement
E Form of Trademark Security Agreement
F Form of Copyright Security Agreement
G Form of Subordination Agreement
H Form of Assignment and Acceptance
I Form of Compliance Certificate
J Form of Confidentiality Letter
<PAGE>
TABLE OF CONTENTS
1. DEFINITIONS.............................................................. 2
2. THE LOANS................................................................ 20
SECTION 2.1. Loans..................................................... 20
SECTION 2.2. Making of Loans........................................... 20
SECTION 2.3. Letters of Credit......................................... 21
SECTION 2.4. Notes..................................................... 29
SECTION 2.5. Interest on Notes......................................... 29
SECTION 2.6. Commitment Fees. ......................................... 31
SECTION 2.7. Optional and Mandatory Termination or
Reduction of Commitments................................. 31
SECTION 2.8. Default Interest; Alternate Rate of
Interest................................................. 33
SECTION 2.9. Continuation and Conversion of Loans...................... 34
SECTION 2.10. Prepayment of Loans; Reimbursement of
Lenders................................................... 35
SECTION 2.11. Change in Circumstances................................... 38
SECTION 2.12. Change in Legality........................................ 41
SECTION 2.13. Manner of Payments........................................ 41
SECTION 2.14. United States Withholding................................. 42
SECTION 2.15. Interest Adjustments...................................... 44
3. REPRESENTATIONS AND WARRANTIES........................................... 44
SECTION 3.1. Corporate Existence and Power............................. 45
SECTION 3.2. Corporate Authority and No Violation...................... 45
SECTION 3.3. Governmental Approval..................................... 46
SECTION 3.4. Financial Condition....................................... 46
SECTION 3.5. No Material Adverse Change................................ 48
SECTION 3.6. Subsidiaries, Other Investments and
Joint Ventures........................................... 48
SECTION 3.7. Copyrights, Patents and Other Rights...................... 49
SECTION 3.8. Fictitious Names.......................................... 49
SECTION 3.9. UCC Filing Information.................................... 50
SECTION 3.10. Title to Properties....................................... 50
SECTION 3.11. Litigation................................................ 50
SECTION 3.12. Federal Reserve Regulations............................... 50
SECTION 3.13. Investment Company Act.................................... 51
SECTION 3.14. Enforceability............................................ 51
SECTION 3.15. Taxes..................................................... 51
SECTION 3.16. Compliance with ERISA..................................... 51
SECTION 3.17. Agreements................................................ 52
SECTION 3.18. Indebtedness; Interest Rate Protection
Agreements and Currency Agreements....................... 52
SECTION 3.19. Security Interest......................................... 53
SECTION 3.20. Disclosure................................................ 53
SECTION 3.21. Environmental Liabilities................................. 54
SECTION 3.22. Labor Matters............................................. 55
SECTION 3.23. Pledged Securities........................................ 55
SECTION 3.24. FCC Licenses.............................................. 56
SECTION 3.25. Senior Obligations........................................ 57
4. CONDITIONS OF LENDING.................................................... 58
<PAGE>
SECTION 4.1. Conditions Precedent to the Initial
Loans.................................................... 58
SECTION 4.2. Conditions Precedent to Each Loan and
Letter of Credit..................................... 62
5. AFFIRMATIVE COVENANTS.................................................... 62
SECTION 5.1. Financial Statements and Reports.......................... 63
SECTION 5.2. Corporate Existence; Compliance with
Statutes................................................. 68
SECTION 5.3. Insurance................................................. 68
SECTION 5.4. Taxes and Charges; Indebtedness in
Ordinary Course of Business.............................. 68
SECTION 5.5. Chief Executive Office.................................... 69
SECTION 5.6. ERISA Compliance and Reports.............................. 69
SECTION 5.7. Access to Books and Records;
Examinations............................................. 70
SECTION 5.8. Maintenance of Properties................................. 71
SECTION 5.9. Material Changes.......................................... 71
SECTION 5.10. Environmental Laws........................................ 71
SECTION 5.11. Claims.................................................... 72
SECTION 5.12. Further Assurances........................................ 72
SECTION 5.13. Performance of Obligations................................ 73
SECTION 5.14. Maintenance of Licenses................................... 73
SECTION 5.15. Subsidiaries.............................................. 74
SECTION 5.16. Backup Facilities......................................... 74
SECTION 5.17. Use of Proceeds........................................... 75
SECTION 5.18. Interest Rate Protection.................................. 75
SECTION 5.19. Payments with respect to the Senior
Notes due 2002........................................... 75
SECTION 5.20. Proceeds of an Asset Sale................................. 76
6. NEGATIVE COVENANTS....................................................... 76
SECTION 6.1. Limitation on Indebtedness................................ 76
SECTION 6.2. Limitation on Guaranties.................................. 77
SECTION 6.3. Changes in Business....................................... 78
SECTION 6.4. Consolidation, Merger, Sale or Purchase
of Assets, etc........................................... 78
SECTION 6.5. Limitation on Loans and Investments....................... 81
SECTION 6.6. Limitations on Liens...................................... 82
SECTION 6.7. Corporate Name; Chief Executive Office.................... 84
SECTION 6.8. Receivables............................................... 84
SECTION 6.9. Sale and Leaseback........................................ 84
SECTION 6.10. ERISA Compliance.......................................... 84
SECTION 6.11. Transactions with Affiliates.............................. 85
SECTION 6.12. No Amendments to Existing Indebtedness
and Preferred Stock...................................... 85
SECTION 6.13. Hazardous Materials....................................... 86
SECTION 6.14. No Further Negative Pledges............................... 86
SECTION 6.15. Total Debt to EBITDA of Mtel and Its
Consolidated Subsidiaries................................ 86
SECTION 6.16. Total Debt to EBITDA Ratio of SkyTel...................... 87
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<PAGE>
SECTION 6.17. Ratio of Total Debt of Mtel and its
Consolidated Subsidiaries to EBITDA of
SkyTel.................................................... 87
SECTION 6.18. Interest Coverage Ratios.................................. 87
SECTION 6.19. Minimum EBITDA of SkyTel.................................. 88
SECTION 6.20. Minimum EBITDA of Mtel.................................... 88
SECTION 6.21. Limitations on Capital Expenditures....................... 89
SECTION 6.22. Minimum Subscriber Level for SkyTel....................... 90
SECTION 6.23. Minimum Subscriber Level for Destineer.................... 91
SECTION 6.24. Accounting Practices...................................... 92
SECTION 6.25. Subsidiaries.............................................. 92
SECTION 6.26. Dividends and other Restricted
Payments................................................. 92
SECTION 6.27. Prohibition of Amendments or Waivers of
Licenses................................................. 93
SECTION 6.28. Joint Ventures............................................ 93
SECTION 6.29. Interest Rate Protection Agreements;
Currency Agreements...................................... 93
SECTION 6.30. Foreign Operations........................................ 94
7. EVENTS OF DEFAULT........................................................ 94
8. GRANT OF SECURITY INTEREST; REMEDIES..................................... 98
SECTION 8.1. Security Interests........................................ 98
SECTION 8.2. Use of Collateral......................................... 99
SECTION 8.3. Proceeds.................................................. 99
SECTION 8.4. Credit Parties to Hold in Trust........................... 99
SECTION 8.5. Collections, etc.......................................... 99
SECTION 8.6. Possession, Sale of Collateral, etc.......................100
SECTION 8.7. Application of Proceeds on Default........................101
SECTION 8.8. Power of Attorney.........................................102
SECTION 8.9. Financing Statements, Direct Payments,
Confirmation of Receivables and Audit
Rights...................................................103
SECTION 8.10. Termination...............................................103
SECTION 8.11. Remedies Not Exclusive....................................104
SECTION 8.12. Limitation on Guaranteed Amount...........................104
9. CASH COLLATERAL..........................................................104
SECTION 9.1. Cash Collateral Account...................................104
SECTION 9.2. Grant of Security Interest................................105
SECTION 9.3. Remedies..................................................106
10. GUARANTY.................................................................106
SECTION 10.1. Guaranty..................................................106
SECTION 10.2. No Impairment of Guaranty.................................107
SECTION 10.3. Continuation and Reinstatement, etc.......................108
SECTION 10.4. Limitation on Guaranteed Amount...........................109
11. PLEDGE...................................................................109
SECTION 11.1. Pledge....................................................109
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<PAGE>
SECTION 11.2. Registration in Nominee Name;
Denominations............................................110
SECTION 11.3. Covenant..................................................110
SECTION 11.4. Voting Rights; Dividends; etc.............................110
SECTION 11.5. Remedies Upon Default.....................................112
SECTION 11.6. Application of Proceeds of Sale and
Cash.....................................................115
SECTION 11.7. Administrative Agent Appointed
Attorney-in-Fact.........................................115
SECTION 11.8. Securities Act, etc.......................................116
SECTION 11.9. Continuation and Reinstatement............................117
SECTION 11.10. Termination...............................................117
12. THE ADMINISTRATIVE AGENT AND THE ISSUING BANK............................117
SECTION 12.1. Administration by the Administrative
Agent....................................................117
SECTION 12.2. Advances and Payments.....................................118
SECTION 12.3. Sharing of Setoffs and Cash Collateral....................119
SECTION 12.4. Notice to the Lenders.....................................120
SECTION 12.5. Liability of Administrative Agent and
Issuing Bank.............................................120
SECTION 12.6. Reimbursement and Indemnification.........................121
SECTION 12.7. Rights of Administrative Agent............................122
SECTION 12.8. Independent Investigation by Lenders......................122
SECTION 12.9. Agreement of Required Lenders.............................122
SECTION 12.10. Notice of Transfer........................................123
SECTION 12.11. Successor Administrative Agent............................123
13. MISCELLANEOUS............................................................123
SECTION 13.1. Notices...................................................123
SECTION 13.2. urvival of Agreement, Representations
and Warranties, etc.......................................124
SECTION 13.3. Successors and Assigns; Syndications;
Loan Sales; Participations................................124
SECTION 13.4. Expenses; Documentary Taxes...............................128
SECTION 13.5. Indemnity.................................................129
SECTION 13.6. Choice of Law.............................................131
SECTION 13.7. No Waiver.................................................131
SECTION 13.8. Extension of Maturity.....................................131
SECTION 13.9. Amendments, etc...........................................131
SECTION 13.10. Severability..............................................132
SECTION 13.11. Service Of Process; Waiver of Jury
Trial....................................................132
SECTION 13.12. Headings..................................................134
SECTION 13.13. Execution in Counterparts.................................134
SECTION 13.14. Entire Agreement..........................................134
SECTION 13.15. Change of Borrower from SkyTel to Mtel....................134
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<PAGE>
CREDIT, SECURITY, GUARANTY AND PLEDGE AGREEMENT, dated
as of December 21, 1995, among SKYTEL CORP., a Delaware
corporation ("SkyTel"), MOBILE TELECOMMUNICATION
TECHNOLOGIES CORP., a Delaware corporation ("Mtel"), the
Subsidiaries of Mtel referred to herein, the lenders
referred to herein (the "Lenders"), CHEMICAL BANK, as
administrative agent for the Lenders (the "Administrative
Agent"), CREDIT LYONNAIS NEW YORK BRANCH, as documentation
agent (the "Documentation Agent"), and J.P. MORGAN
SECURITIES INC., as co-syndication agent (the
"Co-Syndication Agent").
INTRODUCTORY STATEMENT
All terms not otherwise defined above or in this Introductory Statement are
as defined in Article 1 hereof, or as defined elsewhere herein.
SkyTel has requested that the Lenders make Loans to SkyTel and participate
in Letters of Credit as provided for herein, up to an amount not to exceed
$250,000,000 in the aggregate at any time outstanding (of which not more than
$20,000,000 at any one time may consist of Letters of Credit). The proceeds of
the Loans will be used for capital expenditures, working capital and other
general corporate purposes of SkyTel, Mtel and Mtel's subsidiaries.
As a condition precedent to the initial Loans hereunder and to provide
assurance for the repayment of the Loans and all the other Obligations of the
Borrower hereunder, the Borrower will provide or cause to be provided to the
Administrative Agent, for the benefit of the Lenders, the following (each as
more fully described herein):
(i) a guaranty of the Obligations by the Guarantors pursuant to
Article 10 hereof;
(ii) a security interest in the Collateral from the Borrower and the
Guarantors pursuant to this Agreement and the other Fundamental Documents;
and
(iii) a pledge of the capital stock of SkyTel and the Guarantors owned
directly or indirectly by Mtel.
Subject to the terms and conditions set forth herein, the Administrative
Agent, the Documentation Agent and the Co-Syndication Agent are willing to
serve in such capacities for the Lenders, the Issuing Bank is willing to issue
the Letters of Credit and each Lender is willing to make Loans to the Borrower
<PAGE>
and to participate in the Letters of Credit in the maximum aggregate amount at
any time outstanding not in excess of such Lender's Commitment hereunder.
Accordingly, the parties hereto hereby agree as follows:
1. DEFINITIONS
For the purposes hereof unless the context otherwise requires, all section
references herein shall be deemed to correspond with sections herein, the
following terms shall have the meanings indicated, all accounting terms not
otherwise defined herein shall have the respective meanings accorded to them
under GAAP and all terms defined in the New York Uniform Commercial Code and not
otherwise defined herein shall have the respective meanings accorded to them
therein. Unless the context otherwise requires, any of the following terms may
be used in the singular or the plural, depending on the reference:
"Acquisition" shall mean any acquisition by any Credit Party or any
Subsidiary of a Credit Party, whether by purchase or otherwise, of (i) the
business of any other Person, as a going concern or (ii) any capital stock of
any other Person; provided that in either case, the business of any such Person
is a business in which Mtel or SkyTel is not prohibited from engaging pursuant
to Section 6.3.
"Administrative Agent" shall mean Chemical Bank, in its capacity as
administrative agent for the Lenders hereunder or such successor Administrative
Agent as may be appointed pursuant to Section 12.11 hereof.
"Affiliate" shall mean with respect to any Person, any other Person which,
directly or indirectly, is in control of, is controlled by, or is under common
control with, such Person. For purposes of this definition, a Person shall be
deemed to be "controlled by" another Person if such latter Person possesses,
directly or indirectly, power either to (i) vote 10% or more of the securities
(or other ownership interests) having ordinary voting power for the election of
directors (or the equivalent thereof) of such controlled Person or (ii) direct
or cause the direction of the management and policies of such controlled Person
whether by contract or otherwise.
"Agents" shall mean the Administrative Agent, the Documentation Agent and
the Co-Syndication Agent.
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<PAGE>
"Agreement" shall mean this Credit, Security, Guaranty and Pledge
Agreement, as it may be amended, supplemented or otherwise modified, renewed or
replaced from time to time.
"Alternate Base Rate" shall mean for any day, a rate per annum (rounded
upwards to the nearest 1/16 of 1% if not already an integral multiple of 1/16 of
1%) equal to the greatest of (a) the Prime Rate in effect for such day, (b) the
Federal Funds Effective Rate in effect for such day plus 1/2 of 1% or (c) the
Base CD Rate in effect for such day plus 1%. For purposes hereof, "Prime Rate"
shall mean the rate of interest per annum announced by the Administrative Agent
from time to time as its stated rate. For purposes of this Agreement, any change
in the Alternate Base Rate due to a change in the Prime Rate shall be effective
on the date such change in the Prime Rate is effective. "Federal Funds Effective
Rate" shall mean, 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 on the succeeding Business Day
by the Federal Reserve Bank of New York, or, if such rate is not so published
for any day which is a Business Day, the average of the quotations for the day
of such transactions received by the Administrative Agent from three Federal
funds brokers of recognized standing selected by it. "Base CD Rate" shall mean
the sum of (a) the product of (i) the Average Weekly Three-Month Secondary CD
Rate times (ii) Statutory Reserves and (b) the Assessment Rate. "Average Weekly
Three-Month Secondary CD Rate" shall mean the three-month secondary certificate
of deposit ("CD") rate for the most recent weekly period covered therein in the
Federal Reserve Statistical release entitled "Weekly Summary of Lending and
Credit Measures (Averages of daily figures)" released in the week during which
occurs the day for which the CD rate is being determined. The CD rate so
reported shall be in effect, for the purposes of this definition, for each day
of the week in which the release date of such publication occurs. If such
publication or a substitute containing the foregoing rate information is not
published by the Federal Reserve for any week, such average rate shall be
determined by the Administrative Agent on the basis of quotations received by it
from three New York City negotiable certificate of deposit dealers of recognized
standing on the first Business Day of the week succeeding such week for which
such rate information is not published. "Statutory Reserves" shall mean a
fraction (expressed as a decimal) the numerator of which is the number one and
the denominator of which is the number one minus the aggregate rates (expressed
as a decimal) of (A) basic and supplemental reserve requirements in effect on
the date of effectiveness of such Average Weekly Three-Month Secondary CD Rate,
as set forth above under Regulation D of the Board of Governors of the Federal
Reserve System applicable to certificates of
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<PAGE>
deposit in units of $100,000 or more issued by a "member bank" located
in a "reserve city" (as such terms are used in Regulation D) and (B) marginal
reserve requirements in effect on such date of effectiveness under Regulation D
applicable to time deposits of a "member bank". If for any reason the
Administrative Agent shall have determined (which determination shall be
conclusive absent manifest error) that it is unable to ascertain the Base CD
Rate or Federal Funds Effective Rate, or both, for any reason, including,
without limitation, the inability or failure of the Administrative Agent to
obtain sufficient bids or publications in accordance with the terms hereof, the
Alternate Base Rate shall be determined without regard to clause (b) or (c), or
both, of the first sentence of this definition, as appropriate, until the
circumstances giving rise to such inability no longer exist. Any change in the
Alternate Base Rate due to a change in the Average Weekly Three-Month Secondary
CD Rate shall be effective on the effective date of such change in the CD Rate.
Any change in the Alternate Base Rate due to a change in the Federal Funds
Effective Rate shall be effective on the effective date of such change in the
Federal Funds Effective Rate.
"Alternate Base Rate Loan" shall mean a Loan based on the Alternate Base
Rate in accordance with the provisions of Article 2 hereof.
"AMSC" shall mean American Mobile Satellite Corp., a Delaware corporation.
"Annualized EBITDA" shall mean, with respect to any Person for any date for
which it is to be determined, the Consolidated EBITDA of such Person for the two
most recently completed calendar quarters multiplied by two.
"Applicable Law" shall mean all provisions of statutes, rules, regulations
and orders of a Governmental Authority applicable to a Person, all decisional
authorities and all orders and decrees of all courts and arbitrators in
proceedings or actions in which the Person in question is a party.
"Assessment Rate" shall mean, for any day, the net annual assessment rate
(rounded upwards, if necessary, to the next higher 1/100 of 1%) as most recently
estimated by the Administrative Agent for determining the then current annual
assessment payable by the Administrative Agent to the Federal Deposit Insurance
Corporation (or any successor) for insurance by such Corporation (or such
successor) of time deposits made in Dollars at the Administrative Agent's
domestic offices.
"Assignment and Acceptance" shall mean an agreement substantially in the
form of Exhibit H hereto, executed by the assignor, assignee and any other
parties as contemplated thereby.
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<PAGE>
"Basis Point" shall mean 1/100th of 1%.
"Borrower" shall mean (i) SkyTel at any time prior to the Flip Date and
(ii) at any time on or after the Flip Date, Mtel.
"Borrowing" means a borrowing of Loans by the Borrower of the same interest
rate type and having the same Interest Period made by the Lenders hereunder on
any given day.
"Borrowing Date Margin Calculation" shall be as defined in Section 2.5(c)
hereof.
"Borrowing Date Margin Calculation Certificate" shall be as defined in
Section 2.2(b) hereof.
"Business Day" shall mean any day other than a Saturday, Sunday or other
day on which banks in the State of New York are permitted to close; provided,
however, that when used in connection with a Eurodollar Loan, the term "Business
Day" shall also exclude any day on which banks are not open for dealings in
Dollar deposits on the London Interbank Market.
"Business Plan" shall mean the Business Plan of SkyTel, Destineer and Mtel
dated October 10, 1995 (including the projected financial performance and
related assumptions set forth therein), as contained in the Confidential
Information Memorandum dated November, 1995.
"Capital Expenditures" shall mean, with respect to any Person for any
period, the sum of (i) the aggregate of all expenditures (whether paid in cash
or accrued as a liability) by such Person and its Consolidated Subsidiaries
during that period which, in accordance with GAAP, are or should be included in
"additions to property, plant or equipment" or similar items reflected in the
statement of cash flows of such Person and its Consolidated Subsidiaries and
(ii) to the extent not covered by clause (i) hereof, the aggregate of all
expenditures by such Person and its Consolidated Subsidiaries to acquire by
purchase or otherwise the business, property or fixed assets of, or stock or
other evidence of beneficial ownership of, any other Person (other than the
portion of such expenditures allocable in accordance with GAAP to net current
assets).
"Capital Lease" shall mean, as applied to any Person, any lease of any
property (whether real, personal or mixed) by that Person as lessee which, in
accordance with GAAP, is or should be accounted for as a capital lease on the
balance sheet of that Person.
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<PAGE>
"Cash Collateral Account" shall be as defined in Section 9.1 hereof.
"Cash Equivalents" shall mean (i) marketable securities issued or directly
and fully guaranteed by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States of America is pledged in support thereof) having maturities of not more
than six months from the date of acquisition, (ii) time deposits and
certificates of deposit with maturities of not more than six months from the
date of acquisition, issued by any Lender, or by any other domestic commercial
bank or the domestic branch of any foreign commercial bank, of recognized
standing and having capital and surplus in excess of U.S.$250,000,000, (iii)
commercial paper rated at least A-1 or the equivalent thereof by Standard &
Poor's Corporation or at least P-1 or the equivalent thereof by Moody's
Investors Service, Inc. and in each case maturing within six months after the
date of acquisition, (iv) repurchase obligations with a term of not more than 30
days for underlying securities of the types described in clauses (i), (ii) and
(iii) entered into with any bank meeting the qualifications specified in clause
(ii) above or with a securities dealer reasonably acceptable to the
Administrative Agent, and (v) investments in money market mutual funds which
invest exclusively in investments of the types described in clauses (i), (ii),
(iii) and (iv) above.
"Change" shall be as defined in Section 2.14(e) hereof.
"Closing Date" shall mean the date on which the conditions precedent to the
making of the initial Loans as set forth in Article 4 hereof have been satisfied
or waived, which shall in no event be later than January 30, 1996.
"Code" shall mean the Internal Revenue Code of 1986 and the rules and
regulations issued thereunder, as now and hereafter in effect, or any successor
provision thereto.
"Collateral" shall mean with respect to each Credit Party, all of such
Credit Party's right, title and interest in and to all personal property,
tangible and intangible, wherever located or situated and whether now owned,
presently existing or hereafter acquired or created, including without
limitation, all goods (including, but not limited to, goods constituting
fixtures), accounts, documents, instruments, chattel paper, inventory,
machinery, contract rights, general intangibles (including copyrights,
trademarks, tradenames and patents), insurance proceeds, cash, bank accounts,
intercompany Indebtedness, equipment, the Licenses, all other FCC licenses and
the Pledged Securities, and any products or proceeds thereof and income
therefrom, provided, however, that the Collateral shall
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<PAGE>
not include (i) any real property, or (ii) any funds or other assets held in the
Pledge Account (as such term is defined in the Senior Note Indenture), or (iii)
the Excluded Equity Interests, or (iv) any License or other FCC license to the
extent the applicable Credit Party which is the holder of such License or other
license is prohibited from granting a security interest therein pursuant to
Applicable Law, or (v) rights under any Restricted Agreement, but any proceeds
or income from any Excluded Equity Interest, any License or other license
described in clause (iv) of this proviso, or any Restricted Agreement shall be
included in the Collateral.
"Commitment" shall mean with respect to any Lender, the amount set forth
(i) opposite the name of such Lender in the Table of Commitments which appears
in Schedule 1 hereto (as such amount may hereafter be increased pursuant to an
Assignment and Acceptance) or (ii) in the Assignment and Acceptance pursuant to
which it became a Lender hereunder, as the case may be, as such amount may be
reduced from time to time in accordance with the terms of this Agreement.
"Commitment Fee" shall mean the commitment fees referred to in Section 2.6
hereof.
"Commitment Termination Date" shall mean December 31, 2001 or such earlier
date on which the Commitments shall terminate in accordance with Section 2.7 or
Article 7 hereof.
"Compliance Certificate" shall be as defined in Section 5.1(e) hereof.
"Consolidated EBITDA" shall mean, with respect to any Person for any period
for which such amount is being determined, gross operating revenues of such
Person and its Consolidated Subsidiaries on a consolidated basis (if applicable)
(which amount shall not include interest income, extraordinary gains (but shall
include extraordinary losses) and gains or losses on sales or dispositions of
assets of such Person for such period) less the sum of (a) operating and
overhead expenses, including, without limitation, all operating, selling and
general and administrative expenses of such Person and its Consolidated
Subsidiaries (if applicable) and all other cash expenses of such Person and its
Consolidated Subsidiaries (if applicable) for such period, but excluding the
following expenses: taxes, depreciation, amortization, interest and other
non-cash items for such period, (b) the gross operating revenues of such Person
or any of its Consolidated Subsidiaries (if applicable) attributable to any
minority interest in any consolidated entity which minority interest is not
owned by such Person and/or one or more of its Consolidated Subsidiaries, (c)
the gross operating revenues of any other Person (other than a Consolidated
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<PAGE>
Subsidiary) in which such Person or any of its Consolidated Subsidiaries has an
equity investment or comparable interest, except to the extent of the amount of
dividends or other distributions actually paid to such Person or any of its
Consolidated Subsidiaries by such Person during such period, (d)
the gross operating revenues of any other Person accrued prior to the date it
becomes a Consolidated Subsidiary of such Person or is merged into or
consolidated with such Person or any of its Consolidated Subsidiaries or such
other Person's assets are acquired by such Person or any of its Consolidated
Subsidiaries and (e) the gross operating revenues of any Consolidated Subsidiary
to the extent that the declaration or payment of dividends or similar
distributions by that Consolidated Subsidiary of its revenues is not at the time
permitted by operation of the terms of its charter or any agreement, instrument,
judgment, decree, order, statute, rule or governmental regulation applicable to
that Consolidated Subsidiary; provided, however that any determination of
Consolidated EBITDA to be made for SkyTel hereunder shall be determined using
the revenues and expenses of SkyTel and U.S. Paging on a combined basis, as if
they were a single entity.
"Consolidated Interest Expense" shall mean, for any Person, for any period
for which such amount is being determined, interest expense, whether paid or
accrued (including the interest component of Capital Lease obligations) on all
Indebtedness of such Person and its Consolidated Subsidiaries on a consolidated
basis (if applicable) for such period, including, without limitation or
duplication, (a) interest expense in respect of the Loans (in the case of the
Borrower) and all other outstanding Indebtedness, (b) amortization of the
discount or issuance cost of any Indebtedness (including, without limitation,
any original issue discount attributable to any issuance of debt securities),
(c) commissions, discounts and other fees and charges payable in connection with
letters of credit, (d) net payments payable hereunder or in connection with all
Interest Rate Protection Agreements (including amortization of any discount),
(e) any interest which is capitalized and (f) non-cash interest payments.
"Consolidated Subsidiaries" shall mean with respect to any Person, all
Subsidiaries of such Person that are required to be consolidated with such
Person for financial reporting purposes in accordance with GAAP.
"Contribution Agreement" shall mean the contribution agreement
substantially in the form of Exhibit C hereto entered into by the Credit
Parties, as the same may be amended, supplemented or otherwise modified, renewed
or replaced from time to time.
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"Convertible Debentures" shall mean the 6.75% Convertible Subordinated
Debentures due May 15, 2002 issued by Mtel pursuant to the Indenture dated as of
May 28, 1992, in an original aggregate principal amount of $86,250,000.
"Copyright Security Agreement" shall mean the copyright security agreement
substantially in the form of Exhibit F hereto to be delivered by the applicable
Credit Parties to the Administrative Agent for the benefit of the Lenders, as
the same may be amended, supplemented or otherwise modified, renewed or replaced
from time to time.
"Credit Party" shall mean (i) Skytel, Mtel or any of the other Guarantors
at any time prior to the Flip Date and (ii) at any time on or after the Flip
Date, Mtel and any of the Pledged Subsidiaries.
"Currency Agreement" shall mean any permitted, non-speculative foreign
exchange contract, currency swap agreement, futures contract, option contract or
other similar agreement designed to protect any Credit Party against
fluctuations in currency values.
"Default" shall mean any event, act or condition which with notice or lapse
of time, or both, would constitute an Event of Default.
"Destineer" shall mean Destineer Corporation, a Delaware corporation.
"Destineer Licenses" shall mean any licenses, permits and authorizations
granted by the FCC to Destineer pursuant to which Destineer is permitted and is
(and will be) able to provide the narrowband personal communication services as
contemplated by the Business Plan, and all modifications, extensions and
renewals thereto and thereof.
"Dollars" and "$" shall mean lawful money of the United States of America.
"Environmental Laws" shall mean any and all federal, state, local or
municipal laws, rules, orders, regulations, statutes, ordinances, codes, decrees
or requirements of any Governmental Authority regulating, relating to or
imposing liability or standards of conduct concerning any Hazardous Material or
environmental protection or health and safety, as now or may at any time
hereafter be in effect, including without limitation, the Clean Water Act also
known as the Federal Water Pollution Control Act ("FWPCA"), 33 U.S.C. ss. 1251
et seq., the Clean Air Act ("CAA"), 42 U.S.C. ss.ss. 7401 et seq., the Federal
Insecticide, Fungicide and Rodenticide Act ("FIFRA"), 7 U.S.C. ss.ss. 136 et
seq.,
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the Surface Mining Control and Reclamation Act ("SMCRA"), 30 U.S.C. ss.ss. 1201
et seq., the Comprehensive Environmental Response, Compensation and Liability
Act ("CERCLA"), 42 U.S.C. ss. 9601 et seq., the Superfund Amendment and
Reauthorization Act of 1986 ("SARA"), Public Law 99-499, 100 Stat. 1613, the
Emergency Planning and Community Right to Know Act ("EPCRKA"), 42 U.S.C. ss.
11001 et seq., the Resource Conservation and Recovery Act ("RCRA"), 42 U.S.C.
ss. 6901 et seq., the Occupational Safety and Health Act as amended ("OSHA"), 29
U.S.C. ss. 655 and ss. 657, together, in each case, with any amendment thereto,
and the regulations adopted and publications promulgated thereunder and all
substitutions thereof.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
heretofore and hereafter amended, and the regulations promulgated thereunder.
"Eurodollar Loan" shall mean a loan based on the LIBO Rate in accordance
with the provisions of Article 2 hereof.
"Event of Default" shall have the meaning given such term in Article 7
hereof.
"Excess Cash Flow" shall mean for any fiscal year for which it is to be
determined, without double-counting, Consolidated EBITDA of Mtel for such fiscal
year, minus the sum of the following for such fiscal year (i) principal
repayments on all Indebtedness of Mtel and its Subsidiaries, including principal
repayments on the Loans and the principal portion of payments under Capital
Leases (but exclusive of (w) such repayments to the extent refinanced from the
proceeds of other Indebtedness, (x) mandatory payments of Loans during such
period which are based upon the amount of Excess Cash Flow during prior periods,
(y) mandatory prepayments of Loans during such period pursuant to Section
2.10(c) or Section 2.10(d) hereof, and (z) any payments that can be reborrowed),
(ii) the portion of Consolidated Interest Expense actually paid in cash, (iii)
actual taxes paid in cash, and (iv) Capital Expenditures to the extent not
financed as permitted by Section 6.1(c) hereof, all computed for Mtel and its
Consolidated Subsidiaries on a consolidated basis in accordance with GAAP.
"Excluded Equity Interests" shall mean the shares or other equity interests
in the entities listed in Schedule 2 hereto.
"FCC" shall mean the Federal Communications Commission or any successor
thereto.
"Flip Date" shall be as defined in Section 13.15 hereof.
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"Foreign Subsidiary" shall mean any Subsidiary of Mtel which is neither
organized in a jurisdiction within the United States nor operates within the
United States of America.
"Fundamental Documents" shall mean (i) with respect to the Borrower, this
Agreement, the Notes, the Subordination Agreement, the Trademark Security
Agreement, the Patent Security Agreement, the Copyright Security Agreement, the
Contribution Agreement and any other ancillary documentation which is required
to be or is otherwise executed by the Borrower and delivered to the
Administrative Agent in connection with this Agreement and if any such ancillary
documentation is delivered at any time after the Closing Date, then such
documentation which has been designated by the Administrative Agent as a
Fundamental Document and (ii) with respect to any Guarantor, this Agreement, the
Subordination Agreement, the Trademark Security Agreement, the Patent Security
Agreement, the Copyright Security Agreement, the Contribution Agreement and any
other ancillary documentation which is required to be or is otherwise executed
by such Guarantor and delivered to the Administrative Agent in connection with
this Agreement and if any such ancillary documentation is delivered at any time
after the Closing Date, then such documentation which has been designated by the
Administrative Agent as a Fundamental Document.
"GAAP" shall mean United States generally accepted accounting principles
consistently applied (except for accounting changes in response to FASB
releases, or other authoritative pronouncements); provided, however, that all
calculations made pursuant to Sections 6.15 through 6.21 and the related
definitions shall be computed based on such generally accepted accounting
principles as are in effect on the date hereof.
"Governmental Authority" shall mean any federal, state, municipal or other
governmental department, commission, board, bureau, agency or instrumentality,
or any court or arbitrator, in each case whether of the United States or a
foreign jurisdiction.
"Guarantor" shall mean (i) each Person listed in Schedule 3 hereto or (ii)
any Person which becomes a party to this Agreement after the date hereof
pursuant to Section 5.15 hereof.
"Guaranty" shall mean, as to any Person, any direct or indirect obligation
of such Person guaranteeing or in effect guaranteeing any Indebtedness, Capital
Lease, dividend or other monetary obligation ("primary obligation") of any other
Person (the "primary obligor") in any manner, whether directly or indirectly,
including, without limitation, any obligation of such Person, whether or not
contingent, (a) to purchase any such primary obligation or any property
constituting direct or
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indirect security therefor, (b) to advance or supply funds (i) for the
purchase or payment of any such primary obligation or (ii) to maintain working
capital or equity capital of the primary obligor or otherwise to maintain the
net worth or solvency of the primary obligor, (c) to purchase property,
securities or services, in each case, primarily for the purpose of assuring the
owner of any such primary obligation of the repayment of such primary
obligation, or (d) as a general partner of a partnership or a joint venturer of
a joint venture in respect of Indebtedness of such partnership or such joint
venture which is treated as a general partnership for purposes of Applicable Law
unless such obligation of such Person with respect to such partnership or joint
venture is as a matter of law, or expressly made, non-recourse to such Person on
terms acceptable to the Administrative Agent. The amount of any Guaranty shall
be deemed to be an amount equal to (i) the stated or determinable amount of the
primary obligation in respect of which such Guaranty is made or the amount to
which such Guaranty is limited or, (ii) if not stated or determinable, the
maximum reasonably anticipated liability in respect thereof (assuming such
Person is required to perform thereunder).
"Hazardous Materials" shall mean any flammable materials, explosives,
radioactive materials, hazardous materials, hazardous wastes, hazardous or toxic
substances, or similar materials defined as such in any Environmental Law.
"Indebtedness" shall mean, at any time and with respect to any Person, (i)
indebtedness of such Person for borrowed money (whether by loan or the issuance
and sale of debt securities) or for the deferred purchase price of property or
services purchased (other than amounts constituting accrued expenses and trade
payables (payable within 90 days) arising in the ordinary course of business);
(ii) obligations of such Person in respect of letters of credit, acceptance
facilities, or drafts or similar instruments issued or accepted by banks and
other financial institutions for the account of such Person; (iii) obligations
of such Person under Capital Leases; (iv) deferred payment obligations of such
Person resulting from the adjudication or settlement of any claim or litigation
and (v) indebtedness of others of the type described in clauses (i), (ii), (iii)
and (iv) hereof which such Person has (a) directly or indirectly assumed or
guaranteed in connection with a Guaranty or (b) secured by a Lien on the assets
of such Person, whether or not such Person has assumed such indebtedness.
"Initial Date" shall be as defined in Section 2.14(e) hereof.
"Interest Payment Date" shall mean (i) as to any Eurodollar Loan having an
Interest Period of one, two or three
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months, the last day of such Interest Period, (ii) as to any Eurodollar Loan
having an Interest Period of six or twelve months, the last day of such Interest
Period and, in addition, the date or dates during such Interest Period that is
or are an integral multiple of three months from the commencement of such
Interest Period and (iii) with respect to any Alternate Base Rate Loan, the last
Business Day of each month commencing on the last Business Day of December,
1995.
"Interest Period" shall mean as to any Eurodollar Loan, the period
commencing on the date of such Loan or the last day of the preceding Interest
Period and ending on the numerically corresponding day (or if there is no
corresponding day, the last day) in the calendar month that is one, two, three,
six or, subject to each Lender's approval, twelve months thereafter as the
Borrower may elect; provided, however, that (i) if any Interest Period would end
on a day which shall not be a Business Day, such Interest Period shall be
extended to the next succeeding Business Day, unless such next succeeding
Business Day would fall in the next calendar month, in which case, such Interest
Period shall end on the next preceding Business Day, (ii) no Interest Period may
be selected which would end later than December 31, 2001 and (iii) no Interest
Period may be selected which would result in the aggregate amount of Eurodollar
Loans having Interest Periods ending after any date on which the Total
Commitment is reduced pursuant to Section 2.7(b) hereof, being in excess of the
maximum amount of Loans and Letters of Credit permitted to be outstanding after
such date after giving effect to such reduction.
"Interest Rate Protection Agreement" shall mean any permitted,
non-speculative interest rate swap agreement, interest rate cap agreement,
synthetic cap or other financial agreement or arrangement designed to protect
the Borrower against fluctuations in interest rates.
"Investment" shall include any stock, evidence of indebtedness or other
security of any Person, any loan, advance, contribution of capital (whether such
contribution is of cash or another asset, and including obligations of a partner
or joint venturer to satisfy additional capital calls), extension of credit or
commitment therefor (except for current trade and customer accounts receivable
for services rendered in the ordinary course of business and payable in
accordance with customary trading terms in the ordinary course of business), and
any purchase of (i) any security of another Person or (ii) any business or
undertaking of any Person or any commitment to make any such purchase, or any
other investment. Except as otherwise specified herein, the amount of any
Investment shall be the original principal amount, capital amount or price
thereof and shall, if made by the transfer or exchange of property other than
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cash, be deemed to have been made in an original principal or capital amount
equal to the book value (exclusive of goodwill) of such property.
"Issuing Bank" shall mean Credit Lyonnais New York Branch.
"Joint Venture" shall mean any Person in which no more than 50% of the
equity interest is, at the time of which any determination is being made,
directly or indirectly, owned or controlled by a Credit Party.
"Joint Venture Subsidiary" shall mean (i) any corporation which is a wholly
owned Subsidiary of a Credit Party and which has no assets other than an
Investment in a Joint Venture, cash, Cash Equivalents and/or other assets of
nominal value or (ii) any partnership (A) whose general partner is one or more
corporations which are wholly owned Subsidiaries of a Credit Party and have no
assets other than the Investment in such partnership and (B) which has no assets
other than an Investment in a Joint Venture, cash, Cash Equivalents and/or other
assets of nominal value.
"L/C Exposure" shall mean, at any time, the amount expressed in Dollars of
the aggregate face amount of all drafts which may then or thereafter be
presented by beneficiaries under all Letters of Credit then outstanding plus
(without duplication) the face amount of all drafts which have been presented
under Letters of Credit but have not yet been paid or have been paid but not
reimbursed.
"Lender" and "Lenders" shall mean the financial institutions whose names
appear at the foot hereof and any assignee of a Lender pursuant to Section
13.3(b).
"Lending Office" shall mean, with respect to any of the Lenders, the branch
or branches (or affiliate or affiliates) from which any such Lender's Eurodollar
Loans or Alternate Base Rate Loans, as the case may be, are made or maintained
and for the account of which all payments of principal of, and interest on, such
Lender's Eurodollar Loans or Alternate Base Rate Loans are made, as notified to
the Administrative Agent from time to time.
"Letter of Credit" shall mean a Letter of Credit issued pursuant to Section
2.3 hereof.
"LIBO Rate" shall mean, with respect to the Interest Period for a
Eurodollar Loan, an interest rate per annum equal to the quotient (rounded
upwards to the next 1/100 of 1%) of (A) the average of the rates at which Dollar
deposits approximately equal in principal amount to the Administrative Agent's
portion of such
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Eurodollar Loan and for a maturity equal to the applicable Interest Period are
offered to the Lending Office of the Administrative Agent in immediately
available funds in the London Interbank Market for Eurodollars at approximately
11:00 a.m., London time, two (2) Business Days prior to the commencement of such
Interest Period divided by (B) one minus the applicable statutory reserve
requirements of the Administrative Agent, expressed as a decimal (including
without duplication or limitation, basic, supplemental, marginal and emergency
reserves), from time to time in effect under Regulation D or similar regulations
of the Board of Governors of the Federal Reserve System. It is agreed that for
purposes of this definition, Eurodollar Loans made hereunder shall be deemed to
constitute Eurocurrency Liabilities as defined in Regulation D and to be subject
to the reserve requirements of Regulation D.
"Licenses" shall mean the Paging Licenses and the Destineer Licenses.
"Lien" shall mean any mortgage, pledge, security interest, encumbrance,
lien or charge of any kind whatsoever (including 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 under the Uniform Commercial Code of
any jurisdiction).
"Loans" shall be as defined in Section 2.1 hereof.
"Margin" shall mean in the case of Alternate Base Rate Loans, 150 Basis
Points per annum and, in the case of Eurodollar Loans, 250 Basis Points per
annum, subject in each case to adjustment from time to time in accordance with
the terms of Section 2.5(c) hereof.
"Margin Stock" shall be as defined in Regulation U of the Board of
Governors of the Federal Reserve System.
"Material Adverse Effect" shall mean any event or condition that (a) has a
material adverse effect on the business, assets, properties, operations,
condition (financial or otherwise) or prospects of any of SkyTel, or SkyTel and
its Consolidated Subsidiaries taken as a whole, or Mtel and its Consolidated
Subsidiaries taken as a whole, (b) materially impairs the ability of any Credit
Party, to perform any of their respective obligations under any Fundamental
Document to which it is or will be a party, (c) materially impairs the validity
or enforceability of, or materially impairs the rights or remedies available to
the Lenders under, any Fundamental Document or (d) materially adversely affects
SkyTel's or Destineer's authority to utilize the frequency assigned to SkyTel or
Destineer for its nationwide paging operations or narrowband personal
communication
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services as applicable; provided, however, that any event or condition will be
deemed to have a "Material Adverse Effect", if such event or condition when
taken together with all other events or conditions occurring or in existence at
such time with respect to SkyTel, Mtel and/or any of their respective
Subsidiaries (including all other events and conditions which, but for the fact
that any representation or warranty contained herein is subject to a "Material
Adverse Effect" exception, would cause such representation or warranty to be
untrue) would result in a "Material Adverse Effect", even though, individually,
such event or condition would not do so; provided, further, however, that an
adverse determination of the appeal by Mtel challenging the payment of a license
fee as a condition to issuing to Destineer the narrowband personal communication
services license pursuant to a Pioneer's Preference (as distinguished from the
actual payment of, or obligation to pay, such license fee), shall not be deemed
by itself to be a Material Adverse Effect.
"Monthly Operating Statement" shall be as defined in Section 5.1(g) hereof.
"Mtel Asia" shall be as defined in Section 6.30 hereof.
"Mtel Latin America, Inc." shall mean Mtel Latin America, Inc., a Delaware
corporation.
"Multiemployer Plan" shall mean a plan described in Section 3(37) of ERISA.
"Nabarro Note" shall be as defined in Section 3.25 hereof.
"Net Cash Proceeds" shall mean cash payments received (including any cash
payments received by way of repayment of intercompany Indebtedness, special
dividend or deferred payment of principal pursuant to a note or installment
receivable or otherwise, but only as and when received) from any sale, lease,
transfer or other disposition or issuance of Indebtedness, equity securities or
other ownership interests of a Credit Party, a Subsidiary of a Credit Party or a
Joint Venture or any property or other assets of a Credit Party or a Subsidiary
of a Credit Party in each case net of (A) all legal, title and recording tax
expenses, commissions and other fees and expenses incurred, (B) any taxes
payable and reasonably estimated income taxes as a consequence of such sale,
lease, transfer or other disposition and (C) all distributions and other
payments made to holders of interests in any such Credit Party, Subsidiary or
Joint Venture owned by Persons other than a Credit Party as a result of such
sale, lease, transfer or other disposition.
"Notes" shall be as defined in Section 2.4 hereof.
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"Obligations" shall mean the obligation of the Borrower to make due and
punctual payment of principal of, and interest on, the Loans, the Commitment
Fee, reimbursement obligations in respect of Letters of Credit and all other
monetary obligations of the Borrower to the Administrative Agent, the Issuing
Bank or any Lender under this Agreement, the Notes, the other Fundamental
Documents or the letter agreement referred to in Section 13.14 hereof or with
respect to any Interest Rate Protection Agreements or Currency Agreements which
are entered into between the Borrower and any Lender and are permitted
hereunder.
"Pagers" shall mean pagers or personal messaging units of the Borrower or
Destineer.
"Paging Licenses" shall mean any licenses, permits and authorizations
granted by the FCC to SkyTel pursuant to which SkyTel is permitted and is (and
will be) able to provide the paging services as contemplated by the Business
Plan, and all modifications, extensions and renewals thereto and thereof.
"Patent Security Agreement" shall mean the patent security agreement
substantially in the form of Exhibit D hereto to be delivered by the applicable
Credit Parties to the Administrative Agent for the benefit of the Lenders, as
the same may be amended, supplemented or otherwise modified renewed or replaced
from time to time.
"PBGC" shall mean the Pension Benefit Guaranty Corporation.
"Percentage" shall mean with respect to any Lender, the percentage of the
Total Commitment represented by such Lender's Commitment.
"Permitted Encumbrances" shall mean Liens permitted under Section 6.6
hereof.
"Person" shall mean any natural person, corporation, division of a
corporation, partnership, limited liability company, trust, joint venture,
association, company, estate, unincorporated organization or government or any
agency or political subdivision thereof.
"Plan" shall mean an employee pension benefit plan described in Section
3(2) of ERISA, other than a Multiemployer Plan.
"Pledged Securities" shall be as defined in Section 11.1 hereof.
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"Pledged Subsidiary" shall mean any wholly-owned Subsidiary of Mtel (other
than a Foreign Subsidiary of Mtel) all of whose stock or other beneficial
interest is pledged to the Administrative Agent for the benefit of the Lenders.
"Pledgor" shall be as defined in Section 11.1 hereof.
"Preferred Stock" shall mean 3,750,000 shares of Mtel's $2.25 Cumulative
Convertible Exchangeable Preferred Stock.
"Proprietary Rights" shall be as defined in Section 3.7 hereof.
"Pro Rata Share" shall mean with respect to any Obligation or other amount,
each Lender's pro rata share of such Obligation or other amount determined in
accordance with such Lender's Percentage.
"Quarterly Date Margin Calculation" shall be as defined in Section 2.5(c)
hereof.
"Reportable Event" shall mean any reportable event as defined in Section
4043(b) of ERISA (other than a reportable event as to which provision for 30-day
notice to the PBGC would be waived under applicable regulations had the
regulations in effect on the Closing Date been in effect on the date of
occurrence of such reportable event).
"Required Lenders" shall mean (i) the Lenders holding at least 66-2/3% of
(A) the aggregate unpaid principal amount of the Loans to the Borrower then
outstanding, plus (B) the current L/C Exposure or (ii) if no Loans or Letters of
Credit are outstanding, the Lenders holding at least 66-2/3% of the Total
Commitment.
"Restricted Agreement" shall be a defined in Section 8.1 hereof.
"Restricted Payment" shall mean (i) any distribution, dividend or other
direct or indirect payment on account of shares of any class of stock of any
Credit Party or any Subsidiary of a Credit Party now or hereafter outstanding,
except distributions, dividends or payments solely in additional shares of stock
of such Credit Party or such Subsidiary (as applicable); (ii) any redemption,
retirement or other acquisition or re-acquisition by any Credit Party or any
Subsidiary of a Credit Party of any class of its own stock or other equity
interest of any Credit Party or any Subsidiary of a Credit Party now or
hereafter outstanding; (iii) any payment made to retire, or obtain the surrender
of any outstanding warrants or options or other rights to purchase or acquire
shares of any class of stock of any Credit Party or any
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Subsidiary of a Credit Party now or hereafter outstanding; (iv) any payment of
principal of, premium, if any, or interest on, or any redemption, purchase,
retirement, defeasance, sinking fund or similar payment with respect to, any
Subordinated Debt (other than a conversion of the Convertible Debentures or the
Nabarro Note in accordance with their respective terms); and (v) any redemption,
purchase or defeasance of the Senior Notes due 2002 which is not required under
the Senior Note Indenture, or any payment with respect to the Senior Notes due
2002 which is made prior to the date such payment is due pursuant to the terms
of the Senior Note Indenture.
"Senior Note Indenture" shall mean the Indenture dated as of December 29,
1994 between Mtel and Texas Commerce Bank National Association, as Trustee, as
the same may be amended from time to time.
"Senior Notes due 2002" shall mean the 13-1/2% Senior Notes due 2002 issued
by Mtel pursuant to the Senior Note Indenture.
"Subordinated Debt" shall mean (i) the Indebtedness described on Schedule 4
hereto, (ii) the Convertible Debentures, (iii) the Nabarro Note and (iv) all
other Indebtedness of any Credit Party owed to any Person other than a Credit
Party, which Indebtedness is subordinated to the Obligations or the obligations
of such Credit Party under its Guaranty of the Obligations pursuant to Article
10 hereof (as applicable).
"Subordination Agreement" shall mean the subordination agreement
substantially in the form of Exhibit G hereto pursuant to which all now existing
or hereafter arising Indebtedness of a Credit Party owed to any other Credit
Party, is subordinated to repayment in full of the Obligations or the
obligations of the applicable Guarantor pursuant to its guaranty hereunder, as
such agreement may be amended, supplemented or otherwise modified, renewed or
replaced from time to time.
"Subsidiary" shall mean, with respect to any Person, (i) any corporation
(whether now existing or hereafter organized) of which at least a majority of
the voting stock having ordinary voting power for the election of directors is,
at the time as of which any determination is being made, directly or indirectly
owned or controlled by such Person and (ii) any partnership, joint venture,
association or other business entity (whether now existing or hereafter
organized) of which more than 50% of the equity interest is, at the time as of
which any determination is being made, directly or indirectly owned or
controlled by such Person.
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"Total Commitment" shall mean the aggregate amount of the Commitments of
all the Lenders, which amount shall be reduced from time to time in accordance
with the terms of this Agreement.
"Total Debt" shall mean, at any time with respect to any Person, all
outstanding Indebtedness of such Person and its Consolidated Subsidiaries
(without double counting) on a consolidated basis (if applicable), less any
Indebtedness which is subordinated pursuant to the Subordination Agreement.
"Trademark Security Agreement" shall mean the trademark security agreement
substantially in the form of Exhibit E hereto to be delivered by the applicable
Credit Parties to the Administrative Agent for the benefit of the Lenders, as
the same may be amended, supplemented or otherwise modified, renewed or replaced
from time to time.
"U.S. Paging" shall mean United States Paging Corporation, a Delaware
corporation.
2. THE LOANS
SECTION 2.1. Loans.
Each Lender, severally and not jointly, agrees, upon the terms and subject
to the conditions hereof, to make loans (the "Loans") to the Borrower on any
Business Day and from time to time on or after the Closing Date and prior to the
Commitment Termination Date, in an aggregate principal amount at any one time
outstanding for such Lender which when added to such Lender's Pro Rata Share of
then current L/C Exposure will not exceed such Lender's Commitment. Subject to
the terms hereof, the Borrower may borrow, repay and reborrow amounts
constituting the Total Commitment. Subject to Section 2.2, the Loans shall be
made at such times as the Borrower shall request.
SECTION 2.2. Making of Loans.
(a) Each Loan shall be an Alternate Base Rate Loan or a Eurodollar Loan as
the Borrower may request subject to and in accordance with this Section. Each
Lender may at its option fulfill its Commitment with respect to any Eurodollar
Loan by causing a foreign branch or affiliate to make such Loan, provided that
any exercise of such option shall not affect the obligation of the Borrower to
repay such Loan in accordance with the terms hereof and of the applicable Note.
Subject to the other provisions of this Section and Section 2.9(c), Loans of
more than one interest rate type may be outstanding at the same time.
(b) The Borrower shall give the Administrative Agent at least three (3)
Business Days' prior written, telecopy or
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telephonic (promptly confirmed in writing) notice of each Borrowing which is to
consist of Eurodollar Loans, and at least one (1) Business Day's prior written,
telecopy or telephonic (promptly confirmed in writing) notice of each Borrowing
which is to consist of Alternate Base Rate Loans together, in each case, with
the Borrower's calculation of the applicable Margin on such date as determined
in accordance with Section 2.5(c) hereof (the "Borrowing Date Margin Calculation
Certificate"). Each such notice in order to be effective must be received by the
Administrative Agent not later than 11:00 a.m., New York City time, on the day
required and shall specify the date (which shall be a Business Day) on which
such Borrowing is to be made, the aggregate principal amount of the requested
Borrowing, whether the Borrowing then being requested is (or what portion or
portions thereof are) to consist of Alternate Base Rate Loans or Eurodollar
Loans and in the case of Eurodollar Loans, the Interest Period or Interest
Periods with respect thereto. Each such notice shall be irrevocable. If no
election of Interest Period is specified in such notice in the case of a
Borrowing consisting of Eurodollar Loans, such notice shall be deemed to be a
request for an Interest Period of one month. If no election is made as to the
type of Loan, such notice shall be deemed a request for a Borrowing consisting
of Alternate Base Rate Loans. No Borrowing shall consist of Eurodollar Loans if
after giving effect thereto an aggregate of more than ten (10) separate
Eurodollar Loans would be outstanding hereunder with respect to any Lender
(determined in accordance with Section 2.9(c) hereof).
(c) The Administrative Agent shall promptly notify each Lender of its
proportionate share of each Borrowing under this Section, the date of such
Borrowing, the type or types of Loans being requested and if Eurodollar Loans
have been requested, the Interest Period or Interest Periods applicable thereto.
On the borrowing date specified in such notice, each Lender shall make its share
of the Borrowing available at the offices of the Administrative Agent's Agent
Bank Services Department, 140 East 45th Street, 29th Floor, New York, New York
10017, Attention: Ganesh Persaud for credit to SkyTel Clearing Account, Account
No. 144813828 (Reference: SkyTel Credit Agreement dated as of December 21,
1995), no later than 1:00 p.m., New York City time, on the date of the proposed
Borrowing in Federal or other immediately available funds. Upon receipt of the
funds to be made available by the Lenders to fund any Borrowing hereunder, the
Administrative Agent shall disburse such funds by depositing them into an
account of the Borrower maintained with the Administrative Agent which account
shall be designated by the Borrower to the Administrative Agent.
(d) The amount of any Borrowing shall be in principal amount of (i)
$2,500,000 with respect to any Eurodollar Loan (or such lesser amount as shall
equal the available but unused
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portion of the Total Commitment then in effect) or such greater amount which is
an integral multiple of $500,000 or (ii) $2,500,000 with respect to any
Alternate Base Rate Loan (or such lesser amount as shall equal the available but
unused portion of the Total Commitment then in effect) or such greater amount
which is an integral multiple of $100,000.
SECTION 2.3. Letters of Credit.
(a) (i) Upon the terms and subject to the conditions hereof, the Issuing
Bank agrees to issue Letters of Credit payable in Dollars, on any Business Day
from time to time after the Closing Date and prior to the Commitment Termination
Date, upon the request of the Borrower, provided that (A) the Borrower shall not
request that any Letter of Credit be issued if, after giving effect thereto, the
sum of the then current L/C Exposure plus the aggregate Loans then outstanding
would exceed the Total Commitment then in effect, (B) in no event shall the
Issuing Bank issue (x) any Letter of Credit having an expiration date later
than December 31, 2001 or (y) any Letter of Credit having an expiration date
more than one year after its date of issuance and (C) the Borrower shall not
request that the Issuing Bank issue any Letter of Credit if, after giving effect
to such issuance, the L/C Exposure would exceed $20,000,000.
(ii) Immediately upon the issuance of each Letter of Credit, each Lender
shall be deemed to, and hereby agrees to, have irrevocably purchased from the
Issuing Bank a participation in such Letter of Credit in accordance with such
Lender's Percentage.
(iii) Each Letter of Credit may, at the option of the Issuing Bank, provide
that upon the occurrence of an Event of Default and the acceleration of the
maturity of the Loans, the Issuing Bank may (but shall not be required to) pay
all or any part of the maximum amount which may at any time be available for
drawing thereunder to the beneficiary thereof; provided that, if payment is not
then due to the beneficiary, the Issuing Bank shall deposit the funds in
question in an account with the Issuing Bank to secure payment to the
beneficiary and any funds so deposited shall be paid to the beneficiary of the
Letter of Credit if conditions to such payment are satisfied or returned to the
Issuing Bank for distribution to the Lenders (or, if all Obligations shall have
been paid in full in cash, to the Borrower) if no payment to the beneficiary has
been made and the final date available for drawings under the Letter of Credit
has passed. Each payment or deposit of funds by the Issuing Bank as provided in
this paragraph shall be treated for all purposes of this Agreement as a drawing
duly honored by the Issuing Bank under the related Letter of Credit.
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(b) Whenever the Borrower desires the issuance of a Letter of Credit, it
shall deliver to the Administrative Agent and the Issuing Bank a written notice
no later than 1:00 p.m. (New York time) at least three (3) Business Days prior
to the proposed date of issuance. That notice shall specify (i) the proposed
date of issuance (which shall be a Business Day under the laws of the
jurisdiction of the Issuing Bank), (ii) the face amount of the Letter of Credit,
(iii) the expiration date of the Letter of Credit, (iv) the name and address of
the beneficiary and (v) the Guarantor for whom such Letter of Credit is to be
issued, if applicable. Such notice shall be accompanied by a brief description
of the underlying transaction and upon request of the Issuing Bank, the Borrower
shall provide additional details regarding the underlying transaction.
Concurrently with the giving of written notice of a request for the issuance of
a Letter of Credit, the Borrower shall specify a precise description of the
documents and the verbatim text of any certificate to be presented by the
beneficiary of such Letter of Credit which, if presented by such beneficiary
prior to the expiration date of the Letter of Credit, would require the Issuing
Bank to make payment under the Letter of Credit; provided that the Issuing Bank,
in its reasonable discretion, may require customary changes in any such
documents and certificates. Upon issuance of each Letter of Credit, the Issuing
Bank shall notify the Administrative Agent of the issuance of such Letter of
Credit. Promptly after receipt of such notice, the Administrative Agent shall
notify each Lender of the issuance of such Letter of Credit and the amount of
such Lender's respective participation therein.
(c) The acceptance or payment of drafts under any Letter of Credit shall be
made in accordance with the terms of such Letter of Credit and, in that
connection, the Issuing Bank shall be entitled to honor any drafts and accept
any documents presented to it by the beneficiary of such Letter of Credit in
accordance with the terms of such Letter of Credit and believed by the Issuing
Bank in good faith to be genuine. The Issuing Bank shall not have any duty to
inquire as to the accuracy or authenticity of any draft or other drawing
documents which may be presented to it, but shall be responsible only to
determine in accordance with customary commercial practices that the documents
which are required to be presented before payment or acceptance of a draft under
any Letter of Credit have been delivered and that they comply on their face with
the requirements of that Letter of Credit.
(d) If the Issuing Bank shall make payment on any draft presented under a
Letter of Credit, the Issuing Bank shall give notice of such payment to the
Administrative Agent and the Lenders, and each Lender hereby authorizes and
requests the Issuing Bank to advance for its account pursuant to the terms
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<PAGE>
hereof its share of such payment based upon its participation in the Letter of
Credit (as determined by Section 2.3(a)(ii) hereof) and agrees promptly to
reimburse the Issuing Bank in immediately available funds for the Dollar
equivalent of the amount so advanced on its behalf. If such reimbursement is not
made by any Lender in immediately available funds on the same day on which the
Issuing Bank shall have made payment on any such draft, such Lender shall pay
interest thereon to the Issuing Bank at a rate per annum equal to the Issuing
Bank's cost of obtaining overnight funds in the New York Federal Funds Market
for the first day following the time when such Lender fails to make the required
reimbursement and thereafter at a rate per annum equal to the Alternate Base
Rate plus the applicable Margin for Alternate Base Rate Loans.
(e) If any draft is presented under a Letter of Credit, the payment of
which is required to be made at any time on or before the Commitment Termination
Date, then a payment by the Issuing Bank on such draft shall constitute an
Alternate Base Rate Loan hereunder, and interest shall accrue on such Alternate
Base Rate Loan from the date the Issuing Bank makes payment of any draft under
such Letter of Credit. If any draft is presented under a Letter of Credit, the
payment of which is required to be made after the Commitment Termination Date or
at the time when an Event of Default or Default shall have occurred and then be
continuing, then any amounts deposited and still held in the Cash Collateral
Account pursuant to Section 2.3(j) hereof or delivered to and still held by the
Issuing Bank pursuant to Section 2.3(h) hereof (as applicable) on account of
such Letter of Credit, shall be applied to reimburse the Issuing Bank for the
full amount of such draft. If such amounts so deposited or delivered (as
applicable) and still held are insufficient to pay the full amount of such
draft, then the Borrower shall immediately pay to the Issuing Bank, in
immediately available funds, the full amount of such draft together with
interest thereon at a rate per annum equal to 2% per annum in excess of the
Alternate Base Rate plus the Margin applicable to Alternate Base Rate Loans at
such time and as in effect from time to time, from the date on which the Issuing
Bank has made payment of such draft until the date it receives full
reimbursement for such payment from the Borrower. The Borrower further agrees
that the Issuing Bank may reimburse itself for any such drawing from the balance
in any account of the Borrower maintained with the Issuing Bank.
(f) (i) The Borrower agrees to pay the following amounts to the Issuing
Bank with respect to Letters of Credit issued by it hereunder:
(A) with respect to drawings made under any Letter of Credit,
interest, payable on demand, on the amount paid by the Issuing Bank in
respect of each such
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<PAGE>
drawing from the date of the drawing to, but excluding, the date such
amount is reimbursed by the Borrower at a rate which is at all times equal
to 2% per annum in excess of the Alternate Base Rate plus the Margin
applicable to Alternate Base Rate Loans at such time and as in effect from
time to time; provided that no such default interest shall be payable if
such reimbursement is made from the proceeds of Loans pursuant to Section
2.3(e) above or amounts delivered to and still held by the Issuing Bank
pursuant to Section 2.3(h) hereof or amounts deposited and still held in
the Cash Collateral Account pursuant to Section 2.3(j) hereof;
(B) with respect to the issuance, amendment or transfer of each Letter
of Credit and each drawing made thereunder, documentary and processing
charges in accordance with such Issuing Bank's standard schedule for such
charges as in effect at the time of such issuance, amendment, transfer or
drawing, as the case may be; and
(C) a fronting fee payable to the Issuing Bank, computed at a rate
equal to 1/4 of 1% per annum of the average daily amount of the aggregate
face amount of all Letters of Credit which may then or thereafter be
presented by beneficiaries under all Letters of Credit then outstanding
plus (without duplication) the face amount of all drafts which have been
presented under Letters of Credit but have not been paid; such fee to be
due and payable in arrears on and through the last day of each calendar
quarter (commencing with the quarter ending on December 31, 1995), the
Commitment Termination Date and on the expiration of the last outstanding
Letter of Credit (if later than the Commitment Termination Date).
(ii) Subject to Section 2.3(l) hereof, the Borrower agrees to pay to the
Administrative Agent for distribution to each Lender in respect of each
outstanding Letter of Credit, such Lender's Pro Rata Share of a commission equal
to (A) a per annum percentage rate equal to the Margin for Eurodollar Loans in
effect hereunder on the date of each such payment, multiplied by (B) the average
daily amount of the aggregate face amount of all Letters of Credit which may
then or thereafter be presented by beneficiaries under all Letters of Credit
then outstanding plus (without duplication) the face amount of all drafts which
have been presented under Letters of Credit but have not yet been paid. Such
commission shall be payable in arrears on and through the last day of each
calendar quarter (commencing with the quarter ending on December 31, 1995), the
Commitment Termination
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<PAGE>
Date and on the expiration of the last outstanding Letter of Credit (if later
than the Commitment Termination Date).
(iii) Promptly upon receipt by the Administrative Agent of any amount
described in clause (ii) of this Section 2.3(f), the Administrative Agent shall
distribute to each Lender its Pro Rata Share of such amount. Promptly upon
receipt by the Issuing Bank of any amount described in clause (i)(A) of this
Section 2.3(f), the Issuing Bank shall distribute to each Lender its share of
such amount based upon the amount previously reimbursed to the Issuing Bank by
such Lender pursuant to Section 2.3(d) hereof. Amounts payable under clauses
(i)(B) and (i)(C) of this Section 2.3(f) shall be paid directly to the Issuing
Bank and shall be for its exclusive use.
(g) If by reason of (i) any change after the date hereof in Applicable Law,
or in the interpretation or administration thereof (including, without
limitation, any request, guideline or policy not having the force of law) by any
Governmental Authority charged with the administration or interpretation
thereof, or (ii) compliance by the Issuing Bank or any Lender with any
direction, request or requirement (whether or not having the force of law)
issued after the date hereof by any Governmental Authority or monetary authority
(including any change whether or not proposed or published prior to the date
hereof), including, without limitation, Regulation D:
(A) the Issuing Bank or any Lender shall be subject to any tax, levy,
charge or withholding of any nature (other than withholding tax imposed by
the United States of America or political subdivision or taxing authority
thereof or therein or any other tax, levy, charge or withholding (1) that
is measured with respect to the overall net income of the Issuing Bank or
such Lender (or is imposed in lieu of a tax on net income) or of a Lending
Office of the Issuing Bank or such Lender, and that is imposed by the
United States of America, or by the jurisdiction in which the Issuing Bank
or such Lender is incorporated, or in which such Lending Office is located,
managed or controlled or in which the Issuing Bank or such Lender has its
principal office (or any political subdivision or taxing authority thereof
or therein) or (2) that is imposed solely by reason of the Issuing Bank or
such Lender failing to make a declaration of, or otherwise to establish,
nonresidence, or to make any other claim for exemption, or otherwise to
comply with any certification, identification, information, documentation
or reporting requirements prescribed under the laws of the relevant
jurisdiction, in those cases where the Issuing Bank or such Lender may
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<PAGE>
properly make the declaration or claim or so establish nonresidence or
otherwise comply) or to any variation thereof or to any penalty with
respect to the maintenance or fulfillment of its obligations under this
Section 2.3, whether directly or by such being imposed on or suffered by
the Issuing Bank or any Lender;
(B) any reserve, deposit or similar requirement is or shall be
applicable, imposed or modified in respect of any Letter of Credit issued
by the Issuing Bank or participations therein purchased by any Lender; or
(C) there shall be imposed on the Issuing Bank or any Lender any other
condition regarding this Section 2.3, any Letter of Credit or any
participation therein;
and the result of the foregoing is directly or indirectly to increase the cost
to the Issuing Bank or any Lender of issuing, making or maintaining any Letter
of Credit or of purchasing or maintaining any participation therein, or to
reduce the amount receivable in respect thereof by the Issuing Bank or any
Lender, then and in any such case the Issuing Bank or such Lender may, at any
time, notify the Borrower, and the Borrower shall pay on demand such amounts as
the Issuing Bank or such Lender may specify to be necessary to compensate the
Issuing Bank or such Lender for such additional cost or reduced receipt. The
determination by the Issuing Bank or any Lender, as the case may be, of any
amount due pursuant to this Section 2.3(g) (as set forth in a certificate
setting forth the calculation thereof in reasonable detail) shall, in the
absence of manifest error, be final, conclusive and binding on all of the
parties hereto.
(h) If at any time when an Event of Default shall have occurred and be
continuing, any Letters of Credit shall remain outstanding, then the
Administrative Agent may, and if directed by the Required Lenders shall, require
the Borrower to deliver to the Issuing Bank from time to time, Cash Equivalents
in an amount equal to the full amount of the L/C Exposure or to furnish other
security acceptable to the Administrative Agent and the Issuing Bank. If the
Borrower shall default in the payment of any amount required by the preceding
sentence, the Borrower shall on demand and from time to time pay interest, to
the extent permitted by Applicable Law, on all such unpaid amounts at a per
annum rate equal to 2% per annum in excess of the Alternate Base Rate plus the
Margin applicable to Alternate Base Rate Loans at such time and as in effect
from time to time. Any amounts so delivered pursuant to the first sentence of
this paragraph (h) shall be applied to reimburse the Issuing Bank for the amount
of any drawings honored under Letters of Credit; provided, however, that
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<PAGE>
if prior to the Commitment Termination Date, no Default or Event of Default is
then continuing, then the Issuing Bank shall return all of such collateral
relating to such deposit to the Borrower when requested by it.
(i) If at any time, the L/C Exposure plus the principal balance of all
Loans then outstanding exceeds the Total Commitment, then the Administrative
Agent may, and if directed by the Required Lenders shall, require the Borrower
to deliver Cash Equivalents to the Issuing Bank in an amount sufficient to
eliminate such excess or to furnish other security for such excess acceptable to
the Administrative Agent and the Issuing Bank. Any amounts so delivered pursuant
to the preceding sentence shall be applied to reimburse the Issuing Bank for the
amount of any drawings honored under Letters of Credit; provided, however, that
if subsequent to any such deposit such excess is reduced to an amount less than
the portion of such deposited amounts and no Default or Event of Default is then
continuing, the Borrower shall be entitled to receive that portion of such
deposited amounts which equals the amount of the reduction of such excess (such
portion of the deposited amount to be returned by the Issuing Bank upon the
request of the Borrower).
(j) If on the Commitment Termination Date any Letter of Credit shall remain
outstanding or any draft shall have been presented under any Letter of Credit
but shall not yet have been paid, then the Borrower shall immediately deposit
Dollars into the Cash Collateral Account in an amount equal to the L/C Exposure.
Any amounts deposited pursuant to the preceding sentence shall be applied to
reimburse the Issuing Bank for the amount of any drawings under Letters of
Credit; provided, however, that if subsequent to any such deposit, the L/C
Exposure is reduced to an amount less than the amount so deposited and no
Default or Event of Default is then continuing, the Borrower shall be entitled
to receive that portion of such deposited amounts which equals the amount of the
reductions of such L/C Exposure (such portion of the deposited amount to be
returned upon the request of the Borrower).
(k) Notwithstanding the termination of the Commitments and the payment of
the Loans, the obligations of the Borrower under this Section 2.3 shall remain
in full force and effect until the Administrative Agent, the Issuing Bank and
the Lenders shall have been irrevocably released from their obligations with
regard to any and all Letters of Credit.
(l) The Borrower may at its option at any time and from time to time
deliver to the Issuing Bank, or pursuant to Section 2.3(j) hereof may be
required to deliver to the Issuing Bank, Cash Equivalents in an amount equal to
the full amount of the L/C Exposure. At any time when the Issuing Bank is
holding
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Cash Equivalents pursuant to Section 2.3(j) or this Section 2.3(l) in an
amount equal to the full amount of the L/C Exposure, the commission contemplated
by Section 2.3(f)(ii) hereof payable for the benefit of each Lender, shall be
reduced to an amount equal to 3/8 of 1% of the average daily amount of the
aggregate face amount of all Letters of Credit which may then or thereafter be
presented by beneficiaries under all Letters of Credit then outstanding plus
(without duplication) the face amount of all drafts which have been presented
under Letters of Credit but have not yet been paid. The Issuing Bank shall
return to the Borrower upon its request, all or any portion of such Cash
Equivalents deposited with the Issuing Bank pursuant to this Section 2.3(l)
(other than deposits made under Section 2.3(j) hereof) provided that on the date
the Borrower makes any such request, no Default or Event of Default is then
continuing.
(m) Each of the parties hereto hereby agrees that the outstanding letters
of credit in the aggregate face amount of $4,788,000 which letters of credit
were previously issued for the account of SkyTel by Credit Lyonnais New York
Branch shall for all purposes be deemed to be Letters of Credit issued under
this Agreement.
SECTION 2.4. Notes.
(a) The Loans made by each Lender hereunder shall be evidenced by a
promissory note substantially in the form of Exhibit A hereto (each a "Note",
collectively the "Notes") in the face amount of such Lender's Commitment,
payable to the order of such Lender, duly executed on behalf of the Borrower and
dated as of the date hereof. The outstanding principal balance of the Loans as
evidenced by the Notes shall be payable in full on the Commitment Termination
Date, subject to any mandatory prepayment as provided in Section 2.10 hereof and
acceleration as provided in Article 7 hereof.
(b) Each of the Notes shall bear interest on the outstanding principal
balance thereof as set forth in Section 2.5 hereof. Each Lender and the
Administrative Agent on its behalf is hereby authorized by the Borrower, but not
obligated, to enter on the last page of such Lender's Note, the amount of each
Loan made by such Lender hereunder and the other information provided for on
such last page; provided, however, that the failure of any Lender or the
Administrative Agent to set forth the amount of such Loans, or the other
information, or any error with respect thereto, shall not in any manner affect
the obligation of the Borrower to repay the Loans.
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SECTION 2.5. Interest on Notes.
(a) In the case of a Eurodollar Loan, interest shall be payable at a rate
per annum (computed on the basis of the actual number of days elapsed over a
year of 360 days) equal to the LIBO Rate plus the Margin applicable to
Eurodollar Loans as in effect from time to time. Interest shall be payable on
each Eurodollar Loan on each applicable Interest Payment Date, on the date of
any prepayment thereof, at maturity and on the date of a conversion of such
Eurodollar Loan to an Alternate Base Rate Loan. The Administrative Agent shall
determine the applicable LIBO Rate for each Interest Period as soon as
practicable on the date when such determination is to be made in respect of such
Interest Period and shall notify the Borrower and the Lenders of the applicable
interest rate so determined. Such determination shall be conclusive absent
manifest error.
(b) In the case of an Alternate Base Rate Loan, interest shall be payable
at a rate per annum (computed on the basis of the actual number of days elapsed
over a year of 365/366 days, as the case may be, during such times as the
Alternate Base Rate is based upon the Prime Rate, and over a year of 360 days at
all other times) equal to the Alternate Base Rate plus the Margin applicable to
Alternate Base Rate Loans. Interest shall be payable on each Alternate Base Rate
Loan on each applicable Interest Payment Date, on the date of any prepayment
thereof and at maturity.
(c) The ratio of the Total Debt of Mtel and its Consolidated Subsidiaries
(after giving effect to the proposed Borrowing to be made on such date) to the
Annualized EBITDA of SkyTel shall be (i) determined and computed in connection
with each Borrowing hereunder in accordance with Section 2.2(b) hereof,
including the date of the initial Loan hereunder (each a "Borrowing Date Margin
Calculation"), and (ii) determined on a quarterly basis as at the end of each
calendar quarter of the Borrower (a "Quarterly Date Margin Calculation") which
determination shall be computed as soon as practicable, but in any event within
60 days (or 90 days in the case of any calendar quarter ending on December 31st
of any year), after the end of each such calendar quarter commencing with the
calendar quarter ending December 31, 1995, and the Margin shall be adjusted to
the applicable rates set forth in column (Y) of the table set forth below
effective as of the applicable date set forth in the next succeeding paragraph
below; provided, however, that upon the occurrence of a Default or an Event of
Default and for so long as such Default or Event of Default shall be continuing,
the Margin shall be as set forth in Section 2.8(a) hereof.
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(X) (Y)
Ratio of Total Debt Margin
of Mtel and its
Consolidated Subsidiaries
to Annualized EBITDA For Alternate For Eurodollar
of SkyTel Base Rate Loans Loans
--------- --------------- -----
greater than or equal 150 Basis Points 250 Basis Points
to 4.00:1.00
greater than or equal 125 Basis Points 225 Basis Points
to 3.50:1.00, but less
than 4.00:1.00
less than 3.50:1.00 100 Basis Points 200 Basis Points
Any reduction in the Margin pursuant to this Section 2.5(c) shall be
prospective and shall take effect on the first Business Day following receipt by
the Administrative Agent of the Borrowing Date Margin Calculation Certificate
pursuant to Section 2.2(b) or the certificate contemplated by 5.1(e), as
applicable, which evidences that the Borrower is entitled to such reduction. Any
increase in the Margin (i) if made as a result of a Borrowing Date Margin
Calculation shall be prospective and shall take effect on the date of the
Borrowing with respect to which the Borrowing Date Margin Calculation
Certificate evidencing such Borrowing Date Margin Calculation was delivered or
(ii) if made as a result of a Quarterly Date Margin Calculation shall be
retroactive to the first day of the calendar quarter immediately following the
calendar quarter upon which such Quarterly Date Margin Calculation was based.
All increases or reductions in the applicable Margin pursuant to this
Section 2.5(c), shall apply to, and result in the applicable increase or
decrease of the applicable interest rate on, the principal balance of all Loans
outstanding on or after the date on which such Margin adjustment is effective in
accordance with the provisions of this Section 2.5(c).
(d) Anything in this Agreement or the Notes to the contrary
notwithstanding, the interest rate on the Loans shall in no event be in excess
of the maximum rate permitted by Applicable Law.
(e) Interest in respect of any Loan hereunder shall accrue from and
including the date of such Loan to but excluding the date on which such Loan is
paid or if applicable, converted to a Loan of a different type.
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SECTION 2.6. Commitment Fees.
The Borrower agrees to pay in arrears to the Administrative Agent for the
account of each Lender a commitment fee of 1/2 of 1% per annum (computed on the
basis of the actual number of days elapsed over a year of 360 days), on the
average daily amount, if any, by which such Lender's Commitment (as such
Commitment may be permanently reduced in accordance with the provisions of this
Agreement) exceeds the sum of such Lender's aggregate principal amount of
outstanding Loans and such Lender's Pro Rata Share of L/C Exposure during the
preceding period or quarter. Such commitment fees shall be payable on the last
Business Day of each March, June, September and December in each year
(commencing on the first such Business Day following the Closing Date), on any
date on which the Total Commitment is reduced or on which the Total Commitment
or any portion thereof is terminated (in each case, in accordance with the terms
hereof), and on the Commitment Termination Date. Such commitment fees shall
commence to accrue for each Lender from the Closing Date.
SECTION 2.7. Optional and Mandatory Termination or Reduction of
Commitments.
(a) Upon written, telecopy or telephonic (promptly confirmed in writing)
notice to the Administrative Agent, which notice must be received by the
Administrative Agent not later than 11:00 a.m., New York City time, on the same
Business Day, the Borrower may at any time prior to the Commitment Termination
Date permanently terminate the Total Commitment in its entirety, or from time to
time permanently reduce the Total Commitment in part. Each such partial
reduction shall be in a minimum principal amount of $5,000,000 or an integral
multiple thereof.
(b) The Total Commitment shall be automatically and permanently reduced on
each of the dates set forth in column (a) below, by the amount set forth
opposite such date in column (b) below:
(a) (b)
Reduction of the
Date Total Commitment
---- ----------------
March 31, 1999 $ 22,500,000
June 30, 1999 $ 22,500,000
September 30, 1999 $ 22,500,000
December 31, 1999 $ 22,500,000
March 31, 2000 $ 27,500,000
June 30, 2000 $ 27,500,000
September 30, 2000 $ 27,500,000
December 31, 2000 $ 27,500,000
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March 31, 2001 $ 12,500,000
June 30, 2001 $ 12,500,000
September 30, 2001 $ 12,500,000
December 31, 2001 $ 12,500,000
(c) The Total Commitment shall be automatically and permanently reduced on
April 1st in each year or on such earlier date on which the audited financial
statements of Mtel and its Consolidated Subsidiaries for the preceding fiscal
year are delivered to the Administrative Agent pursuant to Section 5.1(c)
hereof, by an amount equal to 75% of Excess Cash Flow for the immediately
preceding fiscal year (as certified by the Chief Executive Officer, the Chief
Financial Officer or Treasurer of Mtel). Any reduction in the Total Commitment
pursuant to this Section 2.7(c) shall be applied pro rata to reduce any
remaining scheduled reductions in the Total Commitment pursuant to Section
2.7(b) hereof.
(d) The Total Commitment shall be automatically and permanently reduced by
an amount equal to (i) fifty percent (50%) of the Net Cash Proceeds from the
issuance by any Credit Party of any equity securities (excluding any issuance of
equity securities permitted under Section 6.4(e) hereof) and (ii) one hundred
percent (100%) of the Net Cash Proceeds from the issuance by Mtel of any
Indebtedness permitted under Section 6.1(d) hereof. Any reduction in the Total
Commitment pursuant to this Section 2.7(d) shall occur simultaneously with the
receipt by such Credit Party of such Net Cash Proceeds. Any reduction in the
Total Commitment pursuant to this Section 2.7(d) shall be applied pro rata to
reduce any remaining scheduled reductions in the Total Commitment pursuant to
Section 2.7(b) hereof.
(e) The Total Commitment shall be automatically and permanently reduced by
an amount equal to the amount of Net Cash Proceeds from the disposition of the
equity interests of Mercury Paging Limited pursuant to Section 6.4(e)(i) hereof
which amount (i) the Borrower has elected to use to prepay outstanding Loans or
(ii) was intended to be used for capital expenditures, working capital and other
general corporate purposes of Mtel's Subsidiaries in the United States (as
contemplated by such Section) but which was not so utilized within 265 days
after the receipt of the applicable Net Cash Proceeds. Any reduction in the
Total Commitment pursuant to clause (i) of this Section 2.7(e) shall occur
simultaneously with the receipt by a Credit Party or Subsidiary of a Credit
Party of the applicable Net Cash Proceeds. Any reduction in the Total Commitment
pursuant to clause (ii) of this Section 2.7(e) shall occur on the date which is
265 days after receipt by a Credit Party or a Subsidiary of a Credit Party of
the applicable Net Cash Proceeds. Any reduction in the Total Commitment pursuant
to this Section 2.7(e) shall be
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applied pro rata to reduce any remaining scheduled reductions in the Total
Commitment pursuant to Section 2.7(b) hereof.
(f) Simultaneously with each reduction or termination of the Commitments,
the Borrower shall pay to the Administrative Agent for the benefit of each
Lender all accrued but unpaid amount of the Commitment Fee on the amount of the
Commitments so terminated or reduced through the date thereof.
(g) Any reduction of the Total Commitment pursuant to this Section shall be
applied to reduce the Commitment of each Lender in accordance with its
respective Percentage.
SECTION 2.8. Default Interest; Alternate Rate of Interest.
(a) Upon the occurrence of a Default or Event of Default and for so long as
such Default or Event of Default shall be continuing, the Borrower shall on
demand from time to time pay interest, to the extent permitted by Applicable
Law, on all Loans and overdue amounts outstanding up to the date of actual
payment of any such amount (after as well as before judgment) at the following
rates per annum: (i) for the remainder of the then current Interest Period for
each Eurodollar Loan, at 2% in excess of the LIBO Rate plus 250 Basis Points and
(ii) for all periods subsequent to the then current Interest Period for each
Eurodollar Loan, for all Alternate Base Rate Loans and for all other overdue
amounts hereunder, at 2% in excess of the Alternate Base Rate plus 150 Basis
Points.
(b) In the event, and on each occasion, that on or before two (2) Business
Days prior to the commencement of any Interest Period for a Eurodollar Loan, (i)
the Administrative Agent shall have received notice from any Lender of such
Lender's reasonable determination (which determination, absent manifest error,
shall be conclusive) that Dollar deposits in the amount of the principal amount
of such Eurodollar Loan to be made by such Lender are not generally available in
the London Interbank Market or that the rate at which such Dollar deposits are
being offered will not adequately and fairly reflect the cost to such Lender of
making or maintaining the principal amount of such Eurodollar Loan during such
Interest Period or (ii) the Administrative Agent shall have determined that
reasonable means do not exist for ascertaining the applicable LIBO Rate, the
Administrative Agent shall, as soon as practicable thereafter, give written or
telecopier notice of such determination by such Lender or the Administrative
Agent to the Borrower and the Lenders, and any request by the Borrower for a
Eurodollar Loan (or conversion to or continuation as a Eurodollar Loan pursuant
to Section 2.9), made after receipt of such notice, shall be deemed a request
for an Alternate Base Rate Loan; provided, however, that in the
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circumstances described in clause (i) above, such deemed request shall only
apply to the affected Lender's portion thereof. After such notice shall have
been given and until the circumstances giving rise to such notice no longer
exist, each request (or portion thereof, as the case may be) for a Eurodollar
Loan, to the extent such request relates to an affected Lender's portion, shall
be deemed to be a request for an Alternate Base Rate Loan.
SECTION 2.9. Continuation and Conversion of Loans.
The Borrower shall have the right, at any time, to convert any Loan or
portion thereof to a successive Loan of a different interest rate type or to
continue any Eurodollar Loan for a successive Interest Period, subject to the
following:
(a) the Borrower shall give the Administrative Agent prior notice of each
continuation or conversion hereunder, of at least three (3) Business Days for
continuation as, or conversion to, a Eurodollar Loan and one (1) Business Day
for conversion to an Alternate Base Rate Loan; such notice shall be irrevocable
and to be effective, must be received by the Administrative Agent no later than
11:00 a.m., New York City time on the day required;
(b) no Event of Default or Default shall have occurred and be continuing at
the time of any conversion to a Eurodollar Loan or continuation of any
Eurodollar Loan into a subsequent Interest Period;
(c) no Alternate Base Rate Loan (or portion thereof) may be converted to a
Eurodollar Loan and no Eurodollar Loan may be continued as a Eurodollar Loan if,
after such conversion or continuation, and after giving effect to any concurrent
prepayment of Loans, more than ten (10) separate Eurodollar Loans would be
outstanding hereunder with respect to any Lender (for purposes of determining
the number of such Loans outstanding, Loans with different Interest Periods
commencing or ending on different dates shall be counted as different Loans);
(d) if fewer than all Loans at the time outstanding shall be continued or
converted, such continuation or conversion shall be made pro rata among the
Lenders in accordance with the respective principal amounts of the Loans held by
the Lenders immediately prior to such continuation or conversion;
(e) the aggregate principal amount of Loans continued as, or converted to,
Eurodollar Loans as part of the same continuation or conversion, shall be
$2,500,000 or such greater amount which is an integral multiple of $500,000;
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(f) accrued interest on a Eurodollar Loan (or portion thereof) being
converted to an Alternate Base Rate Loan shall be paid by the Borrower at the
time of conversion;
(g) the Interest Period with respect to a new Eurodollar Loan effected by a
continuation or conversion shall commence on the date of continuation or
conversion;
(h) if a Eurodollar Loan is converted to an Alternate Base Rate Loan other
than on the last day of the Interest Period with respect thereto, the amounts
required by Section 2.10(e) shall be paid upon such conversion; and
(i) each request for a continuation as, or conversion to, a Eurodollar Loan
which fails to state an applicable Interest Period shall be deemed to be a
request for an Interest Period of one month.
Subject to the foregoing, in the event that the Borrower shall not give notice
to continue or convert any Eurodollar Loan as provided above, such Loan (unless
repaid) shall automatically be converted to an Alternate Base Rate Loan at the
expiration of the then current Interest Period. The Administrative Agent shall,
after it receives notice from the Borrower, promptly give the Lenders notice of
any continuation or conversion. It is understood by all parties to this
Agreement that the continuation or conversion of any Loan pursuant to this
Section 2.9 does not constitute a repayment and a reborrowing hereunder and is
not subject to the conditions set forth in Section 4.2 and that the designation
of a Loan as an Alternate Base Rate Loan or Eurodollar Loan, and the designation
of applicable Interest Periods, is merely a mechanism for determining the
interest rate applicable to such Loan.
SECTION 2.10. Prepayment of Loans; Reimbursement of Lenders.
(a) Subject to the terms of Section 2.10(e), the Borrower shall have the
right at its option at any time and from time to time to prepay (i) any
Alternate Base Rate Loan, in whole or in part, upon at least one (1) Business
Day's prior telephonic (promptly confirmed in writing), written or telecopier
notice to the Administrative Agent, in the principal amount of $2,500,000 or
such greater amount which is an integral multiple of $100,000 and (ii) any
Eurodollar Loan, in whole or in part, upon at least three (3) Business Days'
telephonic (promptly confirmed in writing), written or telecopier notice, in the
principal amount of $2,500,000 or such greater amount which is an integral
multiple of $500,000. Each notice of prepayment shall specify the prepayment
date, each Loan to be prepaid and the principal amount thereof to be prepaid,
shall be irrevocable and shall
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commit the Borrower to prepay such Loan in the amount and on the date stated
therein.
(b) The outstanding aggregate principal amount of the Loans shall be
subject to mandatory prepayment in each year no later than April 1st or such
earlier date on which the audited financial statements of Mtel and its
Consolidated Subsidiaries for the preceding fiscal year are delivered to the
Agent pursuant to Section 5.1(c) hereof, in an amount equal to 75% of Mtel's
Excess Cash Flow for the immediately preceding fiscal year (as certified by the
Chief Executive Officer, the Chief Financial Officer or Treasurer of Mtel).
(c) The Borrower shall pay to the Administrative Agent for the pro rata
account of each Lender as a mandatory prepayment on the Loans, an amount equal
to (i) fifty percent (50%) of the Net Cash Proceeds from the issuance by any
Credit Party of any equity securities (excluding any issuance of equity
securities permitted under Section 6.4(e) hereof) and (ii) one hundred percent
(100%) of the Net Cash Proceeds from the issuance by Mtel of any Indebtedness
permitted under Section 6.1(d) hereof. All such mandatory prepayments pursuant
to this Section 2.10(c) shall be made by the Borrower substantially
simultaneously with receipt of such Net Cash Proceeds, but in any event within
three (3) Business Days of receipt thereof.
(d) The Borrower shall pay to the Administrative Agent for the pro rata
account of each Lender as a mandatory prepayment on the Loans, an amount equal
to the amount of Net Cash Proceeds from the disposition of the equity interests
of Mercury Paging Limited pursuant to Section 6.4(e)(i) hereof which amount (i)
the Borrower has elected to use to prepay outstanding Loans or (ii) was intended
to be used for capital expenditures, working capital and other general corporate
purposes of Mtel's Subsidiaries in the United States (as contemplated by such
Section) but which were not so utilized within 265 days after the receipt of the
applicable Net Cash Proceeds. Any mandatory prepayment pursuant to clause (i)
above shall be made on the date of receipt by a Credit Party or a Subsidiary of
a Credit Party of the applicable Net Cash Proceeds. Any mandatory prepayment
pursuant to clause (ii) above shall be made on the date which is 265 days after
receipt by a Credit Party or a Subsidiary of a Credit Party of the applicable
Net Cash Proceeds.
(e) The Borrower shall reimburse each Lender on demand for any loss
incurred or to be incurred by it in the reemployment of the funds released (i)
by any prepayment or conversion (for any reason) of any Eurodollar Loan required
or permitted under this Agreement, if such Loan is prepaid or converted other
than on the last day of the Interest Period for such Loan or (ii) in the event
that after the Borrower delivers a notice of borrowing
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under Section 2.2(b) or a notice under Section 2.9(a) in respect of
Eurodollar Loans, such Loan is not made on the first day of the Interest Period
specified in such notice of borrowing for any reason other than (I) a suspension
or limitation under Section 2.8(b) of the right of the Borrower to select a
Eurodollar Loan or (II) a breach by the Lenders of their obligation hereunder.
Such loss shall be the amount as reasonably determined by such Lender as the
excess, if any, of (A) the amount of interest which would have accrued to such
Lender on the amount so paid or not borrowed, continued or converted at a rate
of interest equal to the interest rate applicable to such Loan pursuant to
Section 2.5 hereof, for the period from the date of such payment or failure to
borrow, continue or convert to the last day (x) in the case of a payment other
than on the last day of the Interest Period for such Loan, of the then current
Interest Period for such Loan, or (y) in the case of such failure to borrow,
continue or convert, of the Interest Period for such Loan which would have
commenced on the date of such failure to borrow, continue or convert, over (B)
the amount realized by such Lender in reemploying the funds not advanced or the
funds received in prepayment or realized from the Loan so continued or converted
during the period referred to above. Each Lender shall deliver to the Borrower
from time to time one or more certificates setting forth the amount of such loss
(and in reasonable detail the manner of computation thereof) as determined by
such Lender in accordance with this Section 2.10(e), which certificates shall be
conclusive absent manifest error.
(f) In the event the Borrower fails to prepay any Loan on the date
specified in any prepayment notice delivered pursuant to Section 2.10(a), the
Borrower on demand by any Lender shall pay to the Administrative Agent for the
account of such Lender any amounts required to compensate such Lender for any
loss incurred by such Lender as a result of such failure to prepay, including,
without limitation, any loss, cost or expenses incurred by reason of the
acquisition of deposits or other funds by such Lender to fulfill deposit
obligations incurred in anticipation of such prepayment. Each Lender shall
deliver to the Borrower and the Administrative Agent from time to time one or
more certificates setting forth the amount of such loss (and in reasonable
detail the manner of computation thereof) as determined by such Lender, which
certificates shall be conclusive absent manifest error.
(g) If on any day on which Loans would otherwise be required to be prepaid
but for the operation of this Section 2.10(g) (each a "Prepayment Date"), the
amount of such required prepayment exceeds the then outstanding aggregate
principal amount of Loans which consist of Alternate Base Rate Loans, and no
Default or Event of Default is then continuing, then on such Prepayment Date the
Borrower may, at its option, deposit Dollars
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into the Cash Collateral Account in an amount equal to such excess. If the
Borrower makes such deposit (i) only the outstanding Alternate Base Rate Loans
shall be required to be prepaid on such Prepayment Date, and (ii) on the last
day of each Interest Period in effect after such Prepayment Date the
Administrative Agent is irrevocably authorized and directed to apply funds from
the Cash Collateral Account (and liquidate investments held in the Cash
Collateral Account as necessary) to prepay Eurodollar Loans for which the
Interest Period is then ending until the aggregate of such prepayments equals
the prepayment which would have been required on such Prepayment Date but for
the operation of this Section 2.10(g).
(h) The outstanding principal amount of the Loans and Notes shall be repaid
immediately to the extent that the sum of the aggregate principal amount of
Loans then outstanding plus the then current L/C Exposure exceeds the Total
Commitment then in effect.
(i) All prepayments shall be applied first to repay Alternate Base Rate
Loans, and then to Eurodollar Loans in order of the scheduled termination of
Interest Periods with respect thereto.
(j) All prepayments shall be accompanied by accrued but unpaid interest on
the principal amount being prepaid to (but not including) the date of
prepayment.
SECTION 2.11. Change in Circumstances.
(a) In the event that after the date hereof any change in Applicable Law or
in the interpretation or administration thereof (including, without limitation,
any request, guideline or policy not having the force of law) by any
Governmental Authority charged with the administration or interpretation thereof
or, with respect to clause (ii), (iii) or (iv) below any change in conditions,
shall occur which shall:
(i) subject any Lender to, or increase the net amount of, any tax,
levy, impost, duty, charge, fee, deduction or withholding with respect to
any Eurodollar Loan (other than withholding tax imposed by the United
States of America or any political subdivision or taxing authority thereof
or therein or any other tax, levy, impost, duty, charge, fee, deduction or
withholding (A) that is measured with respect to the overall net income of
such Lender or of a Lending Office of such Lender, and that is imposed by
the United States of America, or by the jurisdiction in which such Lender
or Lending Office is incorporated, in which such Lending Office is located,
managed or
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controlled or in which such Lender has its principal office (or
any political subdivision or taxing authority thereof or therein), or (B)
that is imposed solely by reason of any Lender failing to make a
declaration of, or otherwise to establish, nonresidence, or to make any
other claim for exemption, or otherwise to comply with any certification,
identification, information, documentation or reporting requirements
prescribed under the laws of the relevant jurisdiction, in those cases
where a Lender may properly make such declaration or claim or so establish
nonresidence or otherwise comply); or
(ii) except as expressly provided in (i) above, change the basis of
taxation of any payment to any Lender of principal of, or any interest on,
any Eurodollar Loan; or
(iii) impose, modify or deem applicable any reserve, deposit or
similar requirement against any assets held by, deposits with or for the
account of, or loans or commitments by, an office of such Lender with
respect to any Eurodollar Loan; or
(iv) except as expressly provided in (i) above, impose upon such
Lender or the London Interbank Market any other condition with respect to
any Eurodollar Loan or this Agreement;
and the result of any of the foregoing shall be to increase the actual cost to
such Lender of making or maintaining any Eurodollar Loan hereunder or to reduce
the amount of any payment (whether of principal, interest or otherwise) received
or receivable by such Lender, or to require such Lender to make any payment in
connection with any Eurodollar Loan, in each case by or in an amount which such
Lender in its sole judgment shall deem material, then and in each case the
Borrower shall pay to the Administrative Agent for the account of such Lender,
as provided in paragraph (c) below, such amounts as shall be necessary to
compensate such Lender for such cost, reduction or payment.
(b) If any Lender shall have determined that the adoption after the date
hereof of any law, rule, regulation or guideline regarding capital adequacy, or
any change in any of the foregoing or in the interpretation or administration of
any of the foregoing by any Government Authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by any Lender (or any Lending Office of such Lender) or any Lender's holding
company with any request or directive regarding capital adequacy (whether or not
having the force of law) of any such Governmental
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Authority, central bank or comparable agency, has or would have the effect of
reducing the rate of return on such Lender's capital or on the capital of such
Lender's holding company, if any, as a consequence of this Agreement or the
Loans made or Letters of Credit issued or participated in by such Lender
pursuant hereto to a level below that which such Lender or such Lender's holding
company could have achieved but for such adoption, change or compliance (taking
into consideration such Lender's policies on capital adequacy) by an amount
deemed by such Lender to be material, then from time to time the Borrower shall
pay to such Lender such additional amount or amounts as will compensate such
Lender or such Lender's holding company for any such reduction suffered.
(c) Each Lender shall deliver to the Borrower and the Administrative Agent
from time to time one or more certificates setting forth the amounts due to such
Lender under paragraphs (a) and (b) above, the changes or events as a result of
which such amounts are due and the manner of computing such amounts. Each such
certificate shall be conclusive in the absence of manifest error. The Borrower
shall pay to the Administrative Agent for the account of each such Lender the
amounts shown as due on any such certificate within ten (10) Business Days after
its receipt of the same. No failure on the part of any Lender to demand
compensation under paragraph (a) or (b) above on any one occasion shall
constitute a waiver of its rights to demand compensation on any other occasion.
The protection of this Section shall be available to each Lender regardless of
any possible contention of the invalidity or inapplicability of any law,
regulation or other condition which shall give rise to any demand by such Lender
for compensation hereunder.
(d) Each Lender agrees that, as promptly as practicable after it becomes
aware of the occurrence of an event or the existence of a condition that (i)
would cause it to incur any increased cost hereunder under Section 2.3(g),
Section 2.8(b), this Section 2.11 or Section 2.14(e) or (ii) would require the
Borrower to pay an increased amount under Section 2.3(g), 2.8(b), this Section
2.11 or Section 2.14(e), it will use reasonable efforts to notify the Borrower
of such event or condition and, to the extent not inconsistent with such
Lender's internal policies, it will use its reasonable efforts to make, fund or
maintain the affected Loans of such Lender, or, if applicable, to participate in
Letters of Credit, through another Lending Office of such Lender if as a result
thereof, the additional monies which would otherwise be required to be paid or
the reduction of amounts receivable by such Lender in respect of such Loans or
Letters of Credit would be materially reduced, or such inability to perform
would cease to exist, or the increased costs which would otherwise be required
to be paid in respect of such Loans or Letters of Credit pursuant to Section
2.3(g),
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2.8(b), this Section 2.11 or Section 2.14(e) would be materially reduced
or the taxes or other amounts otherwise payable under Section 2.3(g), Section
2.8(b), this Section 2.11 or Section 2.14(e) would be materially reduced, and
if, as determined by such Lender, in its sole discretion, the making, funding or
maintaining of such Loans or the participating in such Letters of Credit through
such other Lending Office would not otherwise materially adversely affect such
Loans, such Letters of Credit or such Lender.
SECTION 2.12. Change in Legality.
(a) Notwithstanding anything to the contrary contained elsewhere in this
Agreement, if any change after the date hereof in Applicable Law or guideline,
or in the interpretation thereof by any Governmental Authority charged with the
administration thereof, shall make it unlawful for any Lender to make or
maintain any Eurodollar Loan or to give effect to its obligations as
contemplated hereby with respect to a Eurodollar Loan, then, by written notice
to the Borrower and the Administrative Agent, such Lender may (i) declare that
Eurodollar Loans will not thereafter be made by such Lender hereunder whereupon
such Lender's Pro Rata Share of any subsequent Eurodollar Loan shall, instead,
be an Alternate Base Rate Loan unless such declaration is subsequently withdrawn
and/or (ii) require that, subject to Section 2.10(e), all outstanding Eurodollar
Loans made by it be converted to Alternate Base Rate Loans, whereupon all of
such Eurodollar Loans shall automatically be converted to Alternate Base Rate
Loans, as of the effective date of such notice as provided in Section 2.12(b)
below.
(b) A notice to the Borrower by any Lender pursuant to Section 2.12(a)
above shall be effective for purposes of clause (ii) thereof, if lawful, on the
last day of the current Interest Period for each outstanding Eurodollar Loan;
and in all other cases, such notice shall be effective on the date of receipt of
such notice by the Borrower.
SECTION 2.13. Manner of Payments.
All payments of principal and interest in respect of any Loan shall be made
directly to the Administrative Agent and shall be applied pro rata among the
Lenders holding such Loan in accordance with the then outstanding principal
amount of such Loan held by them. All Borrowings of any Loan hereunder shall be
made pro rata among the Lenders in accordance with their respective Percentages.
Payments of the Commitment Fee shall be allocated by the Administrative Agent
among the Lenders in accordance with the provisions of Section 2.6. All payments
by the Borrower hereunder and under the Notes shall be made without offset or
counterclaim, in Dollars, in Federal or other
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immediately available funds, at the office of the Administrative Agent's Agent
Bank Services Department, 140 East 45th Street, 29th Floor, New York, New York
10017, Attention: Ganesh Persaud for credit to SkyTel Clearing Account, Account
No. 144813828 (Reference: SkyTel Credit Agreement dated as of December 21,
1995), in each case no later than 12:00 noon, New York City time, on the date on
which such payment shall be due.
SECTION 2.14. United States Withholding.
(a) Prior to the date of the initial Loan hereunder, and prior to the
effective date set forth in the Assignment and Acceptance with respect to any
Lender becoming a Lender after the date hereof, and from time to time thereafter
if requested by the Borrower or the Administrative Agent or required because, as
a result of a change in Applicable Law or a change in circumstances or
otherwise, a previously delivered form or statement becomes incomplete or
incorrect in any material respect, each Lender organized under the laws of a
jurisdiction outside the United States shall provide the Administrative Agent
and the Borrower with complete, accurate and duly executed forms or other
statements prescribed by the Internal Revenue Service of the United States
certifying such Lender's exemption from, or entitlement to a reduced rate of,
United States withholding taxes (including backup withholding taxes) with
respect to all payments to be made to such Lender hereunder and under the Notes.
(b) The Borrower and the Administrative Agent shall be entitled to deduct
and withhold any and all present or future taxes or withholdings, and all
liabilities with respect thereto, from payments hereunder or under the Notes, if
and to the extent that the Borrower or the Administrative Agent in good faith
determines that such deduction or withholding is required by the Applicable Law
of the United States, including, without limitation, any applicable treaty of
the United States. In the event the Borrower or the Administrative Agent shall
so determine that deduction or withholding of taxes is required, it shall advise
the affected Lender as to the basis of such determination prior to actually
deducting and withholding such taxes. In the event the Borrower or the
Administrative Agent shall so deduct or withhold taxes from amounts payable
hereunder, it (i) shall pay to or deposit with the appropriate taxing authority
in a timely manner the full amount of taxes it has deducted or withheld as
required by Applicable Law; (ii) shall provide evidence of payment of such taxes
to, or the deposit thereof with, the appropriate taxing authority and a
statement setting forth the amount of taxes deducted or withheld, the applicable
rate, and any other information or documentation reasonably requested by any
Lender from whom the taxes were deducted or withheld; and (iii) shall forward to
such Lender any payment or deposit of the deducted or withheld taxes as may be
refunded from time to time
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by the appropriate taxing authority. Unless the Borrower and the Administrative
Agent have received forms or other documents satisfactory to them indicating
that payments hereunder or under the Notes are not subject to United States
withholding tax or are subject to such tax at a rate reduced by an applicable
tax treaty, the Borrower or the Administrative Agent may withhold taxes from
such payments at the applicable statutory rate in the case of payments to or for
any Lender organized under the laws of a jurisdiction outside the United States.
(c) Each Lender agrees (i) that as between such Lender and the Borrower or
the Administrative Agent, such Lender shall be the Person to deduct and withhold
taxes, and to the extent required by Applicable Law, it shall deduct and
withhold taxes, on amounts that such Lender may remit to any other Person(s) by
reason of any transfer or assignment of an interest in this Agreement to such
other Person(s) pursuant to Section 13.3(g) and (ii) to indemnify the Borrower
and the Administrative Agent and any officers, directors, agents, or employees
of the Borrower or the Administrative Agent against, and to hold them harmless
from, any tax, interest, additions to tax, penalties, reasonable counsel and
accountants' fees, disbursements or payments arising from the assertion by any
appropriate taxing authority of any claim against them relating to a failure to
withhold taxes as required by Applicable Law with respect to amounts described
in clause (i) of this paragraph (c).
(d) Each assignee of a Lender's interest in this Agreement in conformity
with Section 13.3 shall be bound by this Section 2.14, so that such assignee
will have all of the obligations and provide all of the forms and statements and
all indemnities, representations and warranties required to be given under this
Section 2.14.
(e) Notwithstanding the foregoing, in the event that any withholding taxes
shall become payable solely as a result of any change in Applicable Law,
including without limitation, any statute, treaty, ruling, determination or
regulation (a "Change") occurring after the Initial Date in respect of any sum
payable hereunder or under any other Fundamental Document to any Lender or the
Administrative Agent (i) the sum payable by the Borrower shall be increased as
may be necessary so that after making all deductions required by the Change
(including deductions applicable to additional sums payable under this Section
2.14) such Lender or the Administrative Agent (as the case may be) receives an
amount equal to the sum it would have received had no such deductions been made,
(ii) the Borrower shall, upon the earlier to occur of knowledge thereof by the
Borrower or receipt by the Borrower of the notice specified in Section 2.11(d),
make such deductions and (iii) the Borrower shall thereafter pay the full amount
deducted to the relevant taxation authority or other
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authority in accordance with Applicable Law. For purposes of this Section 2.14,
the term "Initial Date" shall mean (i) in the case of the Administrative Agent,
the date hereof, (ii) in the case of each Lender which is an original party to
this Agreement, the date hereof, and (iii) in the case of any other Lender, the
date of the Assignment and Acceptance pursuant to which it became a Lender.
SECTION 2.15. Interest Adjustments.
(a) If the provisions of this Agreement or any Note would at any time
require payment by the Borrower to a Lender of any amount of interest in excess
of the maximum amount then permitted by Applicable Law or any law applicable to
any Loan, the interest payments to such Lender shall be reduced to the extent
and in such a manner as is necessary so that such Lender shall not receive
interest in excess of such maximum amount. If, as a result of the foregoing a
Lender shall receive interest payments hereunder or under its Note in an amount
less than the amount otherwise provided hereunder, such deficit (hereinafter
called the "Interest Deficit") will, to the fullest extent permitted by
Applicable Law, cumulate and will be carried forward (without interest) until
the termination of this Agreement. Interest otherwise payable to a Lender
hereunder and under its Note for any subsequent period shall be increased by the
maximum amount of the Interest Deficit that may be so added without causing the
Lender to receive interest in excess of the maximum amount then permitted by
Applicable Law or any law applicable to the Loans.
(b) To the extent permitted by Applicable Law, the amount of the Interest
Deficit relating to a Loan shall be treated as a prepayment penalty and paid in
full at the time of any optional prepayment by the Borrower to the Lenders of
all the Loans at that time outstanding pursuant to this Agreement. The amount of
the Interest Deficit relating to a Loan at the time of any complete payment of
the Loans at that time outstanding (other than an optional prepayment thereof
pursuant to this Agreement) shall be cancelled and not paid.
3. REPRESENTATIONS AND WARRANTIES
In order to induce the Administrative Agent, the Issuing Bank and the
Lenders to enter into this Agreement and to make the Loans and issue and
purchase participations in the Letters of Credit provided for herein, the Credit
Parties hereby, jointly and severally make the following representations and
warranties to, and agreements with, the Administrative Agent, the Issuing Bank
and the Lenders, all of which shall survive the
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execution and delivery of this Agreement and of the Notes, the making of the
Loans and the issuance of each Letter of Credit:
SECTION 3.1. Corporate Existence and Power.
Each Credit Party and each Subsidiary of a Credit Party has been duly
organized and is validly existing in good standing under the laws of their
respective jurisdictions of incorporation or organization and is in good
standing as a foreign corporation or other foreign entity in all jurisdictions
where the nature of its properties or business so requires as listed in Schedule
3.1 hereto, except where the failure to be in good standing as a foreign
corporation or other foreign entity would not have a Material Adverse Effect.
Each Credit Party and each Subsidiary of a Credit Party has the corporate or
partnership power (as applicable) and authority (i) to own their respective
properties and carry on their respective businesses as now being conducted, (ii)
in the case of the Credit Parties, to execute, deliver and perform their
respective obligations under this Agreement, the Notes and the other Fundamental
Documents to which it is a party and to grant to the Administrative Agent, for
the benefit of the Lenders, a security interest in the Collateral as
contemplated by Article 8 hereof and the other Fundamental Documents, (iii) in
the case of the Borrower, to borrow hereunder, and (iv) in the case of the
Pledgors, to pledge to the Administrative Agent for the benefit of the Lenders,
the Pledged Securities as contemplated by Article 11 hereof.
SECTION 3.2. Corporate Authority and No Violation.
The execution, delivery and performance of this Agreement and the other
Fundamental Documents to which it is a party and the grant to the Administrative
Agent for the benefit of the Lenders of a security interest in the Collateral as
contemplated by Article 8 hereof and the other Fundamental Documents by each
Credit Party; and in the case of the Borrower, the Borrowings hereunder; and in
the case of each of the Guarantors, the guaranty of the Obligations as
contemplated by Article 10 hereof and in the case of the Pledgors, the pledge to
the Administrative Agent for the benefit of the Lenders of the Pledged
Securities (a) have been duly authorized by all necessary corporate or
partnership action on the part of each Credit Party, (b) will not in any
material respect, violate or involve the Administrative Agent or any Lender in a
violation of, any provision of any Applicable Law applicable to any of the
Credit Parties or any of their respective properties or assets, (c) will not
violate any provision of the Certificate of Incorporation, By-Laws or any other
organizational document of any Credit Party or any Subsidiary of a Credit Party,
(d) will not violate any provision of any indenture, any agreement for borrowed
money, any bond, note, debenture or other similar instrument or any other
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material agreement to which any Credit Party or any Subsidiary of a Credit Party
is a party or by which any Credit Party or any Subsidiary of a Credit Party or
any of their respective properties or assets are bound, in any case where as a
consequence thereof a Material Adverse Effect would occur, (e) will not be in
conflict with, result in a breach of, or constitute (with due notice or lapse of
time or both) a default under, any such indenture, agreement for borrowed money,
bond, note, debenture, instrument or other material agreement, in any case where
as a consequence thereof a Material Adverse Effect would occur, and (f) will not
result in the creation or imposition of any Lien upon any material property or
assets of any Credit Party or any Subsidiary of a Credit Party other than
pursuant to this Agreement or another Fundamental Document.
SECTION 3.3. Governmental Approval.
Except as set forth on Schedule 3.3 hereto, no action, consent or approval
of, or registration or filing with, or any other action by, any Governmental
Authority is required in connection with the perfection of the security
interests in the Collateral contemplated by Article 8 hereof and the other
Fundamental Documents, with the pledge of the Pledged Securities pursuant to
Article 11 hereof or with the execution, delivery and performance by any Credit
Party of this Agreement or the other Fundamental Documents except for (i) the
filing of the UCC-1 financing statements in the various offices as listed on
Schedule 3.19 hereto, (ii) the filing of the Trademark Security Agreement and
the Patent Security Agreement with the United States Office of Patents and
Trademarks, and (iii) the filing of the Copyright Security Agreement with the
United States Copyright Office.
SECTION 3.4. Financial Condition.
(a) (i) The audited consolidated balance sheet of Mtel and its Consolidated
Subsidiaries as at the end of, and the related audited consolidated statements
of operations, changes in stockholders' investment and cash flows for the fiscal
year ended December 31, 1994, (ii) the audited balance sheet of SkyTel as at the
end of, and the related audited statements of operations, changes in
stockholders' investment and cash flows for the fiscal year ended December 31,
1994, (iii) the unaudited consolidated balance sheet of Mtel and its
Consolidated Subsidiaries as at the end of, and the related unaudited
consolidated statements of operations, changes in stockholders' investment and
cash flows for the nine-month period ended September 30, 1995 and (iv) the
unaudited balance sheet of SkyTel and U.S. Paging on a combined basis as at the
end of, and the related unaudited statements of operations, changes in
stockholders' investment and cash flows for the nine-month period ended
September 30, 1995, have been prepared in accordance with GAAP consistently
applied, subject in
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the case of such unaudited statements to changes resulting from year-end audit
adjustments. All of such financial statements fairly present the consolidated
financial position or the results of operations, as the case may be, of Mtel and
its Consolidated Subsidiaries, SkyTel or SkyTel and U.S. Paging on a combined
basis, as the case may be, at the dates or for the periods indicated, subject to
year-end and audit adjustments in the case of unaudited statements (and in the
case of balance sheets, including the notes thereto) and reflect all known
liabilities, contingent or otherwise, that GAAP requires, as of such dates, to
be shown, reserved against or disclosed in notes to financial statements.
(b) No Credit Party prior to, or at or after, the Closing Date is entering
into the arrangements contemplated hereby and by the other Fundamental
Documents, or intends to make any transfer or incur any obligations hereunder or
thereunder, with actual intent to hinder, delay or defraud either present or
future creditors. On and as of the Closing Date, after giving effect to all
Indebtedness pursuant hereto and pursuant to the other Fundamental Documents
(including the Loans and Guaranties incurred and Liens created, or to be
created, by each Credit Party in connection therewith) (w) each Credit Party
expects the cash available to such Credit Party and its Subsidiaries on a
consolidated basis, after taking into account all other anticipated uses of the
cash of such Credit Party and its Subsidiaries (including the payments on or in
respect of debt referred to in clause (y) of this Section 3.4(b)), will be
sufficient to satisfy all final judgments for money damages which have been
docketed against such Credit Party and/or its Subsidiaries or which may be
rendered against such Credit Party and/or its Subsidiaries in any action in
which such Credit Party or any such Subsidiary is a defendant as determined on
the date of each Borrowing (taking into account the reasonably anticipated
maximum amount of any such judgment and the earliest time at which such judgment
might be entered); (x) the sum of the present fair saleable value of the assets
of each Credit Party and its Subsidiaries on a consolidated basis will exceed
the probable liability of such Credit Party and its Subsidiaries on their debts
(including their Guaranties); (y) no Credit Party and its Subsidiaries on a
consolidated basis will have incurred or intends to, or believes that it will,
incur debts beyond its ability to pay such debts as such debts mature (taking
into account the timing and amounts of cash to be received by such Credit Party
and its Subsidiaries from any source, and of amounts to be payable on or in
respect of debts of such Credit Party and its Subsidiaries and the amounts
referred to in clause (w)); and (z) each Credit Party and its Subsidiaries on a
consolidated basis will have sufficient capital with which to conduct its
present and proposed business and the property of such Credit Party and its
Subsidiaries does not constitute unreasonably small
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capital with which to conduct its present or proposed business.
For purposes of this Section 3.4, "debt" means any liability on a claim, and
"claim" means (i) right to payment whether or not such right is reduced to
judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured,
disputed (other than those being disputed in good faith), undisputed, legal,
equitable, secured or unsecured, or (ii) right to an equitable remedy for breach
of performance if such breach gives rise to a payment, whether or not such right
is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured,
unmatured, disputed, undisputed, legal, equitable, secured or unsecured.
SECTION 3.5. No Material Adverse Change.
Since December 31, 1994, there has been no event or condition which has
occurred and which has, or is reasonably expected to have, a Material Adverse
Effect.
SECTION 3.6. Subsidiaries, Other Investments and Joint Ventures.
(a) Annexed hereto as Schedule 3.6(a) is a correct and complete list, as of
the date hereof, (i) of all Subsidiaries of any Credit Party, showing, as to
each such Subsidiary, its name, the jurisdiction of its incorporation and the
ownership of its capital stock and, as to each Subsidiary which is not a Foreign
Subsidiary, such Subsidiary's authorized capitalization and the number of shares
of its capital stock then outstanding and (ii) each Investment (other than
Investments in the equity securities of Subsidiaries which are not Joint Venture
Subsidiaries, but including other Investments in Subsidiaries) of any Credit
Party or any Subsidiary of a Credit Party including, without limitation, each
Investment in a Joint Venture. All Subsidiaries of any Credit Party existing on
the date hereof which are not Guarantors hereunder or listed as an inactive
Subsidiary on Schedule 3.6(a) hereto, are incorporated or organized in
jurisdictions outside the United States and do not conduct any operations within
the United States.
(b) As of the date hereof, each Subsidiary of a Credit Party which is
listed on Schedule 3.6(a) hereto and is identified thereon as being inactive,
does not conduct any operations nor own or hold assets with a fair market value
in excess of $30,000.
(c) Except as set forth on Schedule 3.6(c) hereto, no Credit Party or
Subsidiary of a Credit Party, other than a Joint Venture Subsidiary, is a
general partner in any partnership or a joint venturer in any joint venture.
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SECTION 3.7. Copyrights, Patents and Other Rights.
(a) The Credit Parties possess all patents, patent rights or licenses,
trademarks, trademark rights and licenses, tradenames, tradename rights,
copyrights, copyright rights and licenses and any other similar rights which are
material to the conduct of their respective businesses (collectively the
"Proprietary Rights"). Schedule 3.7 lists all registered Proprietary Rights and
all Proprietary Rights as to which an application for registration has been
made, owned and used or held for use by any Credit Party, specifying as to each,
as applicable: (i) the nature of such Proprietary Right; (ii) the Credit Party
which owns such Proprietary Right; (iii) the jurisdictions by or in which such
Proprietary Right has been issued or registered (or, if applicable, in which an
application for such issuance or registration has been filed), including the
respective registration or application numbers and (iv) material licenses,
sublicenses and other agreements to which a Credit Party is a party and pursuant
to which any Person is authorized to use any Proprietary Right including, as to
licenses to a Credit Party, the identity of the licensor, and as to licenses
granted by a Credit Party, the identity of the licensee. To the best of the
Credit Parties' knowledge, a Credit Party is either (1) the sole and exclusive
owner (excluding licenses granted by a Credit Party) of all right, title and
interest in and to (free and clear of any Lien) the Proprietary Rights described
in Schedule 3.7 hereto and has sole and exclusive rights to the use thereof or
the material covered thereby in connection with the services or products in
respect of which they are being used, or (2) the licensee of (free and clear of
any Lien) the Proprietary Rights described in Schedule 3.7 hereto and has the
rights to the use thereof or material covered thereby in connection with the
services or products in respect of which they are being used.
(b) Except as set forth on Schedule 3.7 hereto, (i) there is no claim,
suit, action or proceeding pending, or to the Credit Parties' knowledge,
threatened, against a Credit Party that involves a claim of infringement of any
Proprietary Right and (ii) no Credit Party has any knowledge of any existing
infringement by any other Person of any of the Proprietary Rights.
SECTION 3.8. Fictitious Names.
On the date hereof, no Credit Party has done business, is doing business or
intends to do business other than under its full corporate or partnership name,
including, without limitation, under any tradename or other doing business name,
except as set forth on Schedule 3.8 hereto.
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SECTION 3.9. UCC Filing Information.
The chief executive office of each Credit Party is, on the date hereof, as
set forth on Schedule 3.9 hereto, which office is the place where each Credit
Party is "located" for the purpose of Section 9-103(3)(d) of the Uniform
Commercial Code in effect in the State of New York and in any State in which any
such Person is so located. The places where each Credit Party keeps the records
concerning the Collateral on the date hereof or regularly keeps any substantial
amount of goods included in the Collateral on the date hereof are also listed on
Schedule 3.9 hereto.
SECTION 3.10. Title to Properties.
As of the date hereof, Mtel and its Consolidated Subsidiaries have, and
SkyTel and U.S. Paging on a combined basis have, (as applicable) good title or
valid leasehold interests to each of the properties and assets reflected on the
applicable balance sheets as of September 30, 1995 referred to in Section 3.4(a)
hereof, except for minor defects in title that do not interfere in any material
respect with their respective ability to conduct their respective businesses as
presently conducted or as contemplated to be conducted by the Business Plan. All
such properties and assets are free and clear of Liens, except Permitted
Encumbrances.
SECTION 3.11. Litigation.
Except as set forth on Schedule 3.11 hereto, there are no lawsuits or other
proceedings pending (including, but not limited to, matters relating to
environmental liability), or, to the knowledge of any Credit Party, threatened,
against or affecting any Credit Party or any Subsidiary of a Credit Party or any
of their respective properties or assets, by or before any Governmental
Authority or arbitrator, which if adversely determined would reasonably be
expected to have a Material Adverse Effect or which involve this Agreement or
any of the transactions contemplated hereby. No Credit Party and no Subsidiary
of a Credit Party is in default with respect to any order, writ, injunction,
decree, rule or regulation of any Governmental Authority, which default would
have a Material Adverse Effect.
SECTION 3.12. Federal Reserve Regulations.
No Credit Party and no Subsidiary of a Credit Party is engaged principally,
or as one of its important activities, in the business of extending credit for
the purpose of purchasing or carrying any Margin Stock. No part of the proceeds
of the Loans will be used, whether immediately, incidentally or ultimately, to
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purchase or carry any Margin Stock, to extend credit to others for the purpose
of purchasing or carrying any Margin Stock or for any other purpose violative of
or inconsistent with any of the provisions of Regulation G, T, U or X of the
Board of Governors of the Federal Reserve System.
SECTION 3.13. Investment Company Act.
No Credit Party and no Subsidiary of a Credit Party is, or will during the
term of this Agreement be, (i) an "investment company", or a company "controlled
by an investment company," within the meaning of the Investment Company Act of
1940, as amended or (ii) subject to regulation under the Public Utility Holding
Company Act of 1935, as amended, the Federal Power Act or any foreign, federal
or local statute or regulation limiting its ability to incur indebtedness for
money borrowed or guarantee such indebtedness as contemplated hereby or by any
other Fundamental Document.
SECTION 3.14. Enforceability.
This Agreement, the Notes and each other Fundamental Document when executed
will constitute a legal, valid and binding obligation of each Credit Party which
is a party thereto, enforceable in accordance with its respective terms, subject
(a) as to enforcement of remedies, to applicable bankruptcy, insolvency,
reorganization, moratorium and other similar laws affecting the enforcement of
creditors' rights generally, from time to time in effect and (b) to general
principles of equity (whether enforcement is sought by a proceeding in equity or
at law).
SECTION 3.15. Taxes.
Each Credit Party and each Subsidiary of a Credit Party has filed or caused
to be filed all federal, state, local and foreign tax returns which are required
to be filed, and has paid or has caused to be paid all taxes as shown on said
returns or on any assessment received by them in writing, to the extent that
such taxes have become due, except as permitted by Section 5.4 hereof and except
where the failure to so file or pay would not have a Material Adverse Effect.
SECTION 3.16. Compliance with ERISA.
Each Credit Party and each Subsidiary of a Credit Party is in compliance in
all material respects with the provisions of ERISA and the Code applicable to
Plans, and the regulations and published interpretations thereunder, if any,
which are applicable to it. No Credit Party and no Subsidiary of a Credit Party
has, with respect to any Plan established or maintained by
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it, engaged in a prohibited transaction which would subject it to a material tax
or penalty imposed by ERISA or Section 4975 of the Code. No liability to the
PBGC that is material to a Credit Party or any Subsidiary of a Credit Party has
been, or to any Credit Party's best knowledge is reasonably expected to be,
incurred with respect to any Plans and there has been no Reportable Event and no
other event or condition that presents a material risk of termination of a Plan
established or maintained by a Credit Party or a Subsidiary of a Credit Party by
the PBGC. No Credit Party and no Subsidiary of a Credit Party has engaged in a
transaction which would result in the incurrence of a material liability under
Section 4069 of ERISA. As of the Closing Date, no Credit Party and no Subsidiary
of a Credit Party contributes to a Multiemployer Plan, nor has any such Person
incurred any liability that would result in a Material Adverse Effect on account
of a partial or complete withdrawal (as defined in Sections 4203 and 4205 of
ERISA, respectively) with respect to any Multiemployer Plan.
SECTION 3.17. Agreements.
(a) Those agreements which are set forth as exhibits to the current Form
10-K of Mtel are all the agreements, indentures, leases or instruments which if
a default, breach or violation of any thereof should occur would result in a
Material Adverse Effect. None of the Credit Parties nor any Subsidiary of a
Credit Party is subject to any charter or other corporate restriction, or any
judgment, order, writ, injunction or decree, which if a default, breach or
violation thereof should occur, would result in a Material Adverse Effect.
Except as otherwise disclosed on Schedule 3.17 hereto, no Credit Party nor any
Subsidiary of a Credit Party is a party to any Restricted Agreement.
(b) No Credit Party nor any Subsidiary of a Credit Party is in default in
the performance, observance or fulfillment of any of the obligations, covenants
or conditions contained in any agreement, instrument or contract to which it is
a party which if the other party thereto enforced its rights thereunder would
result in a Material Adverse Effect.
SECTION 3.18. Indebtedness; Interest Rate Protection Agreements and
Currency Agreements.
(a) Except for this Agreement and as otherwise disclosed on Schedule 6.1
hereto, as of the Closing Date, no Credit Party nor any Subsidiary of a Credit
Party has any outstanding Indebtedness.
(b) Schedule 3.18 hereto is a true and complete list as of the Closing Date
of all Interest Rate Protection Agreements
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and Currency Agreements entered into by a Credit Party or a Subsidiary of a
Credit Party. All of the agreements listed on such Schedule 3.18 were entered
into by the applicable Credit Party or Subsidiary of a Credit Party for bona
fide hedging purposes.
SECTION 3.19. Security Interest.
This Agreement and the other Fundamental Documents when executed and
delivered by the Credit Parties will create and grant to the Administrative
Agent for the benefit of the Lenders (upon the making of the first Loan
hereunder and assuming possession by the Administrative Agent of all items of
Collateral as to which a security interest may be perfected only by possession)
a valid and first priority perfected security interest in the Collateral (except
for Collateral located in a jurisdiction in which no UCC financing statement has
been filed for the benefit of the Lenders) assuming the filing of (x) all UCC
financing statements listed on Schedule 3.19 hereto, (y) the Patent Security
Agreement and the Trademark Security Agreement with the United States Patent and
Trademark Office and (z) the Copyright Security Agreement with the United States
Copyright Office. The jurisdictions in which no UCC financing statements have
been filed for the benefit of the Lenders, do not account in the aggregate for
more than 7% of the revenues of Mtel and its Consolidated Subsidiaries. On the
date of the first Loan hereunder, no Person will have any right, title or
interest in or to the Collateral which is, or which shall be, prior, paramount,
superior or equal to the right, title or interest of the Administrative Agent
(on behalf of the Lenders) therein or thereto, except for Permitted
Encumbrances.
SECTION 3.20. Disclosure.
Neither this Agreement nor any other Fundamental Document nor any other
agreement, document, certificate or written statement (other than any
projections) furnished to the Administrative Agent or any Lender by or on behalf
of any Credit Party in connection with the transactions contemplated hereby, at
the time it was furnished, contained any untrue statement of a material fact or
omitted to state a material fact, under the circumstances under which it was
made, necessary in order to make the statements contained herein or in all such
other agreements, documents, certificates or statements, taken as a whole, not
misleading. Any projections furnished to the Administrative Agent or any Lender
by or on behalf of any Credit Party in connection with the transactions
contemplated hereby, were prepared based upon good faith estimates and
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assumptions of the applicable Credit Party, which estimates and assumptions are
believed by management of such Credit Party to be reasonable (it being
understood that such projections and the estimates and assumptions on which they
are based may or may not prove to be correct). At the date hereof, there is no
fact known to any Credit Party which now, or in the future, could reasonably be
expected to result in a Material Adverse Effect.
SECTION 3.21. Environmental Liabilities.
(a) (i) No Credit Party and no Subsidiary of a Credit Party has used,
stored, treated, transported, manufactured, refined, handled, produced or
disposed of any Hazardous Materials on, under, at, from, or in any way affecting
any of their properties or assets, or otherwise, in any manner which at the time
of the action in question violated in any material respect any Environmental Law
governing the use, storage, treatment, transportation, manufacture, refinement,
handling, production or disposal of Hazardous Materials and (ii) to the best of
any Credit Party's knowledge, but without independent inquiry, no prior owner of
such property or asset or any tenant, subtenant, prior tenant or prior subtenant
thereof has used Hazardous Materials on, from or affecting such property or
asset, or otherwise, in any manner which at the time of the action in question,
violated in any material respect any Environmental Law governing the use,
storage, treatment, transportation, manufacture, refinement, handling,
production or disposal of Hazardous Materials.
(b) No Credit Party and no Subsidiary of a Credit Party has any obligations
or liabilities, known or unknown, matured or not matured, absolute or
contingent, assessed or unassessed, where such could have a Material Adverse
Effect and no claims have been made against any Credit Party or any Subsidiary
of a Credit Party during the past five years and no presently outstanding
citations or notices have been issued against any Credit Party or any Subsidiary
of a Credit Party, where such could have a Material Adverse Effect, which in
either case have been or are imposed by reason of or based upon any provision of
any Environmental Laws, including, without limitation, any such obligations or
liabilities relating to or arising out of or attributable, in whole or in part,
to the manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of any Hazardous Materials by any Credit Party or any
Subsidiary of a Credit Party, or any of their respective employees, agents,
representatives or, to the best of any Credit Party's knowledge, any
predecessors in interest in connection with or in any way arising from or
relating to any Credit Party or any Subsidiary of a Credit Party or any of their
respective properties, or relating to or arising from or attributable, in whole
or in part, to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of any such substance, or to the best
knowledge of any Credit Party by any other Person, at or on or
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under any of the real properties owned or used by any Credit Party or any
Subsidiary of a Credit Party or any other location where such could have a
Material Adverse Effect.
SECTION 3.22. Labor Matters.
No Credit Party and no Subsidiary of a Credit Party has experienced any
strike, labor dispute, slowdown or work stoppage due to labor disagreements
which has had a Material Adverse Effect and to the best knowledge of any Credit
Party, there is no such strike, dispute, slowdown or work stoppage threatened
against any Credit Party or any Subsidiary of a Credit Party.
SECTION 3.23. Pledged Securities.
(a) Annexed hereto as Schedule 3.23 is a correct and complete list as of
the Closing Date, of all the Pledged Securities hereunder showing, as to each,
either (1) in the case of any capital stock, the entity whose stock is being
pledged, the stock certificate number, the number of shares of the capital stock
represented by such stock certificate and the Pledgor that owns such capital
stock or (2) in the case of notes (if any) evidencing intercompany Indebtedness,
the entity that owes the intercompany Indebtedness, a description of the note
evidencing such Indebtedness and the Pledgor to which such Indebtedness is owed.
The applicable Pledgor set forth on Schedule 3.23 hereto (x) is the legal and
beneficial owner of, has good title to, and has sole right, title and interest
to, the Pledged Securities owned by it as set forth on Schedule 3.23 hereto free
of all Liens, security interests or other encumbrances or rights of first
refusal, except the security interests created by this Agreement and (y) has
sole right and power to pledge, and grant the security interest in and Lien
upon, such Pledged Securities pursuant to this Agreement without the consent of
any creditor of such Pledgor or any other Person or any Governmental Authority
whatsoever.
(b) The Pledged Securities consisting of equity securities (i) have been
duly authorized and validly issued and are fully paid and nonassessable, (ii)
constitute 100% of the issued and outstanding equity securities of SkyTel and
each of the Guarantors.
(c) There are no options, warrants, conversion or similar rights currently
outstanding permitting any Person to acquire any of the Pledged Securities.
(d) All intercompany Indebtedness as of the date hereof is not evidenced by
a note.
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(e) Except for the granting by the FCC and any state public service or
state public utility commission of any consent or approval which may be required
by Applicable Law, there are no restrictions on the transfer of the Pledged
Securities other than as a result of this Agreement.
(f) Upon delivery to the Administrative Agent of the certificates or notes
(as applicable) evidencing the Pledged Securities, Article 11 of this Agreement
will create in favor of the Administrative Agent for the benefit of the Lenders
a valid, binding and enforceable security interest in, and Lien upon, such
Pledged Securities and such security interest and Lien constitute a fully
perfected first priority security interest in, and Lien upon, all right, title
and interest of the applicable Pledgor in such Pledged Securities.
SECTION 3.24. FCC Licenses.
(a) SkyTel (i) is the sole licensee under the Paging Licenses, (ii) has no
knowledge of any complaints or objections filed with the FCC or any other
Governmental Authority with respect to the operations of its nationwide paging
system during the past three years pursuant to the Paging Licenses or of any
other matter which could, if adversely determined, have a Material Adverse
Effect or materially adversely affect SkyTel's authority to offer its nationwide
paging services, or of any action pending or, to the best knowledge of any
Credit Party, threatened, orally or in writing, before or by the FCC or
otherwise, for the cancellation, modification or nonrenewal of any of the Paging
Licenses, (iii) is not in default in any material respect with respect to any
condition, term, provision, order, rule, regulation, policy, writ or decree of
the FCC or any other agency, court or governmental body with respect to the
Paging Licenses or SkyTel's operation of its nationwide paging system other than
such defaults which could not individually or in the aggregate result in a
Material Adverse Effect and (iv) through the operation and maintenance of its
nationwide paging system and the related buildings, structures, transmission
facilities and properties, whether owned or leased, is not (and does not expect
to be) in violation or contravention in any material respect of any law,
ordinance, or administrative regulation or any restrictive covenant in any
agreement to which SkyTel is a party, or by which it or any of its assets is
bound.
(b) Destineer (i) is the sole licensee under the Destineer Licenses, (ii)
has no knowledge of any complaints or objections filed with the FCC or any other
Governmental Authority with respect to the operation or contemplated operation
of its narrowband personal communication services during the past three years
pursuant to the Destineer Licenses or of any other matter which could, if
adversely determined, have a Material Adverse
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Effect or materially adversely affect Destineer's authority to offer its
narrowband personal communication services, or of any action pending or, to the
best knowledge of any Credit Party, threatened, orally or in writing, before or
by the FCC or otherwise, for the cancellation, modification or nonrenewal of any
of the Destineer Licenses, (iii) is not in default in any material respect with
respect to any condition, term, provision, order, rule, regulation, policy, writ
or decree of the FCC or any other agency, court or governmental body with
respect to the Destineer Licenses or Destineer's operation or contemplated
operation of its narrowband personal communication services other than such
defaults which could not individually or in the aggregate result in a Material
Adverse Effect and (iv) through the operation and maintenance of its narrowband
personal communication services and the related buildings, structures,
transmission facilities and properties, whether owned or leased, is not (and
does not expect to be) in violation or contravention in any material respect of
any law, ordinance, or administrative regulation or any restrictive covenant in
any agreement to which Destineer is a party, or by which it or any of its assets
is bound.
(c) No other material license, permit or approval of any federal or state
agency is required for SkyTel to conduct its nationwide paging operations as
presently conducted and as contemplated to be conducted or for Destineer to
conduct its narrowband personal communication services as presently conducted
and as contemplated to be conducted. Neither SkyTel's nationwide paging
operations conducted pursuant to the Paging Licenses nor Destineer's narrowband
personal communications services are subject to regulation by any state public
service or public utility commission or by any other state agency regulating
rates for, or entry into, paging or messaging operations.
(d) There are no other licenses, permits and approvals (other than the
Paging Licenses and the Destineer Licenses) held by a Credit Party issued by the
FCC or any other federal or state governmental agency or entity which are
material to the business or operations of Mtel and its Consolidated Subsidiaries
taken as a whole.
(e) If Mtel is the losing party in its appeal challenging the payment of a
license fee as a condition to the issuance to Destineer of the narrowband
personal communication services license pursuant to the Pioneer's Preference,
then (i) Destineer shall have the right to surrender such license and thereby
avoid the obligation to pay the license fee which is the subject of the
above-referenced appeal and (ii) any election by Destineer to surrender such
license will not materially impair Destineer's operation of its narrowband
personal communication
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services as presently conducted or as contemplated to be conducted in the
Business Plan.
SECTION 3.25. Senior Obligations
The Guaranty by Mtel of the Obligations pursuant to Article 10 hereof is,
or when incurred or arise will be, within the definition of (i) "Senior
Indebtedness" as such term is defined in the Indenture governing the Convertible
Debentures and (ii) "Senior Debt" as such term is defined in that certain
Convertible Subordinated Note of Mtel in favor of Daniel J. N. Nabarro in the
original principal of U.K. (pound) 2,458,333, dated December 1, 1989 (the
"Nabarro Note"), and such guaranty and other obligations of Mtel are or will be
entitled to the benefits of the subordination provisions contained in the
Nabarro Note and in the Indenture governing the Convertible Debentures.
4. CONDITIONS OF LENDING
SECTION 4.1. Conditions Precedent to the Initial Loans.
The obligation of each Lender to make its initial Loan or, if earlier, the
obligation of the Issuing Bank and each Lender to issue and to purchase
participations in the initial Letter of Credit, are subject to the following
conditions precedent:
(a) Corporate Documents of the Credit Parties. The Administrative Agent
shall have received, with copies for each of the Lenders:
(i) a copy of each Credit Party's certificate of incorporation or
other organizational document(s), certified as of a recent date by an
appropriate official of the jurisdiction of its incorporation or
organization;
(ii) a certificate of each such appropriate official, dated as of a
recent date, as to the good standing of, and payment of taxes by, each
Credit Party which certificate lists such Credit Party's charter or
organizational documents on file in the office of such official;
(iii) a certificate dated as of a recent date as to the good standing
of each Credit Party issued by the appropriate official of each
jurisdiction in which such Credit Party is qualified as a foreign
corporation or entity (as listed in Schedule 3.1 hereof); and
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(iv) a certificate of the Secretary of each Credit Party dated the
date of the initial Loan (or the date of issuance of the initial Letter of
Credit, if applicable) and certifying (A) that attached thereto is a true
and complete copy of the by-laws (or equivalent document) of such Credit
Party as in effect on the date of such certification, (B) that attached
thereto is a true and complete copy of resolutions adopted by the Board of
Directors (or the equivalent thereof) of such Credit Party authorizing the
execution, delivery and performance in accordance with their respective
terms of this Agreement, the Notes (in the case of the Borrower), the other
Fundamental Documents to which such Credit Party will be a party, and any
other documents required or contemplated hereunder or thereunder to which
such Credit Party will be a party, and the Borrowings hereunder (in the
case of the Borrower), the granting of the security interests contemplated
by the Fundamental Documents, and the pledge of the Pledged Securities (in
the case of the Pledgors), (C) that the certificate of incorporation or
other organizational document(s) of such Credit Party have not been amended
since the date of the last amendment thereto indicated on the certificate
of the Secretary of State furnished pursuant to clause (i) above except to
the extent specified in such Secretary's Certificate and (D) as to the
incumbency and specimen signature of each officer of such Credit Party
executing this Agreement, the Notes (if applicable), the other Fundamental
Documents or any other document delivered by it in connection herewith or
therewith (such certificate to contain a certification by another officer
of such Credit Party as to the incumbency and signature of the officer
signing the certificate referred to in this clause (iv)).
(b) Notes. The Administrative Agent shall have received the Notes, each
duly executed on behalf of the Borrower, dated the date hereof and payable to
the order of each Lender in the principal amount equal to such Lender's
Commitment.
(c) Opinions of Counsel. The Administrative Agent shall have received the
favorable written opinions, dated the date of the initial Loan hereunder (or the
date of issuance of the initial Letter of Credit, if applicable), addressed to
the Administrative Agent and the Lenders and satisfactory to Morgan, Lewis &
Bockius LLP, counsel to the Agents, of (i) Jones, Day, Reavis & Pogue, counsel
to the Credit Parties, substantially in the form of Exhibit B hereto, (ii) such
FCC counsel and local regulatory counsel as the Administrative Agent may request
and
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(iii) local counsel in Mississippi and New Jersey regarding the creation or
perfection of the security interests in the Collateral and the pledge of the
Pledged Securities.
(d) ERISA. The Administrative Agent shall have received confirmation that
(i) none of the Plans of any of the Credit Parties or any of their respective
Subsidiaries has incurred any "accumulated funding deficiency" (as defined in
Section 302 of ERISA and Section 412 of the Code), (ii) no Reportable Event has
occurred as to any Plan, and (iii) no termination of, or withdrawal from, any
Plan has occurred or is contemplated that would result in any liability on the
part of any Credit Party or any Subsidiary of a Credit Party.
(e) Insurance. The Borrower shall have furnished the Administrative Agent
with (i) a summary of all existing insurance coverage and (ii) Certificates of
Insurance with respect to all existing insurance coverage which certificates
shall name Chemical Bank, as Administrative Agent as the certificate holder and
shall evidence compliance with Section 5.3(c) hereof with respect to all
insurance coverage existing as of the Closing Date.
(f) Pledged Securities. The Administrative Agent shall have received all of
the certificates representing all of the Pledged Securities, together with an
undated stock power executed in blank for each such certificate.
(g) Subordination Agreement. The Administrative Agent shall have received
the Subordination Agreement, duly executed by all the parties thereto.
(h) Contribution Agreement. The Administrative Agent shall have received
the Contribution Agreement, duly executed by the Credit Parties.
(i) Copyright Security Agreement. The Administrative Agent shall have
received the Copyright Security Agreement duly executed by the applicable Credit
Parties.
(j) Trademark Security Agreement. The Administrative Agent shall have
received the Trademark Security Agreement duly executed by the applicable Credit
Parties.
(k) Patent Security Agreement. The Administrative Agent shall have received
the Patent Security Agreement duly executed by the applicable Credit Parties.
(l) UCC Financing Statements and UCC Searches, etc. The Administrative
Agent shall have received (i) UCC financing statements executed on behalf of
each of the Credit Parties for
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filing in the applicable jurisdictions set forth on Schedule 3.19 hereto in
order to provide the Administrative Agent (for the benefit of the Lenders) with
a perfected security interest in the Collateral as to which a security interest
may be perfected by filing and (ii) UCC searches satisfactory to the
Administrative Agent indicating that no other filings with regard to the
Collateral are of record in any of such jurisdictions except in connection with
Permitted Encumbrances disclosed to the Administrative Agent on the Closing
Date.
(m) Financial Statements. The Administrative Agent shall have received,
with sufficient copies for each of the Lenders, the financial statements of
SkyTel and U.S. Paging on a combined basis, and Mtel and its Consolidated
Subsidiaries, for the period ended on September 30, 1995 in the form required by
Sections 5.1(b) and (d) hereof, together with a related Compliance Certificate
and a Monthly Operating Statement.
(n) Agreement with MCI Telecommunications Corporation. The Administrative
Agent shall be satisfied with the terms and conditions of the Special Customer
Agreement between Mtel and MCI Telecommunications Corporation as currently in
effect.
(o) Existing Indebtedness. Simultaneously with the making of the initial
Loan hereunder, all outstanding Indebtedness (other than Indebtedness expressly
permitted hereby) shall be paid in full, any commitment with respect thereto
terminated and any and all security interests, Liens and other encumbrances
granted in connection therewith shall be released.
(p) Payment of Fees. All fees and expenses then due and payable by the
Credit Parties in connection with the transactions contemplated hereby shall
have been paid.
(q) No Material Adverse Change. No material adverse change shall have
occurred with respect to the business, assets, property, condition (financial or
otherwise) or prospects of SkyTel individually, or Mtel and its Consolidated
Subsidiaries, taken as a whole, in each case, since December 31, 1994.
(r) Compliance with Laws. The Administrative Agent shall be satisfied that
the transactions contemplated hereby will not violate, in any material respect,
any provision of Applicable Law (including, without limitation, ERISA and the
provisions of Regulations G, T, U and X of the Board of Governors of the Federal
Reserve System), and will not violate any order of any court or other agency of
the United States or any state thereof applicable to any Credit Party or any of
their respective properties or assets.
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(s) Other Documents. The Administrative Agent shall have received such
other documents as the Lenders may require.
(t) Other Matters. All legal matters incident to this Agreement and the
transactions contemplated hereby shall be reasonably satisfactory to Morgan,
Lewis & Bockius LLP, counsel to the Administrative Agent.
SECTION 4.2. Conditions Precedent to Each Loan and Letter of Credit.
The obligations of the Lenders to make each Loan (including the initial
Loan but excluding continuations and conversions) and of the Issuing Bank and
the Lenders to issue and to purchase participations in each Letter of Credit,
are subject to the following conditions precedent:
(a) Notice. The Administrative Agent (and the Issuing Bank, if applicable)
shall have received a notice with respect to such Borrowing (together with the
Borrowing Date Margin Calculation Certificate required by Section 2.2(b) hereof)
or Letter of Credit as required by Article 2 hereof.
(b) Representations and Warranties. The representations and warranties set
forth in Article 3 hereof and in the other Fundamental Documents shall be true
and correct in all material respects on and as of the date of each Borrowing or
issuance of a Letter of Credit hereunder (except to the extent that such
representations and warranties expressly relate to an earlier date) with the
same effect as if made on and as of such date.
(c) No Event of Default. On the date of (and after giving effect to) each
Borrowing or issuance of a Letter of Credit hereunder, the Borrower shall be in
compliance with all of the terms and provisions set forth herein to be observed
or performed and no Event of Default or Default shall have occurred and be
continuing.
(d) Additional Documents. The Lenders shall have received from the Borrower
on the date of each Borrowing or issuance of a Letter of Credit, such documents
and information as they may reasonably request relating to the satisfaction of
the conditions in this Section 4.2.
Each Borrowing or issuance of a Letter of Credit shall be deemed to be a
representation and warranty by the Credit Parties on the date of such Borrowing
or issuance as to the matters specified in paragraphs (b) and (c) of this
Section.
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5. AFFIRMATIVE COVENANTS
From the date of the initial Loan and for so long as the Commitments shall
be in effect, or any amount shall remain outstanding under any Note or unpaid
under this Agreement or any Letter of Credit shall remain outstanding, each of
the Credit Parties agrees that each of them will, and will cause each of its
Subsidiaries to:
SECTION 5.1. Financial Statements and Reports.
Deliver to each Lender:
(a) As soon as is practicable, but in any event within ninety (90) days
after the end of each fiscal year of SkyTel, the audited balance sheet of SkyTel
and U.S. Paging on a combined basis as at the end of, and the related statements
of operations, changes in stockholders' investment and cash flows for, such
year, and the comparable financial statements as at the end of, and for, the
preceding fiscal year, which current year financial statements shall (i) contain
in the notes thereto, a summary explanation of the basis on which expenses were
allocated between SkyTel and Destineer and (ii) be accompanied by a report and
opinion of Arthur Andersen LLP or such other independent certified public
accountants of nationally recognized standing as shall be retained by SkyTel and
be satisfactory to the Agents, which report and opinion shall be prepared in
accordance with generally accepted auditing standards relating to reporting and
which report and opinion shall (A) be unqualified as to the status of each of
SkyTel and U.S. Paging as a going concern and scope of audit and shall state
that such financial statements fairly present, in all material respects, the
financial position of SkyTel and U.S. Paging on a combined basis as at the dates
indicated and the results of its operations and cash flows for the periods
indicated in conformity with GAAP and (B) contain no material exceptions or
qualifications except for qualifications relating to accounting changes (with
which such independent public accountants concur) in response to FASB releases
or other authoritative pronouncements;
(b) As soon as is practicable, but in any event within sixty (60) days
after the end of each of the first three fiscal quarters of each fiscal year,
the unaudited balance sheet of SkyTel and U.S. Paging on a combined basis as at
the end of, and the related unaudited statements of operations, changes in
stockholders' investment and cash flows for, such quarter and for the period
from the beginning of the then current fiscal year to the end of such fiscal
quarter and the comparable financial statements as at the end of, and for, the
corresponding periods in the preceding fiscal year, together with a certificate
signed by the Chief Financial Officer of SkyTel to the effect that such
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financial statements, while not examined by independent public accountants,
reflect, in his or her opinion and in the opinion of SkyTel, all adjustments
necessary to present fairly, in all material respects, the financial position of
SkyTel and U.S. Paging on a combined basis as at the end of the fiscal quarter
and the results of its operations for the quarter and the period then ended in
conformity with GAAP consistently applied, subject only to year-end audit
adjustments and to the absence of footnote disclosure;
(c) As soon as is practicable, but in any event within ninety (90) days
after the end of each fiscal year of Mtel, (i) the audited consolidated balance
sheet of Mtel and its Consolidated Subsidiaries as at the end of, and the
related statements of operations, changes in stockholders' investment and cash
flows for, such year, and the comparable financial statements as at the end of,
and for, the preceding fiscal year, accompanied by a report and opinion of
Arthur Andersen LLP or such other independent certified public accountants of
nationally recognized standing as shall be retained by Mtel and be satisfactory
to the Agents, which report and opinion shall be prepared in accordance with
generally accepted auditing standards relating to reporting and which report and
opinion shall (A) be unqualified as to the status of Mtel as a going concern and
scope of audit and shall state that such financial statements fairly present, in
all material respects, in all material respects the financial position of Mtel
and its Consolidated Subsidiaries as at the dates indicated and the results of
their operations and cash flows for the periods indicated in conformity with
GAAP and (B) contain no material exceptions or qualifications except for
qualifications relating to accounting changes (with which such independent
public accountants concur) in response to FASB releases or other authoritative
pronouncements and (ii) the unaudited consolidating balance sheet of Mtel and
its Consolidating Subsidiaries as at the end of the related fiscal year and the
unaudited consolidating statements of operations, changes in stockholders'
investment and cash flows for such fiscal year, certified by the Chief Financial
Officer of Mtel that such statements fairly present, in all material respects,
the financial condition of Mtel and its Consolidated Subsidiaries, as at the
dates indicated and the results of their operations and cash flows of Mtel and
its Consolidated Subsidiaries for the periods indicated, all in conformity with
GAAP;
(d) As soon as is practicable, but in any event within sixty (60) days
after the end of each of the first three fiscal quarters of each fiscal year,
the unaudited consolidated and consolidating balance sheets of Mtel and its
Consolidated Subsidiaries as at the end of, and the related unaudited statements
of operations, changes in stockholders' investment and
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cash flows for, such quarter and for the period from the beginning of the then
current fiscal year to the end of such fiscal quarter and the comparable
financial statements as at the end of, and for, the corresponding periods in the
preceding fiscal year, together with a certificate signed by the Chief Financial
Officer of Mtel to the effect that such financial statements, while not examined
by independent public accountants, reflect, in his or her opinion and in the
opinion of Mtel, all adjustments necessary to present fairly, in all material
respects, the financial position of Mtel and its Consolidated Subsidiaries as at
the end of the fiscal quarter and the results of their operations for the
quarter and the period then ended in conformity with GAAP consistently applied,
subject only to year-end audit adjustments and to the absence of footnote
disclosure;
(e) Together with the delivery of the statements referred to in paragraphs
(a) through (d) of this Section 5.1, a certificate of the Chief Financial
Officer of Mtel and the Chief Financial Officer of SkyTel, substantially in the
form of Exhibit I hereto (i) stating that the signer has reviewed the terms of
this Agreement and that in the course of the performance of his or her duties,
he or she would normally have knowledge of any condition or event which would
constitute an Event of Default or Default and stating whether or not he or she
has knowledge of any such condition or event and, if so, specifying each such
condition or event of which he or she has knowledge and the nature thereof, the
period during which it has existed and any action which any Credit Party has
taken, is taking or proposes to take with respect to each such condition or
event, (ii) certifying that the allocation of expenses between SkyTel and
Destineer was done on a fair and reasonable basis, (iii) demonstrating in
reasonable detail compliance with the provisions of Sections 6.15 through 6.23
hereof (as applicable), (iv) attaching a comparison of actual versus projected
results of SkyTel and U.S. Paging on a combined basis, and Mtel and its
Consolidated Subsidiaries together with a business and financial analysis of any
variance, (v) if applicable, noting a reduction or an increase in the applicable
interest Margin as contemplated by Section 2.5(c) and giving the basis for the
same and (vi) attaching a schedule showing in reasonable detail any reductions
or additions, during the preceding quarter, in Investments by a Credit Party in
any other Credit Party, any Subsidiary of a Credit Party, any Joint Venture, any
Joint Venture Subsidiary or any Affiliate of a Credit Party (any such
certificate shall be referred to herein as a "Compliance Certificate");
(f) Together with each set of audited financial statements required by
Section 5.1(a) or Section 5.1(c) above, a report from the independent public
accountants rendering the report thereon (i) stating that such Person has made
such
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examination or investigation as is necessary to enable it to express an informed
opinion as to the matters referred to in clauses (ii) and (iii) of this Section
5.1(f), (ii) stating whether, in connection with their audit examination, any
condition or event, at any time during or at the end of the accounting period
covered by such financial statements, which constitutes an Event of Default has
come to their attention, and if such a condition or event has come to their
attention, specifying the nature and period, if known, of existence thereof, and
(iii) stating that the matters which are set forth in the Compliance Certificate
delivered therewith and which are required pursuant to clause (iii) of Section
5.1(e) above for the applicable fiscal year, are stated in accordance with the
terms of this Agreement;
(g) Within forty (40) days after the end of each month, a copy of the
Monthly Operating Statement of Mtel and its Consolidated Subsidiaries in a form
mutually agreed upon by Mtel and the Administrative Agent (a "Monthly Operating
Statement").
(h) Promptly upon receipt thereof, each comment letter submitted to
management by any independent public accountant in connection with an annual
audit, and copies of all reports stating any material conclusions or
recommendations, if any, submitted by any independent public accountant to a
Credit Party or any Subsidiary of a Credit Party in connection with any annual,
interim or special audit of the financial statements of any Credit Party or any
Subsidiary of a Credit Party.
(i) Not later than the first day of each fiscal year of Mtel, a summary of
the combined financial plan of SkyTel and U.S. Paging and the consolidated
financial plan of Mtel and its Consolidated Subsidiaries for the next succeeding
fiscal year and each year thereafter through December 31, 2001, including,
without limitation, financial projections for such fiscal years prepared in a
manner acceptable to the Administrative Agent, provided, however, that the
summary financial plans for fiscal year 1996 may be delivered on or before
January 31, 1996;
(j) Promptly upon their becoming available, copies of all financial
statements, reports, notices, proxy statements or other material written
communications sent or made available by Mtel to its security holders generally,
of all regular and periodic reports and all registration statements and
prospectuses, if any, filed by Mtel with any securities exchange or with the
Securities and Exchange Commission or any comparable foreign bodies, and of all
press releases and other statements made available generally by Mtel to the
public concerning material developments in the business of any Credit Party or
any Subsidiary of a Credit Party;
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(k) Promptly upon any executive officer of any Credit Party obtaining
knowledge (a) of any Default, or becoming aware that any Lender has given notice
or taken any other action with respect to a claimed Event of Default or (b) that
any Person has given any notice to a Credit Party or any Subsidiary of a Credit
Party or taken any other action with respect to a claimed default or event or
condition of the type referred to in paragraph (e) of Article 7, a certificate
of the president or Chief Financial Officer of the applicable Credit Party
specifying the nature and period of existence of any such condition or event, or
specifying the notice given or action taken by such holder or Person and the
nature of such Default or claimed Event of Default and what action the Credit
Parties have taken, are taking and propose to take with respect thereto;
(l) Promptly upon any executive officer of any Credit Party obtaining
knowledge of (i) the institution of, or threat of, any action, suit, proceeding,
investigation or arbitration by any Governmental Authority or other Person
against or affecting any Credit Party, any Subsidiary of a Credit Party or any
of their respective property or assets, including, without limitation, any such
action, suit, proceeding, investigation or arbitration relating to the Paging
Licenses or the Destineer Licenses or any notice, oral or written, of the
intention of the FCC or any other issuing agency to revoke, suspend, cancel,
amend or not renew for any reason the Paging Licenses or the Destineer Licenses
or (ii) any material development in any such action, suit, proceeding,
investigation or arbitration (whether or not previously disclosed to the
Lenders), which might reasonably be expected to have a Material Adverse Effect,
the applicable Credit Party shall promptly give notice thereof to the Lenders
and provide such other information as may be reasonably available to it (without
waiver of any applicable evidentiary privilege) to enable the Lenders to
evaluate such matters; and, in addition to the requirements set forth in clauses
(i) and (ii) of this Section 5.1(l), the applicable Credit Party upon request
shall promptly give to the Lenders notice of the status of any action, suit,
proceeding, investigation or arbitration covered by a report delivered to the
Lenders pursuant to clause (i) or (ii) above to the Lenders and provide such
other information as may be reasonably available to it (without waiver of any
applicable evidentiary privilege) to enable the Lenders to evaluate such
matters;
(m) As soon as practicable after a request of the Administrative Agent, a
report in form and substance satisfactory to the Administrative Agent outlining
all material insurance coverage maintained as of the date of such report by the
Credit Parties and the Subsidiaries of the Credit Parties and all material
insurance coverage planned to be maintained by such Persons in the subsequent
twelve-month period;
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(n) Notice of any repurchase of the Preferred Stock, which notice shall be
received by the Lenders at least twenty (20) Business Days prior to any such
repurchase; and
(o) With reasonable promptness, such other information and data with
respect to any Credit Party, any Subsidiary of a Credit Party or any Joint
Venture as from time to time may be reasonably requested by any of the Lenders.
SECTION 5.2. Corporate Existence; Compliance with Statutes.
Do or cause to be done all things necessary to (i) preserve, renew and keep
in full force and effect its corporate existence, material rights, permits and
franchises and (ii) comply in all material respects with all provisions of
Applicable Law, and all applicable restrictions imposed by, any Governmental
Authority (including without limitation, the FCC, and all state laws and
regulations).
SECTION 5.3. Insurance.
(a) Keep its assets which are of an insurable character insured (to the
extent and for time periods consistent with normal industry practices) by
financially sound and reputable insurers against loss or damage by fire,
explosion, theft or other hazards which are included under extended coverage in
an amount not less than the insurable value of the property insured and with
such self-insured retentions or deductible levels as are consistent with normal
industry standards.
(b) Maintain with financially sound and reputable insurers, insurance
against other hazards and risks and liability to persons and property to the
extent and in the manner customary for companies in similar businesses;
provided, however, that worker's compensation insurance or similar coverage may
be maintained with respect to its operations in any particular state or other
jurisdiction through an insurance fund operated by such state or jurisdiction.
(c) Cause all such above-described insurance (excluding worker's
compensation insurance) for any Credit Party to (i) provide for the benefit of
the Lenders that 30 days' (10 days in the case of cancellation for nonpayment of
premium) prior written notice of suspension, cancellation, termination,
modification, non-renewal or lapse or material change of coverage shall be given
to the Administrative Agent; (ii) name the Administrative Agent for the benefit
of the Lenders as the loss payee (except for third-party liability insurance);
and (iii) to the extent neither the Administrative Agent nor the Lenders shall
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be liable for premiums or calls, name the Administrative Agent for the benefit
of the Lenders as an additional insured.
SECTION 5.4. Taxes and Charges; Indebtedness in Ordinary Course of
Business.
Duly pay and discharge, or cause to be paid and discharged, before the same
shall become delinquent, all federal, state or local taxes, assessments, levies
and other governmental charges, imposed upon any Credit Party, any Subsidiary of
a Credit Party or any of their respective properties, sales and activities, or
any part thereof, or upon the income or profits therefrom, the failure to make
payment of which could have a Material Adverse Effect, as well as all claims for
labor, materials, or supplies which if unpaid might by law become a Lien upon
any of the property of any Credit Party or any Subsidiary of a Credit Party;
provided, however, that any such tax, assessment, charge, levy or claim need not
be paid if the validity or amount thereof shall currently be contested in good
faith by appropriate proceedings and if the applicable Credit Party(s) shall
have set aside on their books proper reserves (the presentation of which is
segregated to the extent required by GAAP) adequate with respect thereto if
reserves shall be deemed necessary by the applicable Credit Party(s) in
accordance with GAAP; and provided, further, that the applicable Credit Party
will pay all such taxes, assessments, levies, other governmental charges or
claims forthwith upon the commencement of proceedings to foreclose any Lien
which may have attached as security therefor (unless the same is fully bonded or
otherwise effectively stayed). Each Credit Party and each Subsidiary of a Credit
Party will promptly pay when due, or in conformance with customary trade terms,
all other indebtedness incident to its operations, except (i) any such
indebtedness the validity or amount of which shall currently be contested in
good faith by appropriate proceedings and if the applicable Credit Party(s)
shall have set aside on their books proper reserves (the presentation of which
is segregated to the extent required by GAAP) adequate with respect thereto if
reserves shall be deemed necessary by the applicable Credit Party(s) in
accordance with GAAP, provided, that the applicable Credit Party(s) will pay all
such indebtedness which, if unpaid, might result in a Lien on its properties or
the property of any of its Subsidiaries, except Permitted Encumbrances and (ii)
any such indebtedness the failure to make payment of which could not have a
Material Adverse Effect.
SECTION 5.5. Chief Executive Office.
No Credit Party will change the location of its chief executive office or
any of the offices where such entity keeps the records concerning the Collateral
or a substantial amount of goods included in the Collateral without (i) giving
the
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Administrative Agent thirty (30) days' written notice of such change and
(ii) filing any additional UCC financing statements and/or such other documents
reasonably requested by the Administrative Agent as are necessary or desirable
to continue the first perfected security interest of the Administrative Agent
for the benefit of the Lenders in the Collateral.
SECTION 5.6. ERISA Compliance and Reports.
Furnish to each Lender (a) as soon as possible, and in any event within
thirty (30) days after any executive officer (as defined in Regulation C under
the Securities Act of 1933) of anyof a Credit Party or any Subsidiary of a
Credit Party has occurred, a statement of the Chief Financial Officer of the
Borrower, setting forth details as to such Reportable Event and the action which
it, the applicable Credit Party or the applicable Subsidiary proposes to take
with respect thereto, together with a copy of the notice, if any, required to be
filed by any Credit Party or any Subsidiary of a Credit Party, of such
Reportable Event with the PBGC or (2) an accumulated funding deficiency has been
incurred or an application has been made to the Secretary of the Treasury for a
waiver or modification of the minimum funding standard or an extension of any
amortization period under Section 412 of the Code with respect to a Plan of a
Credit Party or any Subsidiary of a Credit Party, any such Plan has been or is
proposed to be terminated in a "distress termination" (as defined in Section
4041(c) of ERISA), proceedings have been instituted to terminate any such Plan
or a Multiemployer Plan, a proceeding has been instituted to collect a
delinquent contribution to any such Plan or a Multiemployer Plan, or any Credit
Party or any Subsidiary of a Credit Party will incur any liability (including
any contingent or secondary liability) to or on account of the termination of or
withdrawal from a Plan under Sections 4062, 4063, 4064 of ERISA or the
withdrawal or partial withdrawal from a Multiemployer Plan under Sections 4201
or 4204 of ERISA, a statement of the Chief Financial Officer of the Borrower,
setting forth details as to such event and the action it, the applicable Credit
Party or the applicable Subsidiary proposes to take with respect thereto, (b)
promptly upon the reasonable request of the Administrative Agent, copies of each
annual and other report with respect to each Plan established or maintained by a
Credit Party or a Subsidiary of a Credit Party and (c) promptly after receipt
thereof, a copy of any notice any Credit Party or any Subsidiary of a Credit
Party may receive from the PBGC relating to the PBGC's intention to terminate
any Plan or to appoint a trustee to administer any Plan.
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SECTION 5.7. Access to Books and Records; Examinations.
Maintain or cause to be maintained at all times true and complete books and
records of its financial operations (in accordance with GAAP) and provide each
of the Lenders and their designated representatives access to all such books and
records and to any of their properties or assets during regular business hours
and after reasonable notice, in order that the Lenders may make such audits and
examinations and make abstracts from such books, accounts, records and other
related papers and may discuss the affairs, finances and accounts with, and be
advised as to the same by, officers and independent accountants, all as the
Lenders may deem appropriate for the purpose of verifying the various reports
delivered to the Lenders pursuant to this Agreement or for otherwise
ascertaining compliance with this Agreement.
SECTION 5.8. Maintenance of Properties.
Keep its properties which are material to its business in good repair,
working order and condition consistent with industry practice and, from time to
time (i) make all appropriate repairs, renewals, replacements, additions and
improvements thereto and (ii) comply at all times with the provisions of all
material leases and other material agreements to which it is a party so as to
prevent any loss or forfeiture thereof or thereunder.
SECTION 5.9. Material Changes.
Report any event or condition which has occurred and which has had, or is
reasonably expected to have, a material Adverse Effect to the Lenders promptly
after any executive officer of any Credit Party obtains knowledge of same.
SECTION 5.10. Environmental Laws.
(a) Notify the Administrative Agent, promptly upon any executive officer of
a Credit Party becoming aware, of any violation or potential violation or
non-compliance with, or liability or potential liability under, any
Environmental Laws which, when taken together with all other pending violations
and liabilities would if adversely determined result in a Material Adverse
Effect, and promptly furnish to the Administrative Agent all notices of any
nature which any Credit Party or any Subsidiary of a Credit Party may receive
from any Governmental Authority or other Person with respect to any violation,
or potential violation or non-compliance with, or liability or potential
liability under, any Environmental Laws which, in any case or when taken
together with all such other notices, would if adversely determined have a
Material Adverse Effect.
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(b) Comply in all material respects with, and use reasonable efforts to
ensure compliance, in all material respects by all tenants and subtenants with,
all Environmental Laws, and obtain and comply in all material respects with and
maintain all licenses, approvals, registrations or permits required by (and use
reasonable efforts to ensure that all tenants and subtenants obtain and comply
in all material respects with and maintain any and all licenses, approvals,
registrations or permits required by) all Environmental Laws.
(c) Conduct and complete all investigations, studies, sampling and testing,
and all remedial, removal and other actions required under all Environmental
Laws and promptly comply in all material respects with all lawful orders and
directives of all Governmental Authorities respecting Environmental Laws
(subject in all respects to any lawful rights of appeal).
(d) Defend, indemnify and hold harmless the Agents and the Lenders, and
their respective employees, agents, officers and directors, from and against any
claims, demands, penalties, fines, liabilities, settlements, damages, costs and
expenses of whatever kind or nature, known or unknown, contingent or otherwise,
arising out of, or in any way related to, the actual or alleged violation of or
non-compliance with any Environmental Laws or any orders, requirements or
demands of Governmental Authorities related thereto, and in any way related to
any of the Credit Parties or their Subsidiaries or any of their respective
properties or assets or the transactions contemplated hereby, including, without
limitation, reasonable attorney and consultant fees, investigation and
laboratory fees, court costs and litigation expenses, but excluding therefrom
all claims, demands, penalties, fines, liabilities, settlements, damages, costs
and expenses arising out of or resulting from (i) the gross negligence or
willful misconduct of the indemnified party seeking indemnification or (ii) any
acts or omissions of any indemnified party occurring after such indemnified
party is in possession of any property or asset.
SECTION 5.11. Claims.
Report to the Administrative Agent, within fifteen (15) days of the date on
which an executive officer of a Credit Party becomes aware of the same, any
legal claims against any Credit Party or any Subsidiary of a Credit Party in
excess of $500,000 over the amount directly covered by insurance.
SECTION 5.12. Further Assurances.
(a) Upon the request of the Administrative Agent, at the cost and expense
of the Borrower, duly and promptly execute and deliver, or cause to be duly and
promptly executed and
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delivered, such further instruments, documents, consents, authorizations,
approvals and orders (in form and substance satisfactory to the Administrative
Agent and including, without limitation, the execution, amendment or
supplementation of any financing statement and continuation statement or other
statement for filing under the provisions of the Uniform Commercial Code of any
jurisdiction or any other statute, rule or regulation of any applicable foreign,
federal, state or local jurisdiction) and promptly perform or cause to be
promptly performed, any and all acts, in all cases as may be necessary, proper
or advisable from time to time, in the reasonable judgment of the Administrative
Agent, to carry out the provisions and purposes of this Agreement and the other
Fundamental Documents, and to provide, perfect or preserve the Liens hereunder
and under the Fundamental Documents, in the Collateral and the Pledged
Securities and any portion thereof.
(b) Unless otherwise agreed by the Administrative Agent, use commercially
reasonable efforts to exclude from any contract to which it becomes a party,
provisions which prevent the creation of a security interest in the rights under
such contract, and upon the request of the Administrative Agent, use
commercially reasonable efforts to obtain permission for the creation of a
security interest in favor of the Administrative Agent (for the benefit of the
Lenders) in rights under any contract which by its terms prohibits the creation
of such a security interest.
(c) If, at any time, the trademarks which are registered pursuant to the
laws of the United Kingdom are used by any Credit Party or any Subsidiary of a
Credit Party or are licensed to any Person, duly and promptly execute and
deliver, or cause to be duly and promptly executed and delivered to the
Administrative Agent (for the benefit of the Lenders), a charge on such
trademarks under the laws of the United Kingdom, which charge shall be in form
and substance reasonably satisfactory to the Administrative Agent.
(d) If the sale of the equity interests in AMSC permitted by Section 6.4(f)
hereof is not consummated on or before February 29, 1996, cause such equity
interests to be pledged to the Administrative Agent (for the benefit of the
Lenders) pursuant to Article 11 hereof, and deliver to the Administrative Agent
the certificates evidencing all such equity interests together with undated
stock powers executed in blank for such certificates.
SECTION 5.13. Performance of Obligations.
Perform in all material respects all of its obligations under the terms of
each mortgage, indenture, security agreement,
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other debt instrument and contract and agreement by which it is bound or to
which it is a party or subject.
SECTION 5.14. Maintenance of Licenses.
(a) In the case of SkyTel, do all that is necessary to preserve, renew,
keep in full force and effect and maintain the Paging Licenses and at all times
comply in all material respects with all terms and conditions thereof; and (b)
in the case of Destineer maintain the Destineer Licenses, and at all times
comply in all material respects with all terms and conditions thereof.
SECTION 5.15. Subsidiaries.
(a) Notify the Administrative Agent if (i) any Subsidiary is hereafter
acquired or formed by any Credit Party or any Subsidiary of a Credit Party or
(ii) any Subsidiary which is listed on Schedule 3.6(a) hereto and is identified
thereon as being inactive, begins to conduct any operations or owns or holds
assets with a fair market value in excess of $30,000.
(b) Upon the request of the Administrative Agent, (i) cause any Subsidiary
which is the subject of a notice referred to in Section 5.15(a) hereof and which
is incorporated or organized in a jurisdiction in the United States, or conducts
any operations within the United States, to become a Guarantor hereunder and to
become a party to the other Fundamental Documents, as appropriate, with the same
obligations and responsibilities under this Agreement and the other Fundamental
Documents as if it had originally executed this Agreement and the other
Fundamental Documents, by executing a written instrument in form and substance
satisfactory to the Administrative Agent and (ii) cause the stock of such
Subsidiary referred to in the preceding clause (i) to be pledged to the
Administrative Agent (for the benefit of the Lenders) pursuant to Article 11
hereof, and deliver to the Administrative Agent certificates evidencing all such
stock together with undated stock powers executed in blank for such
certificates.
SECTION 5.16. Backup Facilities.
(a) SkyTel shall at all times maintain adequate backup satellite
transponder facilities for its national paging system and if SkyTel is at any
time required to utilize such backup satellite transponder facilities, SkyTel
shall as soon as possible, and in any event within thirty (30) days thereafter,
arrange for the replacement of the primary satellite transponder facilities or
obtain additional backup satellite transponder facilities such that at all times
thereafter SkyTel shall have
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adequate backup satellite transponder facilities for its national paging system.
(b) Destineer shall at all times maintain adequate backup ground
transmission lines or satellite transponder facilities for its national two-way
messaging system and if Destineer is at any time required to utilize such backup
facilities, Destineer shall as soon as possible, and in any event within thirty
(30) days thereafter, arrange for the replacement of the primary satellite
transponder facilities or obtain additional backup ground transmission lines or
satellite transponder facilities such that at all times thereafter Destineer
shall have adequate backup ground transmission lines or satellite transponder
facilities for its national two-way messaging system.
SECTION 5.17. Use of Proceeds.
Use the proceeds of the Loans hereunder solely for capital expenditures,
working capital and other general corporate purposes, including, but not limited
to, making loans to the extent and on the terms permitted by Section 6.1(e)
hereof and repaying the outstanding Indebtedness as contemplated by Section
4.1(o) hereof.
SECTION 5.18. Interest Rate Protection.
Maintain, or cause to be maintained, Interest Rate Protection Agreements
(on terms and conditions reasonably acceptable to the Agents) to the extent
necessary so that at any time, interest on Indebtedness in a principal amount
equal to at least 50% of the Total Debt of Mtel and its Consolidated
Subsidiaries, is effectively fixed or capped at rates which are reasonably
acceptable to the Agents.
SECTION 5.19. Payments with respect to the Senior Notes due 2002.
(a) Deliver to each Lender (i) notice of any redemption, purchase,
defeasance of, or any other payment (including, without limitation, on or after
March 31, 1998, the payment of scheduled interest on the due date thereof) with
respect to, the Senior Notes due 2002 or any portion thereof (any such
redemption, purchase, defeasance or other payment shall be referred in this
Section 5.19 as a "Senior Note Payment") and (ii) at any time on or after March
31, 1998, a certificate of the Chief Financial Officer of Mtel, certifying, with
respect to any Senior Note Payment, that (A) the cash on hand of Mtel, plus the
amount of new Borrowings permitted to be made under this Agreement pursuant to
the terms hereof or otherwise (in each case determined as of the date of such
Certificate), is in excess of
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such Senior Note Payment and (B) on a pro forma basis after giving effect to
such Senior Note Payment and any related Borrowing hereunder, no Default or
Event of Default shall occur or then be continuing; such notice and certificate
(if applicable) shall be received by the Lenders at least twenty (20) Business
Days prior to any Senior Note Payment.
(b) From the date of any Certificate delivered to the Lenders pursuant to
Section 5.19(a) hereof until the payment in full of the Senior Note Payment
which was the subject of such Certificate, cause the amount of cash on hand of
Mtel plus the amount of new Borrowings permitted to be made under this Agreement
pursuant to the terms hereof or otherwise, to be in excess of such Senior Note
Payment.
SECTION 5.20. Proceeds of an Asset Sale.
In the event that Mtel or any of its Subsidiaries engages in an Asset Sale
(as such term is defined in the Senior Note Indenture), it will apply the
proceeds of such Asset Sale in a manner so as not to require any purchase or
prepayment of the Senior Notes due 2002 or any portion thereof.
6. NEGATIVE COVENANTS
From the date of the initial Loan and for so long as the Commitments shall
be in effect, any amount shall remain outstanding under any Note or unpaid under
this Agreement or any Letter of Credit shall remain outstanding, each of the
Credit Parties agrees that each of them will not, and will not permit any of its
Subsidiaries, directly or indirectly, to:
SECTION 6.1. Limitation on Indebtedness.
Incur, assume or suffer to exist any Indebtedness except:
(a) Indebtedness hereunder;
(b) Indebtedness of the Credit Parties and any of Mtel's Subsidiaries,
which Indebtedness is in existence on the date hereof and is listed on Schedule
6.1 hereto, but not any extensions or renewals thereof, unless effected on
substantially the same terms;
(c) purchase money Indebtedness (including Capital Leases), provided that
(i) any Lien granted with respect to such Indebtedness is permitted by Section
6.6(b) hereof and (ii) the aggregate amount thereof incurred by all the Credit
Parties and all the Subsidiaries of Mtel does not exceed $5,000,000 at any one
time outstanding;
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(d) Subordinated Debt incurred after the date hereof by Mtel; provided
that, (A) on a pro-forma basis after giving effect to the issuance of such
Subordinated Debt, no Default or Event of Default is continuing and the ratio of
Total Debt of Mtel and its Consolidated Subsidiaries to Annualized EBITDA of
Mtel is less than or equal to 4.00:1.00, (B) such Subordinated Debt does not
have a final maturity, scheduled amortization, sinking fund requirement or other
principal payment prior to December 31, 2002 and (C) such Subordinated Debt has
been issued pursuant to written agreements, containing interest rates, payment
terms, maturities, amortization schedules, covenants, defaults, remedies,
subordination provisions and other material terms in form and substance
satisfactory to the Required Lenders;
(e) intercompany loans and advances (i) from SkyTel or any of the other
Credit Parties (other than Mtel) to Mtel, (ii) from Mtel to SkyTel or any of the
other Credit Parties, (iii) from any Credit Party (other than Mtel) to any of
their respective Subsidiaries which is not a Foreign Subsidiary or (iv) from any
Subsidiary of a Credit Party to its direct or indirect corporate parent which is
a Credit Party; provided that any such intercompany loan or advance is subject
to, and is in compliance with, the Subordination Agreement; and provided,
further, that at the time any such loan or advance described in this Section
6.1(e) is made or incurred, no Default or Event of Default shall have occurred
and then be continuing;
(f) Guaranties permitted by Section 6.2 hereof;
(g) Indebtedness of any Subsidiary of Mtel after the date hereof which is
outstanding on the date on which such Subsidiary becomes a Subsidiary of Mtel
(other than Indebtedness issued in connection with, or in anticipation of, such
Subsidiary becoming a Subsidiary of Mtel);
(h) Indebtedness of Foreign Subsidiaries in an aggregate amount for all
such Subsidiaries not in excess of $5,000,000;
(i) Indebtedness in respect of intercompany loans and advances to Foreign
Subsidiaries, Joint Venture Subsidiaries and Subsidiaries which are not wholly
owned Subsidiaries which are made by Mtel or by the direct or indirect corporate
parent of any such Person, but only to the extent such Indebtedness constitutes
an Investment made by a Credit Party which is permitted by Section 6.5(d)
hereof; and
(j) deferred payment obligations of a Credit Party or a Subsidiary of a
Credit Party resulting from the adjudication or settlement of any claim or
litigation.
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SECTION 6.2. Limitation on Guaranties.
Assume or incur any Guaranty except:
(a) endorsements of negotiable instruments for deposit or collection in the
ordinary course of business;
(b) any Guaranties by Mtel in respect of Indebtedness of any other Credit
Party or any Subsidiary of Mtel permitted under Section 6.1 hereof;
(c) the Guaranty by the Guarantors hereunder;
(d) the existing Guaranties listed on Schedule 6.1 hereto, but not any
extensions or renewals thereof, unless effected on substantially the same terms;
(e) any Guaranties by Mtel of the contractual obligations of its
Subsidiaries (other than any obligations relating to Indebtedness of such
Subsidiaries) incurred by such Subsidiaries which are not Foreign Subsidiaries
in the ordinary course of business which contractual obligations are otherwise
permitted by this Agreement;
(f) any direct or indirect Guaranty by a Credit Party which constitutes an
Investment which is permitted by Section 6.5(d) hereof; and
(g) other Guaranties by Mtel in an aggregate amount not in excess of
$5,000,000.
SECTION 6.3. Changes in Business.
(a) Engage in any line of business other than (i) those lines of business
in existence on the date hereof and (ii) other lines of business for the
delivery of advanced messaging services permitted by the Licenses, or other
messaging products that are integrally related to such lines of business.
(b) Permit any Joint Venture or Subsidiary to engage in any line of
business in which Mtel or the Borrower is prohibited from engaging pursuant to
Section 6.3(a) hereof.
SECTION 6.4. Consolidation, Merger, Sale or Purchase of Assets, etc.
Whether in one transaction or a series of transactions, wind up, liquidate
or dissolve its affairs, or enter into any transaction of merger or
consolidation, or sell or otherwise dispose of all or any part of its property
or assets, or purchase, lease or otherwise acquire all or any part of the
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property or assets of any Person, or agree to do or suffer any of the foregoing,
except:
(a) sales or dispositions of Pagers, transmitter equipment and paging
software to retail customers or re-sellers in the ordinary course of business;
(b) sales or dispositions of assets, in the ordinary course of business
consistent with past practices, for cash consideration not less than the fair
market value thereof;
(c) sales or dispositions of assets, not in the ordinary course of business
during the term of this Agreement which assets have an aggregate fair market
value of no more than $10,000,000 for all the Credit Parties and all
Subsidiaries of the Credit Parties;
(d) simultaneous purchases and sales of assets to Affiliates and Joint
Ventures of any Credit Party; provided that such assets were specifically
acquired for such purpose and the price paid by such Affiliate or Joint Venture
is at least equal to the price paid by the applicable Credit Party for such
assets;
(e) the sale or other disposition of the following equity interests
(including, without limitation, by way of the issuance of new equity interests)
or assets: (i) all the equity interests in Mercury Paging Limited provided, that
such equity interests are sold or disposed of in one transaction and the
proceeds of such sale or disposition are used for capital expenditures, working
capital and other general corporate purposes of Mtel's Subsidiaries in the
United States within 265 days after receipt thereof or are applied as a
mandatory prepayment of outstanding Loans (and the Total Commitment shall be
permanently reduced by an amount equal to such mandatory prepayment), or (ii)
equity interests in Mtel Latin America, Inc. which equity interests, in the
aggregate, have a fair market value of at least $25,000,000 and do not represent
more than 30% of the voting or economic interests in Mtel Latin America, Inc.,
or (iii) equity interests in Mtel Asia which equity interests, in the aggregate,
do not represent more than 50% of the voting or economic interests in Mtel Asia,
or (iv) equity interests in, or assets of, Foreign Subsidiaries whether now
existing or hereafter acquired or created (other than Mercury Paging Limited)
and other entities which are organized outside the United States or operate
solely outside the United States, or (v) equity interests in Subsidiaries which
are not Foreign Subsidiaries (other than Mtel Latin America, Inc. and Mtel
Asia), whether now existing or hereafter created, whose sole purpose is to own
shares in Foreign Subsidiaries or other entities of the type described in the
preceding clause (iv); and provided, further that with respect to any sale or
disposition pursuant to this Section 6.4(e):
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(A) such sale or disposition shall be for at least the fair market
value of such interest being sold or disposed of, as demonstrated by an
internal valuation report of Mtel, a copy of which shall be provided to the
Lenders and which, if requested by the Administrative Agent shall be
confirmed by an independent third-party valuation by a valuation firm
acceptable to the Administrative Agent;
(B) each such transaction shall be approved by a majority of the
independent directors of Mtel; and
(C) not less than thirty (30) days prior to the closing of any such
proposed transaction, Mtel shall deliver a written notification to the
Lenders specifying the particulars of the proposed transaction (including
the specifics of any proposed reinvestment) and demonstrating pro forma
compliance with all provisions of Article 6 hereof as of the date of such
proposed transaction and giving effect to such proposed transaction;
(f) the sale of Mtel's telephone answering service businesses (including
receivables and assets used solely in such businesses) for fair market value and
the sale of the equity interests in AMSC for fair market value;
(g) the making of Investments to the extent permitted by Section 6.5
hereof;
(h) Acquisitions, provided that (i) the aggregate consideration (other than
shares of the capital stock of Mtel that neither by its terms nor otherwise is
required to be redeemed and is not redeemable at the option of the holder
thereof) given (whether in one transaction or a series of transactions) for all
Acquisitions made pursuant to this Section 6.4(h) during the term of this
Agreement, shall not exceed the sum of $25,000,000, provided, however, that (A)
in connection with an Acquisition made by a non-wholly owned Subsidiary, the
consideration given for such Acquisition shall be included in any determination
of the aggregate consideration given for all Acquisitions pursuant to this
clause (h) only to the extent that the amount of such consideration exceeds the
aggregate amount of Investments in such non-wholly owned Subsidiary, which
Investments were made in cash or with Cash Equivalents and were Acquisitions
made pursuant to this Section 6.4(h), (B) the amount of any Indebtedness
described in, and permitted by, Section 6.1(g) hereof involved in any
Acquisition permitted by this Section shall be considered as part of the total
consideration given for such Acquisition and (C) the amount or value of, or
consideration given for (as applicable), any
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Acquisition made by a non-wholly owned Subsidiary shall, for purposes of this
Agreement, be reduced to the extent funded by a third party; and (ii) on a pro
forma basis after giving effect to such Acquisition and taking into
consideration the target company, no Default or Event of Default shall occur or
then be continuing; and (iii) at least five (5) Business Days prior to the
consummation of any such Acquisition involving total consideration of $5,000,000
or more, the Administrative Agent shall have received a certificate of an
executive officer of SkyTel or Mtel outlining the terms of the proposed
transaction and confirming compliance with this Section;
(i) purchases of assets in exchange for the issuance of shares of the
capital stock of Mtel which capital stock is neither by its terms nor otherwise
required to be redeemed and is not redeemable at the option of the holder
thereof;
(j) any Subsidiary of Mtel may merge into, consolidate with, or transfer
its assets to, (each a "Transaction") any other Subsidiary of Mtel or any other
Person (other than Mtel); provided, however, that (i) SkyTel shall not enter
into a Transaction with any other Subsidiary of Mtel, except for Mtel Paging,
Inc. or U.S. Paging, (ii) if a Pledged Subsidiary is a party to any Transaction
then the survivor shall also be a Pledged Subsidiary, (iii) if a Person which is
not theretofore a Subsidiary of Mtel is a party to a Transaction then such
Transaction must also meet all requirements otherwise applicable for an
Acquisition to be permitted under the other provisions of this Agreement, and
(iv) after giving effect to such Transaction, no Default or Event of Default
shall be continuing as determined at such time and in the case only of a
Transaction involving SkyTel, determined on a pro forma basis as if such
Transaction had been consummated at the beginning of the second preceding
quarter for which financial statements are available; and
(k) on and after March 31, 1998, transfers of assets to Mtel in the minimum
amount which, when taken together with funds otherwise available to Mtel, are
sufficient to pay interest when due on the Senior Notes due 2002; provided that
at the time and after giving effect to any such transfer, no Default or Event of
Default is continuing; and provided, further, that no such transfer shall be
made unless Mtel is prevented from receiving, or is otherwise unable to receive
(for any reason whatsoever), sufficient funds by dividends, repayments of
intercompany Indebtedness or the making of intercompany loans or advances by
Subsidiaries of Mtel to Mtel.
SECTION 6.5. Limitation on Loans and Investments.
Make any loan or advance or extend credit to any Person (whether or not a
Subsidiary, employee, officer or other
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Affiliate of any Credit Party) or make any Investment in or with respect to, any
Person or its securities, except:
(a) Investments by any Credit Party or any Subsidiary of a Credit Party in
Cash Equivalents;
(b) Investments outstanding on the date hereof;
(c) Investments in the equity securities of Pledged Subsidiaries (other
than Joint Venture Subsidiaries and non- wholly owned Subsidiaries); provided
that with respect to Subsidiaries created or formed after the date hereof, the
applicable Credit Party or Subsidiary has given notice to the Administrative
Agent of the creation or acquisition of such Subsidiary and otherwise complied
with Section 5.15 and 6.25 hereof;
(d) Investments of any Credit Party made after the date hereof, in Foreign
Subsidiaries, Joint Venture Subsidiaries, Joint Ventures and Subsidiaries which
are non-wholly owned Subsidiaries (including, without limitation, equity
Investments in Foreign Subsidiaries, Joint Venture Subsidiaries, Joint Ventures
and Subsidiaries which are non-wholly owned Subsidiaries (including, without
limitation, any non-wholly owned Subsidiary which was created by a Credit Party
or any Subsidiary of a Credit Party selling or otherwise disposing of, or
issuing additional, equity interests of a wholly owned Subsidiary), Investments
by Joint Venture Subsidiaries in Joint Ventures, loans or advances to Joint
Ventures, Joint Venture Subsidiaries and non-wholly owned Subsidiaries and
Guaranties by Joint Venture Subsidiaries of Indebtedness of Joint Ventures);
provided that (i) any Subsidiary or Joint Venture in which an Investment is
being made pursuant to this Section 6.5(d), is engaged in a business in which
Mtel or SkyTel is not prohibited from engaging pursuant to Section 6.3 hereof,
(ii) on a pro forma basis after giving effect thereto, no Default or Event of
Default shall be continuing, (iii) the aggregate amount of all Investments made
pursuant to this clause (d) (without double-counting and net of cash proceeds
from the disposition of such Investments and reductions of the amount of such
Investments resulting from the repayment of loans or advances and termination of
Guaranties) shall not exceed $25,000,000 in the aggregate on a consolidated
basis and (iv) in the case of any such Investment (or series of related
Investments) in an amount in excess of $5,000,000, the Board of Directors of
Mtel shall have determined, in good faith, that such transaction is in the best
interest of Mtel and its Subsidiaries taken as a whole;
(e) Other Investments (other than those Investments described in Section
6.5(d) hereof) in an aggregate amount for all the Credit Parties, not in excess
of $5,000,000; and
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(f) Indebtedness permitted by Section 6.1(e) hereof.
SECTION 6.6. Limitations on Liens.
Suffer any Lien on its property, except:
(a) deposits under worker's compensation, unemployment insurance and social
security laws or to secure statutory obligations or surety or appeal bonds or
performance or other similar bonds in the ordinary course of business, or
statutory Liens of landlords, carriers, warehousemen, mechanics and material men
and other similar Liens, in respect of liabilities which are not yet due or
which are being contested in good faith, Liens for taxes not yet due and
payable, and Liens for taxes due and payable, the validity or amount of which is
currently being contested in good faith by appropriate proceedings and as to
which foreclosure and other enforcement proceedings shall not have been
commenced (unless fully bonded or otherwise effectively stayed);
(b) purchase money Liens granted in connection with the incurrence of
Indebtedness permitted by Section 6.1(c), to the vendor or Person financing the
acquisition of property, plant or equipment if (i) such Lien is limited to the
specific assets acquired or, in the case of tangible assets, other property
which is an improvement to or is acquired for specific use in connection with
such acquired property or which is real property being improved by such acquired
property; (ii) the debt secured by the Lien is the unpaid balance of the
acquisition cost of the specific assets on which the Lien is granted; and (iii)
such transaction does not otherwise violate this Agreement;
(c) Liens upon real and/or tangible personal property, which property was
acquired after the date of this Agreement (by purchase, construction or
otherwise) by a Credit Party or any Subsidiary of a Credit Party, each of which
Liens existed on such property before the time of its acquisition and was not
created in anticipation thereof; provided, however, that no such Lien shall
extend to or cover any property of any Credit Party or any Subsidiary of a
Credit Party other than the respective property so acquired and improvements
thereon;
(d) Liens arising out of attachments, judgments or awards as to which an
appeal or other appropriate proceedings for contest or review are promptly
commenced (and as to which foreclosure and other enforcement proceedings (i)
shall not have been commenced (unless fully bonded or otherwise effectively
stayed) or (ii) in any event shall be promptly fully bonded or otherwise
effectively stayed);
(e) Liens securing Indebtedness permitted by Section 6.1(g) hereof, which
Liens existed prior to the date on
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which the applicable Subsidiary became a Subsidiary of Mtel (other than Liens
created in connection with, or in anticipation of, such Subsidiary becoming a
Subsidiary of Mtel);
(f) Liens created under any Fundamental Document;
(g) Liens existing on the date hereof and described on Schedule 6.6 hereto,
without giving effect to any extensions or renewals thereof (except for such
Liens securing Indebtedness expressly permitted to be extended pursuant to
Section 6.1 hereof);
(h) Liens granted by a Foreign Subsidiary in connection with the incurrence
of Indebtedness by that Foreign Subsidiary permitted by Section 6.1(h) hereof;
and
(i) rights of first offer or similar rights granted in connection with the
equity interests of Mtel Asia, Mtel Latin America, Inc., a Foreign Subsidiary or
a Joint Venture.
SECTION 6.7. Corporate Name; Chief Executive Office.
Permit any Credit Party to change its corporate name or the location of its
chief executive office, any office where any such entity keeps the books and
records with respect to the Collateral owned by it or any of the offices or
locations where such entity regularly keeps any substantial amount of goods
included in the Collateral owned by it without (i) giving the Administrative
Agent thirty (30) days' prior written notice of such change and (ii) filing any
additional UCC financing statements, mortgages, and such other documents
requested by the Administrative Agent or which are otherwise necessary or
desirable to continue the first priority perfected security interest of the
Administrative Agent for the benefit of the Lenders in the Collateral.
SECTION 6.8. Receivables.
Sell, transfer, discount or otherwise dispose of notes, accounts receivable
or other obligations owing to a Credit Party or any Subsidiary of a Credit Party
except (i) for the purpose of collection in the ordinary course of business or
(ii) in connection with the disposition of an entire business, or all of the
equity interests of a Person, owned by a Credit Party or a Subsidiary of a
Credit Party, which disposition is not prohibited by Section 6.4 hereof.
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SECTION 6.9. Sale and Leaseback.
Enter into any arrangement with any Person or Persons, whereby in
contemporaneous transactions a Credit Party or any Subsidiary of a Credit Party
sells essentially all of its right, title and interest in a material asset
(including, without limitation, a substantial number of Pagers) and, in
connection therewith, a Credit Party or any Subsidiary of a Credit Party
acquires or leases back the right to use such asset.
SECTION 6.10. ERISA Compliance.
Engage in a "prohibited transaction", as defined in Section 406 of ERISA or
Section 4975 of the Code, with respect to any Plan or Multiemployer Plan or
knowingly consent to any other "party in interest" or any "disqualified person",
as such terms are defined in Section 3(14) of ERISA and Section 4975(e)(2) of
the Code, respectively, engaging in any "prohibited transaction", with respect
to any Plan or Multiemployer Plan maintained by a Credit Party or any Subsidiary
of a Credit Party; or permit any Plan maintained by a Credit Party or any
Subsidiary of a Credit Party to incur any "accumulated funding deficiency", as
defined in Section 302 of ERISA or Section 412 of the Code, unless such
incurrence shall have been waived in advance by the Internal Revenue Service; or
terminate any such Plan in a manner which could result in the imposition of a
Lien on any property of a Credit Party or any Subsidiary of a Credit Party
pursuant to Section 4068 of ERISA; or breach or knowingly permit any employee or
officer or any trustee or administrator of any Plan maintained by a Credit Party
or any Subsidiary of a Credit Party to breach any fiduciary responsibility
imposed under Title I of ERISA with respect to any Plan maintained by a Credit
Party or any Subsidiary of a Credit Party; engage in any transaction which would
result in the incurrence of a liability under Section 4069 of ERISA; or fail to
make contributions to a Plan or Multiemployer Plan which results in the
imposition of a Lien on any property of a Credit Party or any Subsidiary of a
Credit Party pursuant to Section 302(f) of ERISA or Section 412(n) of the Code,
if the occurrence of any of the foregoing events would result in a liability
which would cause a Material Adverse Effect.
SECTION 6.11. Transactions with Affiliates.
Except for transactions expressly permitted by the other provisions of this
Agreement, directly or indirectly enter into any transaction with an Affiliate
(other than a Credit Party) on terms less favorable (including, but not limited
to, price and credit terms) to a Credit Party or any Subsidiary of a Credit
Party than would be the case if such transaction had been effected at arms
length with a Person other than an Affiliate.
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SECTION 6.12. No Amendments to Existing Indebtedness and Preferred Stock.
Agree to, or permit, any amendment, alteration, modification, cancellation,
suspension or other change of any kind to any of the terms or provisions of:
(a) any existing Indebtedness of a Credit Party (other than intercompany
Indebtedness permitted by Section 6.1(e) hereof) which Indebtedness is
subordinated to the Obligations hereunder or the obligations of the
applicable Guarantor pursuant to its guaranty hereunder;
(b) the Senior Notes due 2002 or the Indenture relating thereto;
(c) the Convertible Debentures or the Indenture relating thereto; or
(d) the Certificate of Powers, Designations, Preferences and Rights of the
Preferred Stock as initially filed with the Secretary of State of the
State of Delaware.
SECTION 6.13. Hazardous Materials.
Cause or permit any of its properties or assets to be used to generate,
manufacture, refine, transport, treat, store, handle, dispose, transfer, produce
or process Hazardous Materials, except in compliance in all material respects
with all applicable Environmental Laws, nor release, discharge, dispose of or
permit or suffer any release or disposal as a result of any intentional act or
omission on its part of Hazardous Materials onto any such property or asset in
material violation of any Environmental Law.
SECTION 6.14. No Further Negative Pledges.
Except with respect to prohibitions against other encumbrances on (i)
specific property encumbered to secure payment of particular Indebtedness (which
Indebtedness relates solely to such specific property, and improvements and
accretions thereto, and is otherwise permitted hereby), (ii) assets of a Foreign
Subsidiary or (iii) any Investment in any entity other than a Credit Party,
enter into any agreement (other than this Agreement and the other Fundamental
Documents) (x) prohibiting the creation or assumption of any Lien upon the
properties or assets, whether now owned or hereafter acquired, of a Credit Party
or any Subsidiary of a Credit Party or (y) requiring an obligation to be secured
if some other obligation is secured.
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SECTION 6.15. Total Debt to EBITDA of Mtel and Its Consolidated
Subsidiaries.
At any time during the periods indicated below, permit the ratio of Total
Debt of Mtel to Annualized EBITDA of Mtel to exceed the corresponding ratio
indicated below:
Period Ratio
------ -----
From 4/1/97 through 6/30/97 6.50:1.00
From 7/1/97 through 9/30/97 5.00:1.00
From 10/1/97 through 12/31/97 3.75:1.00
From 1/1/98 through 3/31/98 3.50:1.00
From 4/1/98 through 6/30/98 3.00:1.00
Thereafter 2.50:1.00
SECTION 6.16. Total Debt to EBITDA Ratio of SkyTel.
At any time, permit the ratio of Total Debt of SkyTel and U.S. Paging on a
combined basis to Annualized EBITDA of SkyTel to exceed 2.00:1.00.
SECTION 6.17. Ratio of Total Debt of Mtel and its Consolidated Subsidiaries
to EBITDA of SkyTel.
At any time during the periods indicated below, permit the ratio of Total
Debt of Mtel and its Consolidated Subsidiaries to Annualized EBITDA of SkyTel to
exceed the corresponding ratio set forth below:
Period Ratio
------ -----
At 12/31/95 5.50:1.00
From 1/1/96 through 3/31/98 4.25:1.00
From 4/1/98 through 3/31/99 4.00:1.00
From 4/1/99 through 9/30/99 3.50:1.00
Thereafter 3.00:1.00
SECTION 6.18. Interest Coverage Ratios.
(a) With respect to each fiscal quarter ending during the periods indicated
below, permit the ratio of Annualized EBITDA of Mtel and its Consolidated
Subsidiaries to Consolidated Interest Expense of Mtel and its Consolidated
Subsidiaries minus interest paid on the Senior Notes due 2002 from funds held in
the Pledge Account (as such term is defined in the Senior Note Indenture), to be
less than the corresponding ratio indicated below:
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Period Ratio
------ -----
From 7/1/96 through 12/31/97 3.50:1.00
Thereafter 4.00:1.00
(b) With respect to each fiscal quarter ending during the periods indicated
below, permit the ratio of Annualized EBITDA of SkyTel to Consolidated Interest
Expense of Mtel and its Consolidated Subsidiaries minus interest paid on the
Senior Notes due 2002 from funds held in the Pledge Account (as such term is
defined in the Senior Note Indenture), to be less than the corresponding ratio
indicated below:
Period Ratio
------ -----
From the Closing Date through 3/31/98 3.50:1.00
From 4/1/98 through 6/30/98 3.00:1.00
From 7/1/98 through 9/30/98 2.50:1.00
From 10/1/98 through 12/31/99 2.00:1.00
Thereafter 2.50:1.00
SECTION 6.19. Minimum EBITDA of SkyTel.
For each of the fiscal quarters indicated below, permit Consolidated EBITDA
of SkyTel to be less than the corresponding amount set forth below for such
fiscal quarter:
Fiscal Quarter Ended Amount
-------------------- ------
(in millions)
December 31, 1995 16.1
March 31, 1996 19.9
June 30, 1996 20.3
September 30, 1996 21.5
December 31, 1996 24.4
March 31, 1997 27.2
June 30, 1997 27.3
September 30, 1997 27.6
December 31, 1997 27.4
March 31, 1998 30.2
June 30, 1998 29.3
September 30, 1998 28.9
December 31, 1998 28.0
March 31, 1999 28.9
June 30, 1999 28.9
September 30, 1999 28.9
December 31, 1999 28.9
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March 31, 2000 28.1
June 30, 2000 28.1
September 30, 2000 28.1
December 31, 2000 28.1
March 31, 2001 24.9
June 30, 2001 24.9
September 30, 2001 24.9
December 31, 2001 24.9
SECTION 6.20. Minimum EBITDA of Mtel.
For each of the fiscal quarters indicated below, permit Consolidated EBITDA
of Mtel to be less than the corresponding amount set forth below for such fiscal
quarter:
Fiscal Quarter Ended Amount (in millions)
-------------------- --------------------
September 30, 1996 2.0
December 31, 1996 9.7
March 31, 1997 12.6
June 30, 1997 21.4
September 30, 1997 28.9
December 31, 1997 35.1
March 31, 1998 38.7
June 30, 1998 47.5
September 30, 1998 55.0
December 31, 1998 61.2
March 31, 1999 84.9
June 30, 1999 84.9
September 30, 1999 84.9
December 31, 1999 84.9
March 31, 2000 104.25
June 30, 2000 104.25
September 30, 2000 104.25
December 31, 2000 104.25
March 31, 2001 109.5
June 30, 2001 109.5
September 30, 2001 109.5
December 31, 2001 109.5
SECTION 6.21. Limitations on Capital Expenditures.
Make or incur any obligation to make Capital Expenditures (including
obligations under Capital Leases) in the aggregate for all Credit Parties and
all their Subsidiaries for
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each period indicated below, in excess of the amounts indicated below:
Period
(Fiscal Year ending on
December 31) Amount (in millions)
------------ --------------------
1995 $246.0
1996 $170.5
1997 $170.0
1998 $168.0
1999 $190.0
2000 $175.0
2001 $175.0
provided, however, that Capital Expenditures made from the Net Cash Proceeds
from the sale or other disposition of any equity interests (including by way of
the issuance of new equity interests) or assets pursuant to and as contemplated
by Section 6.4(e) hereof, shall not be included in any determination of
aggregate Capital Expenditures for purposes of determining compliance with this
Section 6.21; provided, further, however, to the extent the amount of Capital
Expenditures permitted by this Section 6.21 for any period (without regard to
any carry-over from a prior year pursuant to this proviso) is in excess of the
actual amount of Capital Expenditures for such period, the amount of permitted
Capital Expenditures during the immediately succeeding fiscal year only, shall
be increased by the lesser of (i) the amount of such excess and (ii) the amount
equal to 25% of the amount of Capital Expenditures permitted by this Section
6.21 (without regard to any carry-over from a prior year pursuant to this
proviso) for the period with respect to which such excess exists.
SECTION 6.22. Minimum Subscriber Level for SkyTel.
On any of the dates indicated below, permit the number of subscribers to
SkyTel's one-way paging services plus the number of subscribers to U.S. Paging's
one-way paging services (excluding in either case, any subscriber who is being
provided such services substantially free of charge or whose account is more
than 90 days delinquent) to be less than the corresponding amount indicated
below:
Number of
Date Subscribers
---- -----------
December 31, 1995 774,228
March 31, 1996 850,928
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June 30, 1996 928,875
September 30, 1996 1,050,000
December 31, 1996 1,171,961
March 31, 1997 1,252,385
June 30, 1997 1,332,121
September 30, 1997 1,402,452
December 31, 1997 1,473,511
March 31, 1998 1,527,237
June 30, 1998 1,587,520
September 30, 1998 1,641,123
December 31, 1998 1,708,432
March 31, 1999 1,757,800
June 30, 1999 1,807,169
September 30, 1999 1,856,537
December 31, 1999 1,905,906
March 31, 2000 1,924,292
June 30, 2000 1,942,678
September 30, 2000 1,961,063
December 31, 2000 1,979,449
March 31, 2001 1,986,805
June 30, 2001 1,994,161
September 30, 2001 2,001,516
December 31, 2001 2,008,872
SECTION 6.23. Minimum Subscriber Level for Destineer.
On any of the dates indicated below, permit the number of subscribers to
Destineer's two-way personal communication services (excluding any subscriber
who is being provided such services substantially free of charge or whose
account is more than 90 days delinquent) to be less than the corresponding
amount indicated below:
Number of
Date Subscribers
---- -----------
September 30, 1996 175,000
December 31, 1996 239,444
March 31, 1997 358,964
June 30, 1997 467,366
September 30, 1997 565,675
December 31, 1997 654,829
March 31, 1998 831,540
June 30, 1998 991,796
September 30, 1998 1,137,127
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December 31, 1998 1,268,919
March 31, 1999 1,435,987
June 30, 1999 1,603,055
September 30, 1999 1,770,123
December 31, 1999 1,937,191
March 31, 2000 2,057,973
June 30, 2000 2,178,755
September 30, 2000 2,299,538
December 31, 2000 2,420,320
March 31, 2001 2,510,276
June 30, 2001 2,600,233
September 30, 2001 2,690,189
December 31, 2001 2,780,145
SECTION 6.24. Accounting Practices.
Establish a fiscal year ending other than on December 31, or modify or
change accounting treatments or reporting practices, except as otherwise
required or permitted by changes in GAAP.
SECTION 6.25. Subsidiaries.
After the Closing Date, create or acquire any new Subsidiary which is not a
Foreign Subsidiary, unless such Subsidiary is directly owned by Mtel and Section
5.15 hereof is complied with; provided, however, that Mtel Asia may be directly
owned by Mtel International, Inc. (a direct Subsidiary of Mtel) as contemplated
by Section 6.30 hereof.
SECTION 6.26. Dividends and other Restricted Payments.
Declare, make or incur any liability to make any Restricted Payments
except:
(a) Restricted Payments to a Credit Party (other than Mtel) by any
Subsidiary of a Credit Party;
(b) Restricted Payments to Mtel by any Credit Party or any Subsidiary of a
Credit Party; provided that at the time and after giving effect to such
Restricted Payment, no Default or Event of Default is continuing;
(c) required payments (but not prepayments) of interest (in cash only to
the extent required), premium and principal (including sinking fund payments) on
Subordinated Debt
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to the extent not prohibited by the subordination provisions of such
Subordinated Debt;
(d) In the event of the sale by Mtel prior to December 15, 1997 of its
capital stock to a Strategic Equity Investor (as such term is defined in the
Senior Note Indenture) in a single transaction or series of related transactions
for an aggregate purchase price equal to or exceeding $75,000,000, as
contemplated by Section 3.07(b) of the Senior Note Indenture, Mtel may apply up
to a maximum of 50% of the net proceeds thereof (but only to the extent such
proceeds consist of cash or readily marketable cash equivalents received in
respect of the capital stock so sold) to redeem up to 25% of the aggregate
principal amount of the Senior Notes due 2002 originally issued, at a redemption
price of 114.5% of the principal amount thereof plus accrued and unpaid interest
in accordance with such Section 3.07(b); provided that after giving effect to
any such redemption and all related transactions no Default or Event of Default
is then continuing;
(e) Restricted Payments by Mtel to fund purchases of shares of Mtel or
options relating to shares of capital stock of Mtel held by current or former
employees of Mtel upon any such person's death, retirement, termination or
disability, provided that the aggregate amount of such payments (net of proceeds
received by Mtel as a result of the exercise of employee stock options or sales
of stock to employees) does not at any time exceed $500,000;
(f) scheduled dividend payments on the Preferred Stock, provided that at
the time and after giving effect to such payment, no Default or Event of Default
is continuing; and
(g) repurchases of the Preferred Stock paid for with shares of common stock
of Mtel.
SECTION 6.27. Prohibition of Amendments or Waivers of Licenses.
Agree to, or permit, any amendment, alteration, modification, cancellation,
suspension or other change of the Paging Licenses, the Destineer Licenses, or
any other license (or waive a material right thereunder) in any manner which
might (i) result in a Material Adverse Effect or (ii) materially decrease the
fair market value of the Collateral (including the Pledged Securities) taken as
a whole.
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SECTION 6.28. Joint Ventures.
(a) Except as shall be set forth on Schedule 3.6(c) hereto, be a general
partner of any Person, provided, however, that a Joint Venture Subsidiary may be
a general partner of a non-wholly owned Subsidiary or Joint Venture; and
(b) Except as shall be set forth on Schedule 3.6(c) hereto, permit a Joint
Venture to incur, assume or suffer to exist any Indebtedness which is recourse
to a Credit Party or any of their respective Subsidiaries, other than the
applicable Joint Venture Subsidiary or Joint Venture.
SECTION 6.29. Interest Rate Protection Agreements; Currency Agreements
Enter into any Interest Rate Protection Agreement or Currency Agreement,
except for bona fide hedging purposes or as required by Section 5.18 hereof.
SECTION 6.30. Foreign Operations.
(a) Conduct any operations, or make any Investment, in Central or South
America (including the Caribbean), except through Mtel Latin America, Inc.
(b) Conduct any operations, or make any Investment, in the Asia/Pacific Rim
region, except through a direct Subsidiary of Mtel International, Inc. (a direct
Subsidiary of Mtel) to be created after the date hereof under the laws of a
jurisdiction within the Untied States, which Subsidiary's sole purpose shall be
to act as a holding company for Mtel's operations and Investments in the
Asia/Pacific Rim region (such Subsidiary shall be referred to herein as "Mtel
Asia").
7. EVENTS OF DEFAULT
In the case of the happening and during the continuance of any of the
following events (herein called "Events of Default"):
(a) any representation or warranty made by any Credit Party in this
Agreement or any other Fundamental Document or any representation and warranty
made at any time after the date hereof by any Credit Party or any Subsidiary of
a Credit Party in connection with this Agreement, any other Fundamental Document
or the Borrowings hereunder, or any statement or representation made at any time
after the date hereof, in any report, financial statement, certificate or other
document furnished by or on behalf of any Credit Party or any Subsidiary of a
Credit Party to the Administrative Agent or any Lender under or in connection
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with this Agreement, any other Fundamental Document, the Loans or the Letters of
Credit hereunder, shall prove to have been, or to be, taken together with all
such other representations and warranties, false or misleading in any material
respect when made or delivered; provided, however, that no Event of Default
shall occur hereunder based on the inaccuracy of any financial projections
unless such financial projections were not prepared in good faith or when made,
did not represent the reasonable, good faith opinion of the applicable Credit
Party or Subsidiary of a Credit Party of the most probable course of its
business;
(b) default shall be made in the payment of any principal of, or interest
on, the Notes or of any fees or other amounts payable by the Borrower hereunder,
when and as the same shall become due and payable, whether at the due date
thereof or at a date fixed for prepayment thereof or by acceleration thereof or
otherwise and, in the case of payments of interest, such default shall continue
unremedied for three (3) Business Days, and in the case of payments other than
of any principal amount of, or interest on, the Notes, such default shall
continue unremedied for three (3) days after receipt by the Borrower of an
invoice therefor;
(c) default shall be made by any Credit Party in the due observance or
performance of any covenant, condition or agreement contained in Section 5.1(k)
(with respect to notice of Defaults or Events of Default), Section 5.14, Section
5.15, Section 5.17, Section 5.19, Section 5.20 or Article 6 of this Agreement;
(d) default shall be made by any Credit Party in the due observance or
performance of any other covenant, condition or agreement to be observed or
performed pursuant to the terms of this Agreement or any other Fundamental
Document and such default shall continue unremedied for thirty (30) days after a
Credit Party obtains knowledge of such occurrence;
(e) default in payment shall be made with respect to any Indebtedness
(other than the Indebtedness incurred by the Borrower hereunder) of any Credit
Party or any Subsidiary of a Credit Party in an amount or amounts in excess of
$2,000,000 in the aggregate, or any other default shall occur with respect to
the performance of any other obligation incurred in connection with any such
Indebtedness, if the effect of such other default is, or with the giving of
notice or passage of time or both would be, to accelerate the maturity, of such
Indebtedness or to permit the holder thereof (after giving effect to any
applicable grace periods) to cause such Indebtedness to become due prior to its
stated maturity, or any such Indebtedness shall not be paid when due, whether at
the due date thereof or at acceleration thereof or otherwise, or any other
circumstance shall arise (other than
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the mere passage of time) by reason of which a Credit Party or any Subsidiary of
a Credit Party is required (prior to any scheduled redemption or repurchase) to
redeem or repurchase, or offer to holders the opportunity to have redeemed or
repurchased, any such Indebtedness;
(f) any Credit Party or any Subsidiary of a Credit Party shall generally
not pay its debts as they become due or shall admit in writing its inability to
pay its debts, or shall make a general assignment for the benefit of creditors;
or any Credit Party or any Subsidiary of a Credit Party shall commence any case,
proceeding or other action seeking to have an order for relief entered on its
behalf as debtor or to adjudicate it a bankrupt or insolvent, or seeking
reorganization, arrangement, adjustment, liquidation, dissolution or composition
of it or its debts under any law relating to bankruptcy, insolvency,
reorganization or relief of debtors, or seeking appointment of a receiver,
administrative receiver, trustee, custodian or other similar official for it or
for all or any substantial part of its property, or shall file an answer or
other pleading in any such case, proceeding or other action admitting the
material allegations of any petition, complaint or similar pleading filed
against it or consenting to the relief sought therein; or any Credit Party or
any Subsidiary of a Credit Party shall take any action to authorize any of the
foregoing;
(g) any involuntary case, proceeding or other action against any Credit
Party or any Subsidiary of a Credit Party shall be commenced seeking to have an
order for relief entered against it as debtor or to adjudicate it a bankrupt or
insolvent, or seeking reorganization, arrangement, adjustment, liquidation,
dissolution or composition of it or its debts under any law relating to
bankruptcy, insolvency, reorganization or relief of debtors, or seeking
appointment of a receiver, administrative receiver, trustee, custodian or other
similar official for it or for all or any substantial part of its property, and
such case, proceeding or other action (i) results in the entry of any order for
relief against it or (ii) shall remain undismissed for a period of sixty (60)
days;
(h) final judgment(s) for the payment of money in excess of $2,000,000, in
the aggregate, shall be rendered in the aggregate, against a Credit Party or any
Subsidiary of a Credit Party and within thirty (30) days from the entry of such
judgment(s), it shall not have been discharged or stayed pending appeal or shall
not have been discharged within thirty (30) days from the entry of a final order
of affirmance on appeal;
(i) a Reportable Event relating to a failure to meet minimum funding
standards or an inability to pay benefits when due shall have occurred with
respect to any Plan under the
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control of a Credit Party or any Subsidiary of a Credit Party and shall not have
been remedied within forty-five (45) days after the occurrence of such
Reportable Event;
(j) this Agreement, the Copyright Security Agreement, the Patent Security
Agreement or the Trademark Security Agreement, (each a "Security Document")
shall, for any reason, not be, or shall cease to be, in full force and effect or
shall be declared, or asserted to be, null and void, or any of the Security
Documents shall not give, or shall cease to give, the Administrative Agent the
Liens, rights, powers and privileges purported to be created thereby, in favor
of the Administrative Agent for the benefit of the Lenders, superior to and
prior to the rights of all third Persons and subject to no other Liens (except
to the extent expressly permitted herein or therein), or the validity or
enforceability of the Liens granted, to be granted, or purported to be granted,
by any of the Security Documents shall be contested by any Credit Party or any
of its Affiliates, provided that no such defect in the Security Documents shall
give rise to an Event of Default under this paragraph (j) unless such defect
shall affect Collateral that is, or should be, subject to a Lien in favor of the
Agent (for the benefit of the Lenders) having an aggregate value in excess of
$250,000 (exclusive in each case of any exceptions to such terms, covenants,
agreements or defects otherwise expressly permitted by the Fundamental
Documents, including Permitted Encumbrances);
(k) a "change in control" shall occur; as used herein a "change in control"
shall mean (i) the failure of Mtel to directly own 100% of the outstanding
capital stock of Destineer and SkyTel (provided that prior to the Flip Date,
SkyTel may be continue to be owned indirectly through Mtel Paging, Inc.), or
(ii) "Continuing Directors" shall no longer constitute at least a majority of
Mtel's Board of Directors, and a "Continuing Director" means any individual who
at the date hereof was a member of Mtel's Board of Directors and any new
director who was specifically approved by a majority of the directors on Mtel's
Board of Directors who at the time of such individual's initial election or
appointment to such Board, were either directors at the date hereof or whose
election was previously so approved, or (iii) the acquisition by any Person or
group (as defined in the Securities Exchange Act of 1934 and the regulation
thereunder) of ownership and/or voting control of more than 30% of Mtel's issued
and outstanding common stock;
(l) (i) any of the Paging Licenses or the Destineer Licenses, shall be
suspended or revoked, (ii) SkyTel shall for any other reason fail to be the
licensee under the Paging Licenses or otherwise fail to have all authorizations
and licenses required to operate the nationwide paging system as conducted and
as contemplated to be conducted by SkyTel on the
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date hereof, or (iii) Destineer shall for any other reason fail to be the
licensee under the Destineer Licenses or otherwise fail to have all
authorizations and licenses required to operate the narrowband personal
communication services as conducted and as contemplated to be conducted on the
date hereof to be conducted by Destineer;
(m) any total or material partial disruption shall occur in the nationwide
paging operations of SkyTel or the narrowband personal communication services of
Destineer that continues for more than three (3) consecutive days;
(n) any Guarantor shall repudiate its obligations pursuant to its Guaranty
under this Agreement; or
(o) the Senior Notes due 2002 or any portion thereof is required to be
redeemed, purchased or defeased, or any payment with respect to the Senior Notes
due 2002 is required to be, or is otherwise, made prior to the date such payment
is due pursuant to the terms of the Senior Note Indenture; then, in every such
event and at any time thereafter during the continuance of such event, the
Administrative Agent shall, if directed by the Required Lenders, take any or all
of the following actions, at the same or different times: (1) terminate
forthwith the Commitments and/or (2) declare the principal of and the interest
on the Loans and the Notes and all other amounts payable hereunder or thereunder
to be forthwith due and payable, whereupon the same shall become and be
forthwith due and payable, without presentment, demand, protest, notice of
acceleration, notice of intent to accelerate or other notice of any kind, all of
which are hereby expressly waived, anything in this Agreement or in the Notes to
the contrary notwithstanding and/or (3) require the Borrower to deliver to the
Issuing Bank from time to time, Cash Equivalents in an amount equal to the full
amount of the L/C Exposure or to furnish other security acceptable to the
Administrative Agent and the Issuing Bank. If an Event of Default specified in
paragraphs (f) or (g) above shall have occurred, the principal of and interest
on the Loans and the Notes and all other amounts payable hereunder or thereunder
shall thereupon and concurrently become due and payable without presentment,
demand, protest, notice of acceleration, notice of intent to accelerate or other
notice of any kind, all of which are hereby expressly waived, anything in this
Agreement or the Notes to the contrary notwithstanding and the Commitments of
the Lenders shall thereupon forthwith terminate.
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8. GRANT OF SECURITY INTEREST; REMEDIES
SECTION 8.1. Security Interests.
(a) As security for the Obligations (in the case of the Borrower) and as
security of its obligations under Article 10 of this Agreement (in the case of
any Guarantor), each Credit Party hereby mortgages, pledges, assigns, transfers,
sets over, conveys and delivers to the Administrative Agent (for the benefit of
the Lenders) and grants to the Administrative Agent (for the benefit of the
Lenders) a security interest in all of its right, title and interest in and to
the Collateral, provided, however, that such security interest shall be limited
to the extent necessary to avoid a breach or default under any lease of any site
upon which any Credit Party's transmitting or receiving facilities are located
or any other agreement, (a "Restricted Agreement") or any License, provided,
further, that the security interest granted hereby shall constitute a security
interest in the proceeds of any License, any Restricted Agreement or any
Excluded Equity Interest.
(b) In the event that a Credit Party shall, as a result of any change in
Applicable Law or any other reason, at any time in the future be permitted to
grant a security interest in any License or Restricted Agreement to any greater
extent than permitted on the date hereof, then, the applicable Credit Party
shall promptly so notify the Administrative Agent and shall promptly execute and
deliver to the Administrative Agent such additional security agreements, pledge
or other documents, instruments, financing statements or agreements as are
necessary in the reasonable judgment of the Administrative Agent, and in each
case take such other actions, as the Administrative Agent may request, in order
to perfect such security interest.
SECTION 8.2. Use of Collateral.
So long as no Event of Default shall have occurred and be continuing, and
subject to the various provisions of this Agreement and the other Fundamental
Documents to which it is a party, each of the Credit Parties may use the
Collateral in any lawful manner.
SECTION 8.3. Proceeds.
Upon request of the Administrative Agent, upon the occurrence and during
the continuation of an Event of Default, each Credit Party agrees to take all
steps necessary to cause all sums, monies, royalties, fees, commissions,
charges, payments, advances, income, profit, and other proceeds constituting
proceeds of the Collateral to be applied to the repayment of the
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Obligations in accordance with the provisions of Section 8.7 hereof.
SECTION 8.4. Credit Parties to Hold in Trust.
Upon the occurrence and during the continuance of an Event of Default, each
of the Credit Parties will, upon receipt by it of any revenue, income, profits
or other sums in which a security interest is granted by this Article 8, payable
pursuant to any agreement or otherwise, or of any check, draft, note, trade
acceptance or other instrument evidencing an obligation to pay any such sum,
hold the sum or instrument in trust for the Lenders, and forthwith, without any
notice, demand or other action on the part of the Lenders whatsoever (all
notices, demands, or other actions on the part of the Lenders being expressly
waived), endorse, transfer and deliver any such sums or instruments or both, to
the Administrative Agent to be applied to the repayment of the Obligations in
accordance with the provisions of Section 8.7 hereof.
SECTION 8.5. Collections, etc.
Upon the occurrence and during the continuation of an Event of Default, the
Administrative Agent may, in its sole discretion, in the name of the
Administrative Agent or in the name of the applicable Credit Party or otherwise,
demand, sue for, collect or receive any money or property at any time payable or
receivable on account of, or in exchange for, or make any compromise or
settlement deemed desirable with respect to, any of the Collateral, but shall be
under no obligation so to do, or the Administrative Agent may, to the fullest
extent permitted by Applicable Law, extend the time of payment, arrange for
payment in installments, or otherwise modify the terms of, or release, any of
the Collateral, without thereby incurring responsibility to, or discharging or
otherwise affecting any liability of, any of the Credit Parties. Neither the
Administrative Agent nor the Lenders will be required to take any steps to
preserve any rights against prior parties to the Collateral, except as may be
required by Applicable Law. If a Credit Party fails to make any payment or take
any action required hereunder, the Administrative Agent or the Lenders may,
after notice to such Credit Party, make such payments and take all such actions
as the Required Lenders or the Administrative Agent reasonably deem necessary to
protect the Lenders' security interests in the Collateral and/or the value
thereof, and the Administrative Agent is hereby authorized (without limiting the
general nature of the authority hereinabove conferred) to pay, purchase,
contest, or compromise any Liens that in the judgment of the Administrative
Agent appear to be equal to, prior to or superior to the security interests of
the Lenders in the Collateral and any Liens not expressly permitted by this
Agreement.
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SECTION 8.6. Possession, Sale of Collateral, etc.
Upon the occurrence and during the continuation of an Event of Default, the
Administrative Agent may enter upon the premises of a Credit Party or wherever
the Collateral may be, and take possession of the Collateral, and may reasonably
demand and receive such possession from any Person who has possession thereof,
and the Administrative Agent may take such measures as it may deem necessary or
proper for the care or protection thereof, including (without limitation) the
right to remove all or any portion of the Collateral, and with or without taking
such possession may sell, or cause to be sold, whenever the Administrative Agent
shall decide, in one or more sales or parcels, at such prices as the
Administrative Agent may deem best, and for cash or on credit or for future
delivery, without assumption of any credit risk, all or any portion of the
Collateral, at any broker's board or at public or private sale, without demand
of performance or notice of intention to sell or of the time or place of sale
(except 10 days' written notice to such Credit Party of the time and place of
any such public sale or sales or of the time after which any private sale or
other disposition is to be made (it being acknowledged by each of the Credit
Parties that such notice constitutes "reasonable notification") and such other
notices as may be required by Applicable Law and cannot be waived), and any
Person may be the purchaser of all or any portion of the Collateral so sold and
thereafter hold the same absolutely, free from any claim or right of whatever
kind, including any equity of redemption, of any of the Credit Parties, any such
demand, notice, claim, right or equity being hereby expressly waived and
released. At any sale or sales made pursuant to this Article 8, the
Administrative Agent may bid for or purchase, free (to the fullest extent
permitted by Applicable Law) from any claim or right of whatever kind, including
any equity of redemption, of any of the Credit Parties, any such demand, notice,
claim, right or equity being hereby expressly waived and released, any part of
or all of the Collateral offered for sale, and may make any payment on account
thereof by using any claim for moneys then due and payable to the Administrative
Agent and the Lenders by the Credit Parties hereunder as a credit against the
purchase price. The Administrative Agent shall in any such sale make no
representations or warranties with respect to the Collateral or any part
thereof, and neither the Administrative Agent nor any Lender shall be chargeable
with any of the obligations or liabilities of any of the Credit Parties. Each
Credit Party hereby agrees (i) that it will, jointly and severally, indemnify
and hold the Administrative Agent and each of the Lenders harmless from and
against any and all claims with respect to the Collateral asserted before the
taking of actual possession or control of the relevant Collateral by the
Administrative Agent pursuant to this Article 8, or arising out of any act of,
or
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omission to act on the part of, any Person (other than the Administrative
Agent or the Lenders) prior to such taking of actual possession or control by
the Administrative Agent, or arising out of any act on the part of any of the
Credit Parties or any of their agents before or after the commencement of such
actual possession or control by the Administrative Agent; and (ii) neither the
Administrative Agent nor any Lender shall have any liability or obligation to
any of the Credit Parties arising out of any such claim except for acts of
willful misconduct or gross negligence or acts not taken in good faith. In any
action hereunder, the Administrative Agent shall be entitled to the appointment
of a receiver without notice, to the extent permitted by Applicable Law, to take
possession of all or any portion of the Collateral and to exercise such powers
as the court shall confer upon the receiver. Notwithstanding the foregoing, upon
the occurrence and during the continuation of an Event of Default, the
Administrative Agent shall be entitled to apply, without prior notice to any of
the Credit Parties, any cash or cash items constituting Collateral in the
possession of the Administrative Agent to payment of the Obligations.
SECTION 8.7. Application of Proceeds on Default.
Upon the occurrence and during the continuance of an Event of Default, the
balances in any account of any Credit Party with any Lender, all other income on
the Collateral, and all proceeds from any sale of the Collateral pursuant
hereto, shall be applied first, toward payment of the reasonable costs and
expenses incurred by the Administrative Agent in enforcing this Agreement, in
realizing on or protecting any Collateral and in enforcing or collecting any of
the Obligations or any Guaranty thereof, including, without limitation, the
reasonable attorney's fees and expenses incurred by the Administrative Agent,
and then in accordance with the first sentence of Section 12.2(b) hereof. Any
amounts remaining after such payment shall be remitted to the appropriate Credit
Party or as a court of competent jurisdiction may otherwise direct.
SECTION 8.8. Power of Attorney.
Upon the occurrence and during the continuation of an Event of Default (a)
each Credit Party does hereby irrevocably make, constitute and appoint the
Administrative Agent and any of its officers or designees its true and lawful
attorney-in-fact with full power in the name of the Administrative Agent or such
Credit Party to receive, open and dispose of all mail addressed to such Credit
Party, and to endorse any notes, checks, drafts, money orders or other evidences
of payment relating to the Collateral that may come into the possession of the
Administrative Agent, with full power and right to cause the mail of each Credit
Party to be transferred to the Administrative
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Agent's own offices or otherwise, and to do any and all other acts necessary or
proper to carry out the intent of this Agreement and the grant of the security
interests hereunder and under the other Fundamental Documents, and each Credit
Party hereby ratifies and confirms all that the Administrative Agent or its
substitutes shall properly do by virtue hereof; (b) each Credit Party does
hereby further irrevocably make, constitute and appoint the Administrative Agent
or any of its officers or designees its true and lawful attorney-in-fact in the
name of the Administrative Agent or such Credit Party (i) to enforce all of such
Credit Party's rights under and pursuant to all agreements with respect to the
Collateral, all for the sole benefit of the Administrative Agent for the benefit
of the Lenders, (ii) to enter into and perform such agreements as may be
necessary in order to carry out the terms, covenants and conditions of the
Fundamental Documents that are required to be observed or performed by such
Credit Party, (iii) to execute such other and further mortgages, pledges and
assignments of the Collateral, and related instruments or agreements, as the
Administrative Agent may reasonably require for the purpose of perfecting,
protecting, maintaining or enforcing the security interests granted to the
Administrative Agent for the benefit of the Lenders hereunder and under the
other Fundamental Documents, and (iv) to do any and all other things necessary
or proper to carry out the intention of this Agreement and the grant of the
security interests hereunder and under the other Fundamental Documents and each
of the Credit Parties hereby ratifies and confirms in advance all that the
Administrative Agent as such attorney-in-fact or its substitutes shall properly
do by virtue of this power of attorney.
SECTION 8.9. Financing Statements, Direct Payments, Confirmation of
Receivables and Audit Rights.
Each Credit Party hereby authorizes the Administrative Agent to file UCC
financing statements and any amendments thereto or continuations thereof and any
other appropriate security documents or instruments and to give any notices
necessary or desirable to perfect the Lien of the Administrative Agent for the
benefit of the Lenders on the Collateral, in all cases without the signature of
such Credit Party or to execute such items as attorney-in-fact for such Credit
Party. Each Credit Party further authorizes the Administrative Agent (i) upon
the occurrence of an Event of Default, and during the continuation of such Event
of Default, to notify any account debtors that all sums payable to such Credit
Party relating to the Collateral shall be paid directly to the Administrative
Agent and (ii) to confirm (which request for confirmation shall, prior to the
occurrence of an Event of Default or at any time when an Event of Default is not
continuing, be directed by the Administrative Agent to the independent public
accountants of such Credit Party, which independent public accountants shall
request such
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confirmation from the applicable account debtor and upon receipt thereof,
provide such confirmation to the Administrative Agent) with any account debtors
the amounts payable by them to such Credit Party with regard to the Collateral
and to participate with each Credit Party in the audits of its account debtors.
SECTION 8.10. Termination.
(a) Subject to the provisions of Section 13.15 hereof, the security
interests granted under this Article 8 shall terminate when all the Obligations
have been fully paid and performed, the Commitments (including any commitment to
issue any Letter of Credit) shall have terminated and all Letters of Credit
shall have expired or been terminated or cancelled. Upon request by the Borrower
following such termination, the Administrative Agent will, at the expense of the
Borrower, execute and deliver to each Credit Party such documents (in form and
substance satisfactory to the Administrative Agent) as such Credit Party shall
reasonably request to evidence such termination.
(b) The security interest granted under this Article 8 in any asset that is
sold or disposed of by any Credit Party in accordance with the terms of this
Agreement, shall automatically terminate upon such a sale or disposition, but
shall continue with respect to any proceeds thereof received by such Credit
Party. Upon the request of the applicable Credit Party to the Administrative
Agent in writing, the Administrative Agent agrees to duly execute and deliver to
the such Credit Party or to the transferee of such asset, a UCC termination
statement evidencing the release of the security interest hereunder and such
further instruments as may be reasonably necessary to confirm the release of
such security interest.
SECTION 8.11. Remedies Not Exclusive.
The remedies conferred upon, or reserved to, the Administrative Agent and
the Lenders in this Article 8 are intended to be in addition to, and not in
limitation of, any other remedy or remedies available to the Administrative
Agent or the Lenders. Without limiting the generality of the foregoing, the
Administrative Agent and the Lenders shall have all the rights and remedies of a
secured party under Article 9 of the New York Uniform Commercial Code and any
other Applicable Law.
SECTION 8.12. Limitation on Guaranteed Amount.
Notwithstanding any other provision of this Agreement, the Administrative
Agent's recourse to the Collateral of a Credit Party (other than the Borrower)
hereunder shall be limited to the extent, if any, required so that its
obligations hereunder shall not be subject to avoidance under Section 548 of the
Bankruptcy
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Code or to being set aside or annulled under any Applicable Law or foreign
statute relating to fraud on creditors. In determining the limitations, if any,
on the recourse to Collateral of a Credit Party (other than the Borrower)
hereunder pursuant to the preceding sentence, any rights of subrogation or
contribution which such Credit Party may have directly or indirectly under this
Article 8 or under Article 11 hereof, under any other agreement, under
Applicable Law or otherwise, shall be taken into account.
9. CASH COLLATERAL
SECTION 9.1. Cash Collateral Account.
(a) The Administrative Agent shall establish a collateral account in the
name of the Administrative Agent (the "Cash Collateral Account"), into which the
Borrower shall from time to time deposit Dollars pursuant to, and in accordance
with, the express provisions of this Agreement requiring or permitting such
deposit. Except to the extent otherwise provided in this Section 9.1, the Cash
Collateral Account shall be under the sole dominion and control of the
Administrative Agent provided that upon request by the Borrower, the
Administrative Agent shall provide the Borrower with statements of deposits to,
and withdrawals from, such account in accordance with the Administrative Agent's
customary practices.
(b) The Administrative Agent is hereby authorized and directed to invest
and reinvest the funds from time to time deposited in the Cash Collateral
Account on the instructions of the Borrower (provided that such notice may be
given verbally to be confirmed promptly in writing) or, if the Borrower shall
fail to give such instructions, in the sole discretion of the Administrative
Agent, provided that in no event may the Borrower give instructions to the
Administrative Agent to, or may the Administrative Agent in its discretion,
invest or reinvest funds in the Cash Collateral Account in other than Cash
Equivalents.
(c) Any net income or gain on the investment of funds from time to time
held in the Cash Collateral Account shall be promptly reinvested by the
Administrative Agent as a part of the Cash Collateral Account; and any net loss
on any such investment shall be charged against the Cash Collateral Account.
(d) Neither the Administrative Agent nor the Lenders shall be a trustee for
the Borrower, or shall have any obligations or responsibilities, or shall be
liable for anything done or not done, in connection with the Cash Collateral
Account, except as expressly provided herein and except to the extent that the
Administrative Agent shall have the obligations of a secured
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party under the Uniform Commercial Code in effect from time to time in the State
of New York. The Administrative Agent and the Lenders shall not have any
obligation or responsibility, and shall not be liable in any way for, any
investment decision made pursuant to this Section 9.1 or for any decrease in the
value of the investments held in the Cash Collateral Account.
SECTION 9.2. Grant of Security Interest.
For value received and to induce the Lenders to make Loans to the Borrower
and participate in Letters of Credit from time to time as provided for in this
Agreement, as security for the payment of all of the Obligations, the Borrower
hereby assigns to the Administrative Agent (for the benefit of the Lenders), and
grants to the Administrative Agent (for the benefit of the Lenders), a first and
prior Lien upon all the Borrower's rights in and to the Cash Collateral Account,
all cash, documents, instruments and securities from time to time held therein,
and all rights pertaining to investments of funds in the Cash Collateral Account
and all products and proceeds of any of the foregoing. All cash, documents,
instruments and securities from time to time on deposit in the Cash Collateral
Account, and all rights pertaining to investments of funds in the Cash
Collateral Account, shall, immediately and without any need for any further
action on the part of any of the Borrower, any Lender or the Administrative
Agent, become subject to the Lien set forth in this Section 9.2, be deemed
Collateral for all purposes hereof and be subject to the provisions of this
Agreement.
SECTION 9.3. Remedies.
At any time during the continuation of an Event of Default, the
Administrative Agent may sell any documents, instruments and securities held in
the Cash Collateral Account and may immediately apply the proceeds thereof and
any other cash held in the Cash Collateral Account to the satisfaction of the
Obligations in such order as the Administrative Agent may determine, but subject
to the rights of the Lenders. Any amounts remaining after such application shall
be paid or delivered to the Borrower or as a court of competent jurisdiction may
direct.
10. GUARANTY
SECTION 10.1. Guaranty.
(a) Each of the Guarantors, jointly and severally, unconditionally and
irrevocably guarantees to the Administrative Agent and the Lenders the due and
punctual payment and performance of, the Obligations (including interest
accruing on and after the filing of any petition in bankruptcy or of
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reorganization of the obligor whether or not post filing interest is allowed in
such proceeding). Each of the Guarantors further agrees that the Obligations may
be amended, supplemented, extended or renewed, in whole or in part, without
notice or further assent from it, and it will remain bound upon this Guaranty
notwithstanding any amendment, supplement, extension or renewal of any of the
Obligations.
(b) Each of the Guarantors waives presentation to, demand for payment from
and protest to, as the case may be, the Borrower or any Guarantor or any other
guarantor, and also waives notice of protest for nonpayment, notice of
acceleration and notice of intent to accelerate. The obligations of the
Guarantors hereunder shall not be affected by (i) the failure of the
Administrative Agent or any Lender to assert any claim or demand or to enforce
any right or remedy against the Borrower or any Guarantor or any other guarantor
under the provisions of this Agreement or any other agreement or otherwise; (ii)
any extension or renewal of any provision hereof or thereof; (iii) the failure
of the Administrative Agent or the Lenders to obtain the consent of any
Guarantor with respect to any rescission, waiver, compromise, acceleration,
amendment or modification of any of the terms or provisions of this Agreement,
the Notes or of any other agreement; (iv) the release, exchange, waiver or
foreclosure of any security held by the Administrative Agent (for the benefit of
the Lenders) for the Obligations or any of them; (v) the failure of the
Administrative Agent or any Lender to exercise any right or remedy against any
Guarantor or any other guarantor of the Obligations; or (vi) the release or
substitution of any Guarantor or any other guarantor.
(c) Each of the Guarantors further agrees that this Guaranty constitutes a
guaranty of performance and of payment when due and not just of collection, and
waives any right to require that any resort be had by the Administrative Agent
or any Lender to any security held for payment of the Obligations, to any
balance of any deposit, account or credit on the books of the Administrative
Agent or any Lender in favor of the Borrower or any Guarantor or to any other
Person.
(d) Each of the Guarantors hereby expressly assumes all responsibilities to
remain informed of the financial condition of the Borrower, the other Guarantor
and any other guarantor of the Obligations and any circumstances affecting the
Pledged Securities or the ability of the Borrower to perform under this
Agreement.
(e) Each of the Guarantors' Guaranty shall not be affected by the
genuineness, validity, regularity or enforceability of the Obligations, the
Notes or any other instrument evidencing any of the Obligations, or by the
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existence, validity, enforceability, perfection, or extent of any collateral
therefor or by any other circumstance relating to the Obligations which might
otherwise constitute a defense to this Guaranty. Neither the Administrative
Agent nor any Lender makes any representation or warranty in respect to any such
circumstances, nor has any duty or responsibility whatsoever to any Guarantor in
respect of the management and maintenance of the Obligations or any of the
Pledged Securities (except as may be expressly set forth herein).
SECTION 10.2. No Impairment of Guaranty.
The obligations of each Guarantor hereunder shall not be subject to any
reduction, limitation, impairment or termination for any reason, including,
without limitation, any claim of waiver, release, surrender, alteration or
compromise, and shall not be subject to any defense (other than payment of the
Obligations) or set-off, counterclaim, recoupment or termination whatsoever by
reason of the invalidity, illegality or unenforceability of the Obligations or
otherwise. Without limiting the generality of the foregoing, the obligations of
each Guarantor hereunder shall not be discharged or impaired or otherwise
affected by the failure of the Administrative Agent or any Lender to assert any
claim or demand or to enforce any remedy under this Agreement, the Notes or any
other agreement, by any default, failure, waiver or modification of any
provision hereof or thereof, by any default, failure or delay, willful or
otherwise, in the performance of the Obligations, or by any other act or thing,
or omission or delay to do any other act or thing, which may or might in any
manner or to any extent vary the risk of a Guarantor or would otherwise operate
as a discharge of a Guarantor as a matter of law, unless and until the
Obligations are paid in full, the Commitments have been terminated and each
outstanding Letter of Credit has expired or otherwise been terminated.
SECTION 10.3. Continuation and Reinstatement, etc.
(a) Each of the Guarantors further agrees that its Guaranty hereunder shall
continue to be effective or be reinstated, as the case may be, if at any time
payment, or any part thereof, of principal of, or interest on or other amount
with respect to any Obligation is rescinded or must otherwise be restored by the
Administrative Agent or the Lenders upon the bankruptcy or reorganization of the
Borrower or a Guarantor, or otherwise. In furtherance of the provisions of this
Article 10, and not in limitation of any other right which the Administrative
Agent or the Lenders may have at law or in equity against the Borrower, a
Guarantor or any other Person, upon failure of the Borrower to pay any
Obligation when and as the same shall become due, whether at maturity, by
acceleration, after notice or
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otherwise, each of the Guarantors hereby promises to and will, upon receipt of
written demand by the Administrative Agent on behalf of the Lenders, forthwith
pay or cause to be paid to the Administrative Agent on behalf of the Lenders in
cash an amount equal to the unpaid amount of all the Obligations with interest
thereon at a rate of interest equal to the rate specified in Section 2.8(a)
hereof, and thereupon the Administrative Agent shall assign such Obligation,
together with all security interests, if any, then held by the Administrative
Agent in respect of such Obligation, to the Guarantor or Guarantors making such
payment; such assignment to be subordinate and junior to the rights of the
Administrative Agent on behalf of the Lenders with regard to amounts payable by
the Borrower in connection with the remaining unpaid Obligations and to be pro
tanto to the extent to which the Obligation in question was discharged by the
Guarantor or Guarantors making such payment.
(b) All rights of a Guarantor against the Borrower, arising as a result of
the payment by such Guarantor of any sums to the Administrative Agent for the
benefit of the Lenders hereunder by way of right of subrogation or otherwise
shall in all respects be subordinated and junior in right of payment to the
prior final and indefeasible payment in full of all the Obligations to the
Administrative Agent on behalf of the Lenders. If any amount shall be paid to a
Guarantor for the account of the Borrower, such amount shall be held in trust
for the benefit of the Administrative Agent and shall forthwith be paid to the
Administrative Agent on behalf of the Lenders to be credited and applied to the
Obligations, whether matured or unmatured.
SECTION 10.4. Limitation on Guaranteed Amount.
Notwithstanding any other provision of this Article 10, the amount
guaranteed by a Guarantor hereunder shall be limited to the extent, if any,
required so that its obligations under this Article 10 shall not be subject to
avoidance under Section 548 of the Bankruptcy Code or to being set aside or
annulled under any Applicable Law relating to fraud on creditors. In determining
the limitations, if any, on the amount of a Guarantor's obligations hereunder
pursuant to the preceding sentence, any rights of subrogation or contribution
which a Guarantor may have, directly or indirectly, under this Article 10, under
any other agreement, under Applicable Law or otherwise shall be taken into
account.
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11. PLEDGE
SECTION 11.1. Pledge.
As additional security for the payment and performance in full of the
Obligations (including post-petition interest, to the extent permitted by
Applicable Law) in the case of the Borrower, and as additional security for its
obligations under Article 10 of this Agreement in the case of the Guarantors,
each Credit Party identified as a Pledgor on Schedule 3.23 hereto or any
schedule described in the last two sentences of this Section 11.1 (collectively
referred to in this Article 11 as the "Pledgors" and individually as a
"Pledgors") hereby pledges, hypothecates, assigns, transfers, sets over and
delivers unto the Administrative Agent for the benefit of the Lenders, and
hereby grants to the Administrative Agent, for the benefit of the Lenders, a
security interest in (a) all the issued and outstanding shares of capital stock
of each of its Subsidiaries (other than the Subsidiaries which are incorporated
or organized in jurisdictions outside the United States and do not conduct any
operations within the United States), (b) all other equity securities, if any,
which are now or may hereafter be owned by such Pledgor, other than each of the
minority Investments listed on Schedule 11.1 hereto, but only so long as the
fair market value of any such Investment in a single Person does not exceed
$5,000,000, (c) all notes (if any) evidencing intercompany Indebtedness owed to
such Pledgor and (d) all proceeds of such shares, other securities and notes or
other property at any time and from time to time receivable or otherwise
distributed in respect of, or in exchange for, any of or all such shares,
securities and/or notes. All such items referred to in clauses (a), (b), (c) and
(d) of the preceding sentence are collectively referred to herein as the
"Pledged Securities". Each Pledgor shall deliver to the Administrative Agent
(for the benefit of the Lenders), certificates representing, or notes (if any)
constituting, all the Pledged Securities owned from time to time by such Pledgor
accompanied by undated stock or note powers (as appropriate) executed in blank
and by such other instruments or documents as the Administrative Agent or its
counsel shall reasonably request. Each delivery of securities or notes being
pledged hereunder shall be accompanied by a schedule showing a description of
the securities and notes theretofore and then being pledged hereunder (for
purposes hereof, Schedule 3.23 hereto is the applicable schedule on the Closing
Date). Each schedule so delivered shall supersede any prior schedules so
delivered.
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SECTION 11.2. Registration in Nominee Name; Denominations.
The Administrative Agent shall have the right (in its sole and absolute
discretion) to hold the certificates representing any of the Pledged Securities
(a) in its own name or in the name of its nominee or (b) in the name of the
applicable Pledgor, endorsed or assigned in blank or in favor of the
Administrative Agent. Upon the occurrence of an Event of Default and during the
continuation of an Event of Default, the Administrative Agent shall have the
right to exchange the certificates representing any of Pledged Securities for
certificates of smaller or larger denominations for any purpose consistent with
this Agreement.
SECTION 11.3. Covenant.
(a) Each Pledgor covenants that as stockholder of each of its respective
Pledged Subsidiaries, it will not take any action to allow any additional shares
of common stock, preferred stock or other equity securities of any of its
respective Pledged Subsidiaries or any securities convertible or exchangeable
into common or preferred stock of such Pledged Subsidiaries to be issued, or
grant any options or warrants, unless such securities are pledged to the
Administrative Agent (for the benefit of the Lenders) on terms reasonably
satisfactory to the Administrative Agent, as security for the Obligations or
such Pledgor's obligations under Article 10 of this Agreement (as applicable).
(b) Each Pledgor will use its best efforts to promptly obtain any consent
of the FCC which may be required in connection with any transfer of any of the
Pledged Securities pursuant to this Agreement.
SECTION 11.4. Voting Rights; Dividends; etc.
(a) Unless and until an Event of Default shall have occurred and shall be
continuing and a notice shall have been given by the Administrative Agent
pursuant to paragraph (b) below:
(i) Each Pledgor shall be entitled to exercise any and all voting
and/or consensual rights and powers accruing to an owner of the
Pledged Securities being pledged by it hereunder or any part thereof
for any purpose not inconsistent with the terms hereof;
(ii) Any dividend or distribution of any kind whatsoever, which
is not in cash, received by a Pledgor, whether resulting from a
subdivision, combination, or reclassification of the outstanding
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capital stock of the issuer or received in exchange for Pledged
Securities or any part thereof or as a result of any merger,
consolidation, acquisition, or other exchange of assets to which the
issuer may be a party, or otherwise, shall be, and become, part of the
Pledged Securities pledged hereunder and shall immediately be
delivered to the Administrative Agent to be held subject to the terms
of this Agreement. Any dividends or other distributions paid in cash
which are not prohibited by Section 6.26 hereunder shall be disbursed
directly to the applicable Pledgor; provided, however, that nothing
contained in this Section shall be construed as permitting any
Restricted Payment other than in accordance with the terms of Section
6.26 herein.
(iii) The Administrative Agent shall execute and deliver to the
applicable Pledgor, or cause to be executed and delivered to the
applicable Pledgor, all such proxies, powers of attorney, and other
instruments as such Pledgor may reasonably request for the purpose of
enabling such Pledgor to exercise the voting and/or consensual rights
and powers which it is entitled to exercise pursuant to clause (i)
above.
(b) Upon the occurrence and during the continuance of an Event of Default
and upon notice to the applicable Pledgor by the Administrative Agent, all
rights of such Pledgor to (i) exercise the voting and/or consensual rights and
powers which it is entitled to exercise pursuant to subsection (a)(i) of this
Section 11.4 and (ii) receive and retain dividends and distributions which such
Pledgor would be entitled to receive and retain pursuant to this Section 11.4
and Section 6.26, shall cease and all such rights shall thereupon become vested
in the Administrative Agent (for the benefit of the Lenders), which shall have
the sole and exclusive right and authority to exercise such voting and/or
consensual rights and receive and retain such dividends and distributions;
provided, however, that to the extent any fee or other governmental consents or
filings are required for the exercise by the Administrative Agent of any of the
foregoing rights and powers, the Administrative Agent shall refrain from
exercising such rights or powers until the making of such required filings, the
receipt of such consent and the expiration of all related waiting periods. All
dividends and distributions which are received by such Pledgor contrary to the
provisions of this subsection (b) shall be received in trust for the benefit of
the Administrative Agent and the Lenders and shall be delivered to the
Administrative Agent as additional Collateral.
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SECTION 11.5. Remedies Upon Default.
(a) If an Event of Default shall have occurred and be continuing, the
Administrative Agent on behalf of the Lenders may sell the Pledged Securities,
or any part thereof, at public or private sale or at any broker's board or on
any securities exchange, for cash, upon credit or for future delivery as the
Administrative Agent shall deem appropriate subject to the terms hereof or as
otherwise provided in the New York Uniform Commercial Code or in applicable
securities laws. The Administrative Agent shall be authorized at any such sale
(if it deems it advisable to do so) to (1) restrict the prospective bidders or
purchasers to Persons who will represent and agree that they are purchasing the
Pledged Securities for their own account for investment and not with a view to
the distribution or sale thereof, (2) to cause to be placed on certificates for
any or all of the Pledged Securities a legend to the effect that such security
has not been registered under the Securities Act of 1933 and may not be disposed
of in violation of the provision of said Act, and (3) to impose such other
limitations or conditions in connection with any such sale as the Administrative
Agent deems necessary or advisable in order to comply with said Act or any other
law. Upon consummation of any such sale, the Administrative Agent shall have the
right to assign, transfer, and deliver to the purchaser or purchasers thereof
the Pledged Securities so sold. Each such purchaser at any such sale shall hold
the property sold absolutely, free from any claim or right on the part of any
Pledgor; provided, however, that prior to the consummation of any such sale, the
applicable Pledgor shall be entitled to redeem this pledge of the Pledged
Securities by (i) paying all of the Obligations and (ii) paying any additional
reasonable costs or expenses incurred by the Bank in connection with the
proposed sale of the Pledged Securities. The Administrative Agent shall give the
Pledgors not less than ten (10) days' written notice of the Administrative
Agent's intention to make any such public or private sale, or sale at any
broker's board or on any such securities exchange, or of any other disposition
of the Pledged Securities (it being acknowledged by the Pledgors that such
notice constitutes reasonable notification). Such notice, in the case of public
sale, shall state the time and place for such sale and, in the case of sale at a
broker's board or on a securities exchange, shall state the board or exchange at
which such sale is to be made and the day on which the Pledged Securities, or
portion thereof, will first be offered for sale at such board or exchange. Any
such public sale shall be held at such time or times within ordinary business
hours and at such place or places as the Administrative Agent may fix and shall
state in the notice of such sale. At any sale, the Pledged Securities, or
portion thereof, to be sold may be sold in one lot as an entirety or in separate
parcels, as the Administrative Agent may (in its sole and absolute discretion)
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determine. The Administrative Agent shall not be obligated to make any sale of
the Pledged Securities if it shall determine not to do so, regardless of the
fact that notice of sale of the Pledged Securities may have been given. The
Administrative Agent may, without notice or publication, adjourn any public or
private sale or cause the same to be adjourned from time to time by announcement
at the time and place fixed for sale, and such sale may, without further notice,
be made at the time and place to which the same was so adjourned. In case the
sale of all or any part of the Pledged Securities is made on credit or for
future delivery, the Pledged Securities so sold shall be retained by the
Administrative Agent until the sale price is paid by the purchaser or purchasers
thereof, but the Administrative Agent shall not incur any liability in case any
such purchaser or purchasers shall fail to take up and pay for the Pledged
Securities so sold and, in case of any such failure, such Pledged Securities may
be sold again upon like notice. At any sale or sales made pursuant to this
Section 11.5, the Administrative Agent (on behalf of the Lenders) may bid for or
purchase, free from any claim or right of whatever kind, including any equity of
redemption, of the applicable Pledgor, any such demand, notice, claim, right or
equity being hereby expressly waived and released, any or all of the Pledged
Securities offered for sale, and may make any payment on the account thereof by
using any claim for moneys then due and payable to the Administrative Agent or
Lenders (subject to the provisions of Article 12 hereof) by the Credit Parties
as a credit against the purchase price; and the Administrative Agent, upon
compliance with the terms of sale, may hold, retain and dispose of the Pledged
Securities without further accountability therefor to the applicable Pledgor or
any third party (other than the Lenders). The Administrative Agent shall in any
such sale make no representations or warranties with respect to the Pledged
Securities or any part thereof, and shall not be chargeable with any of the
obligations or liabilities of the Pledgor with respect thereto. The Pledgors
hereby agree (i) that they will jointly and severally, indemnify and hold the
Administrative Agent and the Lenders harmless from and against any and all
claims with respect to the Pledged Securities asserted before the taking of
actual possession or control of the Pledged Securities by the Administrative
Agent pursuant to this Agreement, or arising out of any act of, or omission to
act on the part of, any Person (other than the Administrative Agent or Lenders)
prior to such taking of actual possession or control by the Administrative
Agent, or arising out of any act on the part of any Pledgor or its agents before
or after the commencement of such actual possession or control by the
Administrative Agent; and (ii) neither the Administrative Agent nor any Lender
shall have liability or obligation to any Pledgor arising out of any such claim
except for acts of willful misconduct or gross negligence or not taken in good
faith. As an alternative to exercising the power of sale herein conferred upon
it, the
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Administrative Agent may proceed by a suit or suits at law or in equity to
foreclose on the Liens under this Agreement and to sell the Pledged Securities,
or any portion thereof, pursuant to a judgment or decree of a court or courts
having competent jurisdiction.
(b) If the Administrative Agent shall determine that in order to exercise
the right hereunder to sell all or any of the Pledged Securities, and to have
the Pledged Securities or the portion thereof sold, the Pledged Securities shall
be registered under the provisions of the Securities Act of 1933, the Pledgor
agrees, at its own expense, (i) to execute and deliver, and to use its best
efforts to cause each corporation whose securities are to be sold and their
directors and officers to execute and deliver, all such instruments and
documents, and to use its best efforts to do or cause to be done all other such
acts and things, as may be necessary or, in the opinion of the Administrative
Agent, advisable to register such securities under the provisions of the
Securities Act of 1933 and to use its best efforts to cause the registration
statement relating thereto to become effective and to remain effective for such
period as prospectuses are required by law to be furnished, and to make or to
cause to be made all amendments and supplements thereto and to the related
prospectus which, in the opinion of the Administrative Agent, are necessary or
advisable, all in conformity with the requirements of the Securities Act of 1933
and the rules and regulations of the S.E.C. thereunder; provided, that the
Administrative Agent shall furnish to the applicable Pledgor such information
which such Pledgor may reasonably request and as shall be required in connection
therewith, (ii) to use its best efforts to cause the corporation whose
securities are to be sold to agree to make, and to make available to its
security holders as soon as practicable, an earnings statement (which need not
be audited) covering a period of at least 12 months, beginning with the first
month after the effective date of any such registration statement, which
earnings statement will satisfy the provisions of Section 11(a) of the
Securities Act of 1933, (iii) to use its best efforts to qualify such securities
under applicable Blue Sky or other state securities laws or similar laws
analogous in purpose and effect and to obtain the approval of any governmental
authorities for the sale of such securities, as requested by the Administrative
Agent; provided, that the Administrative Agent shall furnish to the applicable
Pledgor such information which the Pledgor may reasonably request and as shall
be required in connection therewith, and (iv) to indemnify and hold harmless the
Administrative Agent, each of the Lenders and any underwriters (and any person
controlling any of the foregoing) from and against any loss, liability, claim,
damage and expense (and reasonable counsel fees incurred in connection
therewith) under the Securities Act of 1933 or otherwise insofar as such loss,
liability, claim, damage or expense arises out of or is based
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upon any untrue statement or alleged untrue statement of a material fact
contained in such registration statement or prospectus or in any preliminary
prospectus or any amendment or supplement thereto, or arises out of or is based
upon any omission or alleged omission to state therein a material fact required
to be stated or necessary to make the statements therein not misleading, such
indemnification to remain operative regardless of any investigation made by or
on behalf of the Administrative Agent, any Lender, or any underwriters (or any
person controlling any of the foregoing), provided that such Pledgor shall not
be liable in any case to the extent that any such loss, liability, claim, damage
or expense arises out of or is based on an untrue statement or alleged untrue
statement or an omission or an alleged omission made in reliance upon and in
conformity with written information furnished to such corporation by the
Administrative Agent, any Lender, or any underwriter expressly for use in such
registration statement or prospectus.
(c) All actions which may be taken pursuant to the provisions of this
Section 11.5 and/or Section 11.7 hereof are subject, in every instance, to the
receipt of any prior consents of the FCC which may be required by Applicable Law
under the circumstances.
SECTION 11.6. Application of Proceeds of Sale and Cash.
The proceeds of sale of the Pledged Securities sold pursuant to Section
11.5 hereof shall be applied first toward payment of the reasonable costs and
expenses incurred by the Administrative Agent in enforcing this Agreement, in
realizing on or protecting the Pledged Securities and in enforcing or collecting
any Obligations or any Guaranty thereof, including, without limitation, the
reasonable attorney's fees and expenses incurred by the Administrative Agent,
and then in accordance with Section 12.2(b) hereof. Any amount remaining after
such payment shall be remitted to the appropriate Pledgor or as a court of
competent jurisdiction may otherwise direct.
SECTION 11.7. Administrative Agent Appointed Attorney-in-Fact.
Upon the occurrence of an Event of Default, and during the continuation of
such Event of Default, each Pledgor hereby appoints the Administrative Agent its
attorney-in-fact for the purpose of carrying out the provisions of this
Agreement and the pledge of the Pledged Securities hereunder and taking any
action and executing any instrument which the Administrative Agent may deem
necessary or advisable to accomplish the purposes hereof, which appointment is
irrevocable and coupled with an interest. Without limiting the generality of the
foregoing, the
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Administrative Agent shall have the right and power to receive, endorse and
collect all checks and other orders for the payment of money made payable to a
Pledgor representing any dividend or other distribution payable in respect of
the Pledged Securities or any part thereof and to give full discharge for the
same.
SECTION 11.8. Securities Act, etc.
In view of the position of the Pledgors in relation to the Pledged
Securities, or because of other present or future circumstances, a question may
arise under the Securities Act of 1933, as amended, as now or hereafter in
effect, or any similar statute hereafter enacted analogous in purpose or effect
(such Act and any such similar statute as from time to time in effect being
hereinafter called the "Federal Securities Laws"), with respect to any
disposition of the Pledged Securities permitted hereunder. Each Pledgor
understands that compliance with the Federal Securities Laws may very strictly
limit the course of conduct of the Administrative Agent if the Administrative
Agent were to attempt to dispose of all or any part of the Pledged Securities,
and may also limit the extent to which or the manner in which any subsequent
transferee of any Pledged Securities may dispose of the same. Similarly, there
may be other legal restrictions or limitations affecting the Administrative
Agent in any attempt to dispose of all or any part of the Pledged Securities
under applicable Blue Sky or other state securities laws, or similar laws
analogous in purpose or effect. Under Applicable Law, in the absence of an
agreement to the contrary, the Administrative Agent may perhaps be held to have
certain general duties and obligations to a Pledgor to make some reasonable
effort towards obtaining a fair price even though the Obligations may be
discharged or reduced by the proceeds of a sale at a lesser price. Each Pledgor
clearly understands that the Administrative Agent does not have any such general
duty or obligation to it, and except as aforesaid, each Pledgor agrees that a
sale by the Administrative Agent of all or any part of the Pledged Securities
shall not be deemed commercially unreasonable, even if the Administrative Agent
shall accept the first offer received or does not approach more than one
possible purchaser, assuming compliance with the Uniform Commercial Code in
effect in the State of New York. Without limiting the generality of the
foregoing, the provisions of this Section 11.8 would apply if, for example, the
Administrative Agent were to place all or any part of the Pledged Securities for
private placement by an investment banking firm, or if such investment banking
firm purchased all or any part of the Pledged Securities for its own account, or
if the Administrative Agent placed all or any part of the Pledged Securities
privately with a purchaser or purchasers.
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SECTION 11.9. Continuation and Reinstatement.
Each Pledgor further agrees that its pledge hereunder shall continue to be
effective or be reinstated, as the case may be, if at any time any payment, or
any part thereof, of any Obligation is rescinded or must otherwise be restored
by the Administrative Agent or the Lenders upon the bankruptcy or reorganization
of such Pledgor or otherwise.
SECTION 11.10. Termination.
Subject to the provisions of Section 13.15 hereof, the pledge and grant of
the security interest hereunder shall terminate when all of the Obligations
shall have been fully paid and performed and the Commitments (including any
commitment to issue any Letter of Credit) shall have terminated and all Letters
of Credit shall have expired, or been terminated or cancelled; at such time the
Administrative Agent shall assign and deliver to the appropriate Pledgor, or to
such Person or Persons as such Pledgor shall designate in writing, against
receipt, such of the Pledged Securities (if any) as shall not have been sold or
otherwise applied by the Administrative Agent pursuant to the terms hereof and
shall still be held by it hereunder, together with appropriate instruments of
reassignment and release. Any such reassignment shall be without recourse upon
or warranty by the Administrative Agent and at the expense of the Borrower.
12. THE ADMINISTRATIVE AGENT AND THE ISSUING BANK
SECTION 12.1. Administration by the Administrative Agent.
(a) The general administration of the Fundamental Documents and any other
documents contemplated by this Agreement or any other Fundamental Document shall
be by the Administrative Agent or its designees. Each of the Lenders hereby
irrevocably authorizes the Administrative Agent and the Agents, at their
discretion, to take or refrain from taking such actions as agent on its behalf
and to exercise, or refrain from exercising, such powers under the Fundamental
Documents, the Notes and any other documents contemplated by this Agreement or
any other Fundamental Document as are delegated by the terms hereof or thereof,
as appropriate, together with all powers reasonably incidental thereto. The
Administrative Agent is hereby authorized to hold all security interests in the
Collateral granted to it pursuant to the trademark charge contemplated by
Section 5.12(c) hereof as trustee for the Lenders in accordance with the terms
thereof. The Administrative Agent and the Agents shall not have any duties or
responsibilities except as set forth in the Fundamental Documents.
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(b) The Lenders hereby authorize the Administrative Agent (in its sole
discretion):
(i) to release a Lien granted to the Administrative Agent (for
the benefit of the Lenders) on any asset, the Net Cash Proceeds from a
sale or disposition of which are to be applied to pay Obligations;
(ii) so long as an Event of Default shall not have occurred and
be continuing, to release a Lien granted to the Administrative Agent
(for the benefit of the Lenders) in any asset sold or otherwise
disposed of in accordance with the terms hereof;
(iii) to determine that the cost to the Borrower or another
Credit Party is disproportionate to the benefit to be realized by the
Lenders by perfecting a Lien in a given asset or group of assets
included in the Collateral and that the Borrower or such other Credit
Party should not be required to perfect such Lien in favor of the
Administrative Agent (for the benefit of the Lenders); and
(iv) to appoint subagents or Lenders to be the holder of record
of any Lien to be granted the Administrative Agent (for the benefit of
the Lenders) or to hold on behalf of the Administrative Agent such
collateral or instruments relating thereto.
SECTION 12.2. Advances and Payments.
(a) On the date of each Loan, the Administrative Agent shall be authorized
(but not obligated) to advance, for the account of each of the Lenders, the
amount of the Loan to be made by such Lender in accordance with its Commitment
hereunder. Each of the Lenders hereby authorizes and requests the Administrative
Agent to advance for its account, pursuant to the terms hereof, the amount of
the Loan to be made by it, and each of the Lenders agrees forthwith to reimburse
the Administrative Agent in immediately available funds for the amount so
advanced on its behalf by the Administrative Agent. If any such reimbursement is
not made in immediately available funds on the same day on which the
Administrative Agent shall have made any such amount available on behalf of any
Lender, such Lender shall pay interest to the Administrative Agent at a rate per
annum equal to the Administrative Agent's cost of obtaining overnight funds in
the New York Federal Funds Market for the first day following the time when such
Lender fails to make the required reimbursement and thereafter at a rate per
annum equal to the Alternate Base Rate plus the applicable Margin for Alternate
Base Rate Loans.
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(b) Any amounts received by the Administrative Agent in connection with
this Agreement, the Notes or the other Fundamental Documents, the application of
which is not otherwise provided for, shall be applied, first, to pay accrued but
unpaid Commitment Fees, in accordance with each Lender's Percentages, second, to
pay accrued but unpaid interest on the Notes in accordance with the amount of
outstanding Loans owed to each Lender, third, the principal balance outstanding
on the Notes in accordance with the amount of outstanding Loans owed to each
Lender and fourth, to pay other amounts payable to the Administrative Agent or
the Lenders. All amounts to be paid to any of the Lenders by the Administrative
Agent shall be credited to such Lender, after collection by the Administrative
Agent, in immediately available funds either by wire transfer or deposit in such
Lender's correspondent account with the Administrative Agent, or as such Lender
and the Administrative Agent shall from time to time agree.
SECTION 12.3. Sharing of Setoffs and Cash Collateral.
Each of the Lenders agrees that if it shall, through the operation of
Section 2.3 hereof or the exercise of any right of banker's lien, setoff or
counterclaim against the Borrower (including, but not limited to, a secured
claim under Section 506 of Title 11 of the United States Code or other security
or interest arising from, or in lieu of, such secured claim and received by such
Lender under any applicable bankruptcy, insolvency or other similar law) or
otherwise, obtain payment in respect of its Loans as a result of which the
unpaid portion of its Loans and L/C Exposure is proportionately less than the
unpaid portion of Loans and L/C Exposure of any of the other Lenders (a) it
shall promptly purchase at par (and shall be deemed to have thereupon purchased)
from such other Lenders a participation in the Loans or Letters of Credit of
such other Lenders, so that the aggregate unpaid principal amount of each of the
Lender's Loans and its participation in Loans and Letters of Credit of the other
Lenders shall be in the same proportion to the aggregate unpaid principal amount
of all Loans then outstanding and L/C Exposure as the principal amount of its
Loans and L/C Exposure prior to the obtaining of such payment was to the
principal amount of all Loans outstanding and L/C Exposure prior to the
obtaining of such payment and (b) such other adjustments shall be made from time
to time as shall be equitable to ensure that the Lenders share such payment pro
rata. If all or any portion of such excess payment is thereafter recovered from
the Lender which originally received such excess payment, such purchase (or
portion thereof) shall be cancelled and the purchase price restored to the
extent of such recovery. The Borrower expressly consents to the foregoing
arrangements and agrees that any Lender or Lenders holding (or deemed to be
holding) a participation in a Note or a Letter of Credit may
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exercise any and all rights of banker's lien, setoff or counterclaim with
respect to any and all moneys owing by the Borrower to such Lender or Lenders as
fully as if such Lender or Lenders held a Note and was the original obligee
thereon or was the issuer of the Letter of Credit, in the amount of such
participation.
SECTION 12.4. Notice to the Lenders.
The Administrative Agent shall not be deemed to have knowledge or notice of
the occurrence of any Default or Event of Default hereunder unless the
Administrative Agent has received notice from a Lender or the Borrower or any
Guarantor referring to this Agreement, describing such Default or Event of
Default and stating that such notice is a "notice of default". In the event that
the Administrative Agent receives such a notice, the Administrative Agent shall
give notice thereof to the Lenders. The Administrative Agent shall take such
action with respect to such Default or Event of Default as shall be reasonably
directed by the Required Lenders, provided that, unless and until the
Administrative Agent shall have received such directions, the Administrative
Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Default or Event of Default as it shall
deem advisable in the best interests of the Lenders.
SECTION 12.5. Liability of Administrative Agent and Issuing Bank.
(a) The Administrative Agent, the Agents and Issuing Bank, when acting on
behalf of the Lenders, may execute any of their duties under this Agreement or
the other Fundamental Documents by or through their respective directors,
officers, agents, or employees. Neither the Administrative Agent, the Agents,
the Issuing Bank nor their respective directors, officers, agents or employees
shall be liable to the Lenders or any of them for any action taken or omitted to
be taken in good faith, or be responsible to the Lenders or to any of them for
the consequences of any oversight or error of judgment, or for any loss, unless
the same shall happen through its gross negligence or willful misconduct. The
Administrative Agent, the Agents, the Issuing Bank and their respective
directors, officers, agents, and employees shall in no event be liable to the
Lenders or to any of them for any action taken or omitted to be taken by it
pursuant to instructions received by it from the Lenders or in reliance upon the
advice of counsel selected by it. Without limiting the foregoing, neither the
Administrative Agent, the Issuing Bank nor any of their respective directors,
officers, employees, or agents shall be responsible to any of the Lenders for
the due execution, validity, genuineness, effectiveness, sufficiency, or
enforceability of, or for any statement,
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warranty, or representation in, or for the perfection of any security interest
or pledge contemplated by, this Agreement the Copyright Security Agreement, the
Trademark Security Agreement, the trademark charge contemplated by Section
5.12(c) hereof, the Patent Security Agreement or any other Fundamental Document
or any related agreement, document or order, or for the designation or failure
to designate this transaction as a "Highly Leveraged Transaction" for regulatory
purposes, or for freedom of any of the Collateral or any of the Pledged
Securities from prior Liens or security interests, or shall be required to
ascertain or to make any inquiry concerning the performance or observance by the
Borrower or any other Credit Party of any of the terms, conditions, covenants,
or agreements of this Agreement, the other Fundamental Documents or any related
agreement or document.
(b) Neither the Administrative Agent, any Agent, the Issuing Bank nor any
of their respective directors, officers, employees, or agents shall have any
responsibility to the Borrower or any other Credit Party on account of the
failure or delay in performance or breach by any of the Lenders or the Borrower
of any of its respective obligations under this Agreement, the Notes, the other
Fundamental Documents or any related agreement or document or in connection
herewith or therewith.
(c) The Administrative Agent, the Agents and the Issuing Bank in such
capacities, shall be entitled to rely on any communication, instrument, or
document reasonably believed by any of them to be genuine or correct and to have
been signed or sent by a Person or Persons believed by it to be the proper
Person or Persons, and it shall be entitled to rely on advice of legal counsel,
independent public accountants, and other professional advisers and experts
selected by any of them.
SECTION 12.6. Reimbursement and Indemnification.
Each of the Lenders agrees (i) to reimburse the Agents for such Lender's
Pro Rata Share of any expenses and fees incurred for the benefit of the Lenders
under the Fundamental Documents, including, without limitation, counsel fees and
compensation of agents and employees paid for services rendered on behalf of the
Lenders, and any other expense incurred in connection with the operations or
enforcement of the Fundamental Documents not reimbursed by a Credit Party, (ii)
to indemnify and hold harmless each of the Agents and any of its directors,
officers, employees, or agents, on demand, in the amount of its Pro Rata Share,
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, it or any of them in any way relating to or arising out
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of the Fundamental Documents or any related agreement or document, or any action
taken or omitted by it or any of them under the Fundamental Documents or any
related agreement or document, to the extent not reimbursed by a Credit Party,
(iii) to indemnify and hold harmless the Issuing Bank and any of its directors,
officers, employees, or agents, on demand, in the amount of its Pro Rata Share,
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 it or any of them in any way relating to or arising out of the issuance
of any Letters of Credit or the failure to issue Letters of Credit if such
failure or issuance was at the direction of Required Lenders (except in the case
of clause (i), (ii) or (iii) above, as shall result from the gross negligence or
willful misconduct of the Person to be reimbursed, indemnified or held harmless,
as applicable)
SECTION 12.7. Rights of Administrative Agent.
It is understood and agreed that Chemical Bank, Credit Lyonnais Cayman
Island Branch and Morgan Guaranty Trust Company of New York shall have the same
duties, rights and powers as a Lender hereunder (including the right to give
such instructions) as any of the other Lenders and may exercise such rights and
powers, as well as its rights and powers under other agreements and instruments
to which it is or may be party, and engage in other transactions with any Credit
Party or any Subsidiary or Affiliate of a Credit Party, as though it were not
the Agent of the Lenders or the Issuing Bank (as applicable) under this
Agreement and the other Fundamental Documents.
SECTION 12.8. Independent Investigation by Lenders.
Each of the Lenders acknowledges that it has decided to enter into this
Agreement and the other Fundamental Documents, and to make the Loans and to
participate in the Letters of Credit hereunder based on its own analysis of the
transactions contemplated hereby and of the creditworthiness of each of the
Credit Parties and agrees that neither any of the Agents nor the Issuing Bank
shall bear any responsibility for such creditworthiness.
SECTION 12.9. Agreement of Required Lenders.
Upon any occasion requiring or permitting an approval, consent, waiver,
election or other action on the part of the Required Lenders, action shall be
taken by the Administrative Agent and/or the Issuing Bank for and on behalf of,
or for the benefit of, all Lenders upon the direction of the Required Lenders,
and any such action shall be binding on all Lenders. No
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amendment, modification, consent or waiver shall be effective except in
accordance with the provisions of Section 13.9 hereof.
SECTION 12.10. Notice of Transfer.
The Administrative Agent and the Issuing Bank may deem and treat any Lender
which is a party to this Agreement as the owner of such Lender's respective
portions of the Loans and participations in Letters of Credit for all purposes,
unless and until a written notice of the assignment or transfer thereof executed
by any such Lender shall have been received by the Administrative Agent and
become effective pursuant to Section 13.3 hereof.
SECTION 12.11. Successor Administrative Agent.
The Administrative Agent may resign at any time by giving written notice
thereof to the Lenders and the Borrower. Upon any such resignation, the Required
Lenders shall have the right to appoint a successor Administrative Agent from
among the Lenders. If no successor Administrative Agent shall have been so
appointed by the Required Lenders and shall have accepted such appointment,
within 30 days after the retiring Administrative Agent's giving of notice of
resignation, the retiring Administrative Agent may, on behalf of the Lenders,
appoint a successor Administrative Agent, which shall be either a Lender, or a
commercial bank reasonably acceptable to the Borrower 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 $500,000,000. Upon the acceptance of any
appointment as Administrative Agent hereunder by a successor Administrative
Agent, such successor Administrative Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring
Administrative Agent, and the retiring Administrative Agent shall be discharged
from its duties and obligations under this Agreement, the other Fundamental
Documents and any other credit documentation. After any retiring Administrative
Agent's resignation hereunder as Administrative Agent, the provisions of this
Article 11 shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was Administrative Agent under this Agreement.
13. MISCELLANEOUS
SECTION 13.1. Notices.
Notices and other communications provided for herein shall be in writing
and shall be delivered or mailed (or if by telecopier, delivered by such
equipment) addressed, if to the
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Administrative Agent or Chemical Bank, to it at 270 Park Avenue, New York, New
York 10017-2070 Attn: John J. Huber, Telecopier No.: (212) 270-2625 and if to
another Agent, a Credit Party or a Lender, to it at its address set forth on the
signature pages hereof, or such other address as such party may from time to
time designate by giving written notice to the other parties hereunder. All
notices and other communications given to any party hereto in accordance with
the provisions of this Agreement shall be deemed to have been given on (i) the
fifth Business Day after the date when sent by registered or certified mail,
postage prepaid, return receipt requested, if by mail, (ii) when delivered, if
delivered by hand or courier service or (iii) when receipt is acknowledged, if
by telecopier, in each case addressed to such party as provided in this Section
13.1 or in accordance with the latest unrevoked written direction from such
party.
SECTION 13.2. Survival of Agreement, Representations and Warranties, etc.
All warranties, representations and covenants made by any Credit Party
herein or in any certificate or other instrument delivered by such Credit Party
or on its behalf in connection with this Agreement or any other Fundamental
Document shall be considered to have been relied upon by the Administrative
Agent and the Lenders and shall survive the making of the Loans herein
contemplated, the issuance and delivery to the Administrative Agent of the Notes
and the issuance of any Letter of Credit, regardless of any investigation made
by the Administrative Agent or the Lenders or on their behalf and shall continue
in full force and effect so long as any Obligation due or to become due
hereunder is outstanding and unpaid, so long as the Total Commitment has not
been terminated in its entirety and so long as any Letter of Credit remains
outstanding. All statements in any such certificate or other instrument shall
constitute representations and warranties by the Borrower hereunder.
SECTION 13.3. Successors and Assigns; Syndications; Loan Sales;
Participations.
(a) Whenever in this Agreement any of the parties hereto is referred to,
such reference shall be deemed to include the successors and assigns of such
party (provided, however, that no Credit Party may assign its respective rights
and obligations hereunder without the prior written consent of all the Lenders),
and all covenants, promises and agreements by or on behalf of the Credit Parties
which are contained in this Agreement shall inure to the benefit of the
successors and assigns of the Lenders.
(b) Each of the Lenders may (but only with the prior written consent of the
Borrower (only at a time when no Event of Default has occurred and is then
continuing), the Administrative
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Agent and the Issuing Bank, which consents shall not be unreasonably withheld or
delayed) assign to any commercial lender or financial institution which makes or
invests in loans in the ordinary course of its business, all or a portion of its
interests, rights and obligations under this Agreement (including, without
limitation, all or a portion of its Commitment and the same portion of the Loans
at the time owing to it, the Notes held by it and its obligations and rights
with regard to Letters of Credit); provided, however, that (i) each Assignment
shall be of a constant, and not a varying, percentage of the assigning Lender's
rights and obligations under this Agreement, (ii) the amount of the Commitment
of the assigning Lender being assigned pursuant to each such assignment (in each
case, determined as of the effective date of the Assignment and Acceptance with
respect to such assignment) shall be in a minimum principal amount of $5,000,000
(or, if less, the entire remaining balance of such assigning Lender's Commitment
on such date), and (iii) the parties to each such assignment shall execute and
deliver to the Administrative Agent, for its acceptance and recording in the
Register (as defined below), an Assignment and Acceptance, together with the
assigning Lender's original Note and a processing and recordation fee of $3,500
to be paid to the Administrative Agent. Upon such execution, delivery,
acceptance and recording, from and after the effective date specified in each
Assignment and Acceptance, which effective date shall not, unless otherwise
agreed to by the Administrative Agent, be earlier than five (5) Business Days
after the date of acceptance and recording by the Administrative Agent, (x) the
assignee thereunder shall be a party hereto and, to the extent provided in such
Assignment and Acceptance, have the rights and obligations of a Lender hereunder
and (y) the assigning Lender thereunder shall, to the extent provided in such
Assignment and Acceptance, be released from its obligations under this Agreement
(and, in the case of an Assignment and Acceptance covering all or the remaining
portion of the assigning Lender's rights and obligations under this Agreement,
such assigning Lender shall cease to be a party hereto).
(c) Notwithstanding the other provisions of Section 13.3(b), each Lender
may at any time assign its interests, rights and obligations under this
Agreement to (i) any Affiliate of such Lender or (ii) any other Lender
hereunder.
(d) By executing and delivering an Assignment and Acceptance, the assigning
Lender thereunder and the assignee thereunder confirm to and agree with each
other and the other parties hereto as follows: (i) other than the representation
and warranty that it is the legal and beneficial owner of the interest being
assigned thereby free and clear of any adverse claim created by such assigning
Lender, the assigning Lender makes no representation or warranty and assumes no
responsibility
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with respect to any statements, warranties or representations made in or in
connection with this Agreement or the other Fundamental Documents or the
execution, legality, validity, enforceability, genuineness, sufficiency or value
of the Fundamental Documents or any other instrument or document furnished
pursuant hereto or thereto; (ii) such assigning Lender makes no representation
or warranty and assumes no responsibility with respect to the financial
condition of any of the Credit Parties or the performance or observance by any
Credit Party of any of its obligations under the Fundamental Documents or any
other instrument or document furnished pursuant thereto; (iii) such assignee
confirms that it has received a copy of this Agreement, together with copies of
the most recent financial statements delivered pursuant to Sections 5.1(a)
through 5.1(d) (or if none of such financial statements shall have then been
delivered, then copies of the financial statements referred to in Section 3.4
hereof) and such other documents and information as it has deemed appropriate to
make its own credit analysis and decision to enter into such Assignment and
Acceptance; (iv) such assignee agrees that it will, independently and without
reliance upon the assigning Lender, the Administrative Agent 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 or the other Fundamental Documents; (v) such assignee
appoints and authorizes the Administrative Agent to take such action as agent on
its behalf and to exercise such powers under any of the Fundamental Documents as
are delegated to the Administrative Agent by the terms thereof, together with
such powers as are reasonably incidental thereto; and (vi) such assignee agrees
that it will be bound by the provisions of this Agreement and will perform in
accordance with its terms all of the obligations, which by the terms of this
Agreement are required to be performed by it as a Lender.
(e) The Administrative Agent shall maintain at its address at which notices
are to be given to it pursuant to Section 13.1, a copy of each Assignment and
Acceptance and a register for the recordation of the names and addresses of the
Lenders and the Commitments of, and principal amount of the Loans owing to, each
Lender from time to time (the "Register"). The entries in the Register shall be
conclusive, in the absence of manifest error, and the Credit Parties, the
Administrative Agent, the Issuing Bank and the Lenders may treat each Person
whose name is recorded in the Register as a Lender hereunder for all purposes of
the Fundamental Documents. The Register shall be available for inspection by the
Credit Parties or any Lender at any reasonable time and from time to time upon
reasonable prior notice.
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(f) Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender, an assignee and any other parties contemplated thereby,
together with the assigning Lender's original Note, the Administrative Agent
shall, if such Assignment and Acceptance has been completed and is substantially
in the form of Exhibit H hereto, (i) accept such Assignment and Acceptance, (ii)
record the information contained therein in the Register and (iii) give prompt
written notice thereof to the Borrower. Within five (5) Business Days after
receipt of the notice, the Borrower, at its own expense, shall execute and
deliver to the Lender, in exchange for the surrendered Note, a new Note to the
order of such assignee in an amount equal to the Commitment assumed by such
assignee pursuant to such Assignment and Acceptance and, if applicable, a new
Note payable to the order of the assigning Lender in an amount equal to the
Commitment retained by it hereunder. Such new Notes shall be in an aggregate
principal amount equal to the principal amount of the surrendered Note, shall be
dated the date of the surrendered Note and shall otherwise be in substantially
the form of Exhibit A hereto. In addition the Borrower will promptly, at its own
expense, execute such amendments to the Fundamental Documents to which it is a
party and such additional documents and cause each Credit Party to execute
amendments to the Fundamental Documents to which it is a party, and take such
other actions as the Administrative Agent or the assignee Lender may reasonably
request in order to give such assignee Lender the full benefit of the Liens
contemplated by the Fundamental Documents and the guaranty contemplated by this
Agreement.
(g) Each of the Lenders may without the consent of the Borrower sell
participations to one or more banks or other entities in all or a portion of its
rights and obligations under this Agreement (including, without limitation, all
or a portion of its Commitment and the Loans owing to it and the Note held by
it); provided, however, that (i) any such Lender's obligations under this
Agreement shall remain unchanged, (ii) such participant shall not be granted any
voting rights or any right to control the vote of such Lender under this
Agreement, except with respect to proposed changes to interest rates, amounts of
Commitments, final maturity of Loans, releases of substantially all the
Collateral and fees (as applicable to such participant), (iii) any such Lender
shall remain solely responsible to the other parties hereto for the performance
of such obligations, (iv) the participating banks or other entities shall be
entitled to the cost protection provisions contained in Sections 2.3(g), 2.10
and 2.11 hereof but a participant shall not be entitled to receive pursuant to
such provisions an amount larger than its share of the amount to which the
Lender granting such participation would have been entitled to receive and (v)
the Credit Parties, the Administrative Agent, the Issuing Bank and the other
Lenders shall continue to deal solely and directly with
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such Lender in connection with such Lender's rights and obligations under this
Agreement.
(h) The Lenders may, in connection with any assignment or participation or
proposed assignment or participation pursuant to this Section 13.3, disclose to
the assignee or participant or proposed assignee or participant, any information
relating to the Credit Parties furnished to the Administrative Agent or any of
the Lenders by or on behalf of the Borrower and/or the other Credit Parties;
provided that prior to any such disclosure, each such assignee or participant or
proposed assignee or participant shall agree, by executing a confidentiality
letter (for the benefit of the Borrower) substantially in the form of Exhibit J
hereto, to preserve the confidentiality of any information relating to any of
the Credit Parties received from such Lender.
(i) The Borrower hereby consents that any Lender may at any time and from
time to time pledge or otherwise grant a security interest in any Loan or any
Note evidencing the Loans (or any part thereof) to any Federal Reserve Bank.
(j) Each Lender hereby represents that it is a commercial lender or
financial institution which makes or invests in loans in the ordinary course of
its business and that it will make Loans hereunder for its own account in the
ordinary course of such business; provided, however, that, subject to preceding
clauses (a) through (i), the disposition of the Notes or other evidence of
Indebtedness held by that Lender shall at all times be within its exclusive
control.
SECTION 13.4. Expenses; Documentary Taxes.
Whether or not the transactions hereby contemplated shall be consummated,
the Borrower agrees to pay all reasonable out-of-pocket expenses incurred by the
Agents or Chemical Securities Inc. in connection with the syndication of the
credit facility contemplated hereby, the negotiation, preparation, execution,
delivery, waiver or modification and administration of this Agreement and any
other documentation contemplated hereby, the Notes, the making of the Loans, the
issuance and administration of the Letters of Credit, the Collateral and the
Pledged Securities including, but not limited to, any internally allocated audit
costs, the reasonable fees and disbursements of Morgan, Lewis & Bockius LLP,
special counsel for the Agents, and any other counsel or consultants that the
Administrative Agent shall retain, as well as all reasonable out-of-pocket
expenses and all allocated costs of in-house counsel incurred by the Agents, the
Issuing Bank and the Lenders in the enforcement or protection of the rights and
remedies of the Issuing Bank or the Lenders in connection with this Agreement,
the Notes, the Letters of Credit or the other Fundamental Documents (including,
without
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limitation, in connection with any bankruptcy, reorganization or other similar
proceeding), and with respect to any action which may be instituted by any
Person against any Lender, the any Agent or the Issuing Bank in respect of any
of the foregoing, or as a result of any transaction, action or nonaction arising
from any of the foregoing, including but not limited to the fees and
disbursements of any counsel for such Lender, the Agent or the Issuing Bank.
Such payments shall be made on the date of execution of this Agreement and
thereafter on demand. The Borrower agrees that it shall indemnify the Agents,
the Lenders and the Issuing Bank from and hold them harmless against any
documentary taxes, assessments or charges made by any Governmental Authority by
reason of the execution and delivery of this Agreement or the Notes or the
issuance of the Letters of Credit. The obligations of the Borrower under this
Section shall survive the termination of this Agreement and/or the payment of
the Loans and/or expiration of any Letter of Credit.
SECTION 13.5. Indemnity.
Further, by the execution hereof, the Borrower agrees to indemnify and hold
harmless the Agents, the Lenders and the Issuing Bank and their respective
directors, officers, employees and agents (each an "Indemnified Party") (to the
fullest extent permitted by law) from and against any and all expenses, losses,
claims, demands, judgments, damages and liabilities (including liabilities for
penalties) incurred by any of them as a result of, arising out of, or in any way
related to, or by reason of, any investigation, litigation or other proceeding
(whether or not any Lender or the Agent is a party thereto) related to the
entering into and/or performance of any Fundamental Document or the use of the
proceeds of any Loans hereunder or the issuance of any Letter of Credit or the
consummation of any other transaction contemplated in any Fundamental Document,
including, without limitation, the reasonable fees and disbursements of counsel
incurred in connection with any such investigation, litigation or other
proceeding (but excluding any such losses, liabilities, claims, damages or
expenses to the extent incurred by reason of the gross negligence or willful
misconduct of the Person to be indemnified). If any proceeding, including any
governmental investigation, shall be instituted involving any Indemnified Party,
in respect of which indemnity may be sought against the Borrower, such
Indemnified Party shall promptly notify the Borrower in writing, and the
Borrower shall assume the defense thereof on behalf of such Indemnified Party
including the employment of counsel (reasonably satisfactory to such Indemnified
Party) and payment of all reasonable expenses. Any Indemnified Party shall have
the right to employ separate counsel in any such proceeding and participate in
the defense thereof, but the fees and expenses of such separate counsel shall be
at the expense of such Indemnified Party unless (i) the employment
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of such separate counsel has been specifically authorized by the Borrower or
(ii) the named parties to any such action (including any impleaded parties)
include such Indemnified Party and the Borrower, and such Indemnified Party
shall have been advised by its counsel that there may be one or more legal
defenses available to such Indemnified Party which are different from or
additional to those available to the Borrower (in which case the Borrower shall
not have the right to assume the defense of such action on behalf of such
Indemnified Party, it being understood, however, that the Borrower shall not, in
connection with any one such action or separate but substantially similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the reasonable fees or expenses of
more than one separate firm of attorneys for all such Indemnified Parties). The
Borrower shall not be liable for any settlement of any such proceeding effected
without the written consent of the Borrower, but if settled with the written
consent of the Borrower or if there is a final judgment for the plaintiff in any
such action, the Borrower agrees to indemnify and hold harmless any Indemnified
Party from and against any loss or liability by reason of such settlement or
judgment. At any time after the Borrower has assumed the defense of any
proceeding involving any Indemnified Party in respect of which indemnity has
been sought against the Borrower, such Indemnified Party may elect, by written
notice to the Borrower, to withdraw its request for indemnity and thereafter the
defense of such proceeding shall be maintained by counsel of the Indemnified
Party's choosing and at the Indemnified Party's expense. The foregoing indemnity
agreement includes any reasonable costs incurred by an Indemnified Party in
connection with any action or proceeding which may be instituted in respect of
the foregoing by any Agent or the Issuing Bank or by any other Person either
against any Agent or the Issuing Bank or the Lenders or in connection with which
any officer or employee of any Agent or the Issuing Bank or the Lenders is
called as a witness or deponent, including, but not limited to, the reasonable
fees and disbursements of Morgan, Lewis & Bockius LLP, counsel to the Agents or
the Issuing Bank and any out-of-pocket costs incurred by any Agent or the
Issuing Bank or the Lenders in appearing as a witness or in otherwise complying
with legal process served upon them. The obligations of the Borrower under this
Section 13.5 shall survive the termination of this Agreement and/or payment of
the Loans and/or the expiration of the Letters of Credit and shall inure to the
benefit of any Person who was a Lender notwithstanding such Person's assignment
of all its Loans and Commitment hereunder.
If a Credit Party shall fail to do any act or thing which it has covenanted
to do hereunder or under a Fundamental Document, or any representation or
warranty of a Credit Party shall be breached, the Administrative Agent may (but
shall not be obligated to) do the same or cause it to be done or remedy any
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such breach and there shall be added to the Obligations hereunder the cost or
expense incurred by the Administrative Agent in so doing, and any and all
amounts expended by the Administrative Agent in taking any such action shall be
repayable to it upon its demand therefor and shall bear interest at 2% in excess
of the Alternate Base Rate from time to time in effect plus 150 Basis Points
from the date advanced to the date of repayment.
SECTION 13.6. CHOICE OF LAW.
THIS AGREEMENT AND THE NOTES SHALL IN ALL RESPECTS BE CONSTRUED IN
ACCORDANCE WITH, AND GOVERNED BY, THE LAWS OF THE STATE OF NEW YORK WHICH ARE
APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED WHOLLY WITHIN SUCH STATE AND,
IN THE CASE OF PROVISIONS RELATING TO INTEREST RATES, ANY APPLICABLE LAWS OF THE
UNITED STATES OF AMERICA. EACH LETTER OF CREDIT SHALL BE GOVERNED BY, AND SHALL
BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OR RULES DESIGNATED IN
SUCH LETTER OF CREDIT, OR IF NO SUCH LAWS OR RULES ARE DESIGNATED, THE UNIFORM
CUSTOMS AND PRACTICES FOR DOCUMENTARY CREDITS (1993 REVISION), INTERNATIONAL
CHAMBER OF COMMERCE, PUBLICATION NO. 500 (THE "UNIFORM CUSTOMS") AND, AS TO
MATTERS NOT GOVERNED BY THE UNIFORM CUSTOMS, THE LAWS OF THE STATE OF NEW YORK.
SECTION 13.7. No Waiver.
No failure on the part of any Agent, any Lender or the Issuing Bank to
exercise, and no delay in exercising, any right, power or remedy hereunder under
the Fundamental Documents or under the Notes or with regards to the Letters of
Credit shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right, power or remedy preclude any other or further
exercise thereof or the exercise of any other right, power or remedy. All
remedies hereunder are cumulative and are not exclusive of any other remedies
provided by law.
SECTION 13.8. Extension of Maturity.
Except as otherwise specifically provided in Article 2 hereof, should any
payment of principal of, or interest on, the Notes or any other amount due
hereunder become due and payable on a day other than a Business Day, the
maturity thereof shall be extended to the next succeeding Business Day and, in
the case of principal, interest shall be payable thereon at the rate herein
specified during such extension.
SECTION 13.9. Amendments, etc.
No modification, amendment or waiver of any provision of this Agreement,
and no consent to any departure by a Credit Party herefrom, shall in any event
be effective unless the same
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shall be in writing and signed by the Required Lenders, and then such waiver or
consent shall be effective only in the specific instance and for the purpose for
which given; provided, however, that no such modification or amendment shall
without the written consent of all of the Lenders (i) extend the final maturity
or any other scheduled maturity of any Loan, or decrease the principal amount of
any Loan or decrease the rate of interest payable thereon or the timing of
payment of such interest, or decrease the amount, or extend the timing of
payment, of any fees or other amounts payable in connection herewith, (ii)
change the Commitment of any Lender, (iii) amend or modify any provision of this
Agreement which provides for the unanimous consent or approval of the Lenders,
(iv) release any Collateral (except as contemplated by Section 12.1 or in
connection with a sale of any asset(s) which sale has been consented to by the
Required Lenders and which assets(s) do not constitute all or substantially all
of the Collateral), (v) release any Guarantor from its obligations hereunder
(except as contemplated by Section 13.15, Section 12.1 or in connection with a
sale of an asset consented to by the Required Lenders), (vi) approve any
amendments to the provisions of the Subordination Agreement (other than consents
to the payment of interest as to which the consent of the Required Lenders shall
be sufficient), (vii) amend this Section 13.9 or the definition of Required
Lenders, or (viii) amend or modify the scheduled reductions in the Total
Commitment pursuant to Section 2.7(b) hereof; and further, provided, that
Section 2.3 hereof shall not be amended without the written consent of the
Issuing Bank and the Administrative Agent. No such amendment or modification may
adversely affect the rights and obligations of the Administrative Agent or the
Issuing Bank hereunder without its prior written consent. No notice to or demand
on any Credit Party shall entitle such Credit Party to any other or further
notice or demand in the same, similar or other circumstances. Each holder of a
Note shall be bound by any amendment, modification, waiver or consent authorized
as provided herein, whether or not such Note shall have been marked to indicate
such amendment, modification, waiver or consent and any consent by any holder of
a Note shall bind any Person subsequently acquiring such Note, whether or not a
Note is so marked.
SECTION 13.10. Severability.
Any provision of this Agreement which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
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SECTION 13.11. SERVICE OF PROCESS; WAIVER OF JURY TRIAL.
(a) THE BORROWER AND EACH GUARANTOR (EACH A "SUBMITTING PARTY" AND
COLLECTIVELY, THE "SUBMITTING PARTIES") HEREBY IRREVOCABLY SUBMIT TO THE
JURISDICTION OF THE STATE COURTS OF THE STATE OF NEW YORK AND TO THE
JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF
NEW YORK, FOR THE PURPOSES OF ANY SUIT, ACTION OR OTHER PROCEEDING ARISING OUT
OF OR BASED UPON THIS AGREEMENT OR THE SUBJECT MATTER HEREOF, ANY FUNDAMENTAL
DOCUMENT OR THE SUBJECT MATTER OF ANY THEREOF BROUGHT BY THE ADMINISTRATIVE
AGENT, A LENDER OR THE ISSUING BANK. EACH SUBMITTING PARTY TO THE EXTENT
PERMITTED BY APPLICABLE LAW (A) HEREBY WAIVES, AND AGREES NOT TO ASSERT, BY WAY
OF MOTION, AS A DEFENSE, OR OTHERWISE, IN ANY SUCH SUIT, ACTION OR PROCEEDING
BROUGHT IN SUCH COURTS, ANY CLAIM THAT IT IS NOT SUBJECT PERSONALLY TO THE
JURISDICTION OF THE ABOVE-NAMED COURTS, THAT ITS PROPERTY IS EXEMPT OR IMMUNE
FROM ATTACHMENT OR EXECUTION, THAT THE SUIT, ACTION OR PROCEEDING IS BROUGHT IN
AN INCONVENIENT FORUM, THAT THE VENUE OF THE SUIT, ACTION OR PROCEEDING IS
IMPROPER OR THAT THIS AGREEMENT OR THE SUBJECT MATTER HEREOF MAY NOT BE ENFORCED
IN OR BY SUCH COURT, AND (B) HEREBY WAIVES THE RIGHT TO ASSERT IN ANY SUCH
ACTION, SUIT OR PROCEEDING ANY OFFSETS OR COUNTERCLAIMS EXCEPT COUNTERCLAIMS
THAT ARE COMPULSORY OR OTHERWISE ARISE FROM THE SAME SUBJECT MATTER. EACH
SUBMITTING PARTY HEREBY CONSENTS TO SERVICE OF PROCESS BY MAIL AT ITS ADDRESS TO
WHICH NOTICES ARE TO BE GIVEN PURSUANT TO SECTION 13.1 HEREOF. EACH SUBMITTING
PARTY AGREES THAT ITS SUBMISSION TO JURISDICTION AND CONSENT TO SERVICE OF
PROCESS BY MAIL IS MADE FOR THE EXPRESS BENEFIT OF THE ADMINISTRATIVE AGENT, THE
LENDERS AND THE ISSUING BANK. FINAL JUDGMENT AGAINST A SUBMITTING PARTY IN ANY
SUCH ACTION, SUIT OR PROCEEDING SHALL BE CONCLUSIVE, AND MAY BE ENFORCED IN ANY
OTHER JURISDICTION (A) BY SUIT, ACTION OR PROCEEDING ON THE JUDGMENT, A
CERTIFIED OR TRUE COPY OF WHICH SHALL BE CONCLUSIVE EVIDENCE OF THE FACT AND THE
AMOUNT OF INDEBTEDNESS OR LIABILITY OF THE SUBMITTING PARTY THEREIN DESCRIBED OR
(B) IN ANY OTHER MANNER PROVIDED BY OR PURSUANT TO THE LAWS OF SUCH OTHER
JURISDICTION, PROVIDED, HOWEVER, THAT THE ADMINISTRATIVE AGENT, A LENDER OR THE
ISSUING BANK MAY AT ITS OPTION BRING SUIT, OR INSTITUTE OTHER JUDICIAL
PROCEEDINGS AGAINST A SUBMITTING PARTY OR ANY OF ITS ASSETS IN ANY STATE OR
FEDERAL COURT OF THE UNITED STATES OR OF ANY COUNTRY OR PLACE WHERE THE
SUBMITTING PARTY OR SUCH ASSETS MAY BE FOUND.
(b) TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW WHICH CANNOT BE WAIVED,
EACH CREDIT PARTY HEREBY WAIVES, AND COVENANTS THAT IT WILL NOT ASSERT (WHETHER
AS PLAINTIFF, DEFENDANT OR OTHERWISE), ANY RIGHT TO TRIAL BY JURY IN ANY FORUM
IN RESPECT OF ANY ISSUE, CLAIM, DEMAND, ACTION, OR CAUSE OF ACTION ARISING OUT
OF, OR BASED UPON, THIS AGREEMENT, THE SUBJECT MATTER HEREOF, ANY FUNDAMENTAL
DOCUMENT OR THE SUBJECT MATTER
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<PAGE>
THEREOF, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING OR WHETHER IN
CONTRACT OR TORT OR OTHERWISE. EACH CREDIT PARTY ACKNOWLEDGES THAT IT HAS BEEN
INFORMED THAT THE PROVISIONS OF THIS SECTION 13.11(b) CONSTITUTE A MATERIAL
INDUCEMENT UPON WHICH THE ADMINISTRATIVE AGENT, THE ISSUING BANK AND THE LENDERS
HAVE RELIED, ARE RELYING AND WILL RELY IN ENTERING INTO THIS AGREEMENT AND ANY
OTHER FUNDAMENTAL DOCUMENT. THE ADMINISTRATIVE AGENT, THE ISSUING BANK AND THE
LENDERS MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION 13.11(b) WITH
ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF A CREDIT PARTY TO THE WAIVER OF
ITS RIGHTS TO TRIAL BY JURY.
SECTION 13.12. Headings.
Section headings used herein are for convenience only and are not to affect
the construction of or be taken into consideration in interpreting this
Agreement.
SECTION 13.13. Execution in Counterparts.
This Agreement may be executed in any number of counterparts, each of which
shall constitute an original, but all of which when taken together shall
constitute one and the same instrument.
SECTION 13.14. Entire Agreement.
This Agreement represents the entire agreement of the parties with regard
to the subject matter hereof and the terms of any letters and other
documentation entered into between the Borrower and the Administrative Agent or
any Lender (other than the provisions of that certain letter agreement dated
November 21, 1995 between the Administrative Agent and Chemical Securities Inc.,
on the one hand, and the Borrower, on the other hand, relating to fees) prior to
the execution of this Agreement which relate to Loans to be made hereunder,
shall be replaced by the terms of this Agreement.
SECTION 13.15. Change of Borrower from SkyTel to Mtel.
(a) Subject to the satisfaction of the following conditions precedent and
effective at 5:00 p.m. New York time on the last day on which pursuant to the
Senior Note Indenture, SkyTel is permitted to incur or suffer to exist
Indebtedness hereunder without violating the Senior Note Indenture (but in no
event earlier than December 30, 1999 which is the last such day under the Senior
Note Indenture as currently in effect), all obligations and rights of SkyTel as
Borrower hereunder are hereby assigned to Mtel and Mtel hereby accepts and
assumes all such obligations and rights for all purposes whatsoever (the date on
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<PAGE>
which such assignment and assumption actually becomes effective herein being
referred to as the "Flip Date"):
(i) Mtel shall have executed and delivered to the Administrative
Agent new promissory notes substantially in the form of Exhibit A
hereto, dated the Flip Date and payable to the order of each Lender in
a principal amount equal to such Lender's Commitment then effect (from
and after the Flip Date all references to the Notes shall mean the new
notes delivered pursuant to this clause);
(ii) SkyTel shall have become a direct (rather than an indirect)
Subsidiary of Mtel so as to continue as a Pledged Subsidiary after the
Flip Date;
(iii) The Administrative Agent shall have received the favorable
written opinion of Jones Day Reavis & Pogue or other counsel to Mtel,
in form and substance satisfactory to the Agents, and addressing the
matters set forth in the opinion of Jones, Day, Reavis & Pogue
delivered pursuant to Section 4.1(c)(i) hereof; and
(iv) No Default or Event of Default shall then be continuing and
the Administrative Agent shall have received a certificate to such
effect executed by the Chief Executive Officer of Chief Financial
Officer of Mtel.
(b) On the Flip Date the guaranty of each Guarantor pursuant to Article 10
hereof and all Liens granted by SkyTel and all of the Guarantors (other than
Mtel) pursuant to this Agreement or any other Fundamental Document shall
terminate, but the Obligations of Mtel and all Liens granted by Mtel pursuant to
this Agreement or any other Fundamental Document shall be preserved without
being diminished in any way whatsoever. On and after the Flip Date, the
Administrative Agent will execute such UCC termination statements and other
documents and take such other actions as the Credit Parties may reasonably
request in order to evidence such terminations.
(c) If due to a failure or inability to satisfy any of the conditions
precedent set forth paragraph (a) of this Section 13.15, the Flip Date shall not
occur, then all Liens granted by any of the Credit Parties and all Obligations
of the Guarantors hereunder and under all other Fundamental Documents shall
continue in full force and effect without being diminished in any way
whatsoever.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and the year first written.
BORROWER:
SKYTEL CORP.
By /s/ J. Robert Fugate
----------------------------
Name: J. Robert Fugate
Title: Vice President - Finance
and Chief Financial
Officer
NOTICES:
Address: 200 South Lamar Street
Security Centre
South Building
Jackson, MS 39201
Attention: Thomas R. Ferguson
Telephone No.: (601) 944-1300
Telecopier No.: (601) 944-7158
GUARANTORS:
MOBILE TELECOMMUNICATION
TECHNOLOGIES CORP.
By /s/ J. Robert Fugate
----------------------------
Name: J. Robert Fugate
Title: Vice President - Finance
and Chief Financial
Officer
NOTICES:
Address: 200 South Lamar Street
Security Centre
South Building
Jackson, MS 39201
Attention: Thomas R. Ferguson
Telephone No.: (601) 944-1300
Telecopier No.: (601) 944-7158
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<PAGE>
MTEL PAGING, INC.
By /s/ J. Robert Fugate
----------------------------
Name: J. Robert Fugate
Title: Vice President - Finance and
Chief Financial Officer
NOTICES:
Address: 200 South Lamar Street
Security Centre
South Building
Jackson, MS 39201
Attention: Thomas R. Ferguson
Telephone No.: (601) 944-1300
Telecopier No.: (601) 944-7158
MTEL INTERNATIONAL, INC.
By /s/ J. Robert Fugate
----------------------------
Name: J. Robert Fugate
Title: Vice President - Finance and
Chief Financial Officer
NOTICES:
Address: 200 South Lamar Street
Security Centre
South Building
Jackson, MS 39201
Attention: Thomas R. Ferguson
Telephone No.: (601) 944-1300
Telecopier No.: (601) 944-7158
MTEL LATIN AMERICA, INC.
By /s/ J. Robert Fugate
----------------------------
Name: J. Robert Fugate
Title: Vice President - Finance and
Chief Financial Officer
NOTICES:
Address: 200 South Lamar Street
Security Centre
South Building
Jackson, MS 39201
Attention: Thomas R. Ferguson
Telephone No.: (601) 944-1300
Telecopier No.: (601) 944-7158
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<PAGE>
MTEL PUERTO RICO, INC.
By /s/ J. Robert Fugate
--------------------------------
Name: J. Robert Fugate
Title: Vice President - Finance and
Chief Financial Officer
NOTICES:
Address: 200 South Lamar Street
Security Centre
South Building
Jackson, MS 39201
Attention: Thomas R. Ferguson
Telephone No.: (601) 944-1300
Telecopier No.: (601) 944-7158
UNITED STATES PAGING CORPORATION
By /s/ J. Robert Fugate
--------------------------------
Name: J. Robert Fugate
Title: Vice President - Finance and
Chief Financial Officer
NOTICES:
Address: 200 South Lamar Street
Security Centre
South Building
Jackson, MS 39201
Attention: Thomas R. Ferguson
Telephone No.: (601) 944-1300
Telecopier No.: (601) 944-7158
DESTINEER CORPORATION
By /s/ J. Robert Fugate
--------------------------------
Name: J. Robert Fugate
Title: Vice President - Finance and
Chief Financial Officer
NOTICES:
Address: 200 South Lamar Street
Security Centre
South Building
Jackson, MS 39201
Attention: Thomas R. Ferguson
Telephone No.: (601) 944-1300
Telecopier No.: (601) 944-7158
-140-
<PAGE>
MOBILECOMM EUROPE INC.
By /s/ J. Robert Fugate
--------------------------------
Name: J. Robert Fugate
Title: Vice President - Finance and
Chief Financial Officer
NOTICES:
Address: 200 South Lamar Street
Security Centre
South Building
Jackson, MS 39201
Attention: Thomas R. Ferguson
Telephone No.: (601) 944-1300
Telecopier No.: (601) 944-7158
MTEL SPACE TECHNOLOGIES CORPORATION
By /s/ J. Robert Fugate
--------------------------------
Name: J. Robert Fugate
Title: Vice President - Finance and
Chief Financial Officer
NOTICES:
Address: 200 South Lamar Street
Security Centre
South Building
Jackson, MS 39201
Attention: Thomas R. Ferguson
Telephone No.: (601) 944-1300
Telecopier No.: (601) 944-7158
MTEL TECHNOLOGIES, INC.
By /s/ J. Robert Fugate
--------------------------------
Name: J. Robert Fugate
Title: Vice President - Finance and
Chief Financial Officer
NOTICES:
Address: 200 South Lamar Street
Security Centre
South Building
Jackson, MS 39201
Attention: Thomas R. Ferguson
Telephone No.: (601) 944-1300
Telecopier No.: (601) 944-7158
-141-
<PAGE>
MTEL MAINE, INC.
By /s/ J. Robert Fugate
--------------------------------
Name: J. Robert Fugate
Title: Vice President - Finance and
Chief Financial Officer
NOTICES:
Address: 200 South Lamar Street
Security Centre
South Building
Jackson, MS 39201
Attention: Thomas R. Ferguson
Telephone No.: (601) 944-1300
Telecopier No.: (601) 944-7158
COM/NAV REALTY CORP.
By /s/ J. Robert Fugate
--------------------------------
Name: J. Robert Fugate
Title: Vice President - Finance and
Chief Financial Officer
NOTICES:
Address: 200 South Lamar Street
Security Centre
South Building
Jackson, MS 39201
Attention: Thomas R. Ferguson
Telephone No.: (601) 944-1300
Telecopier No.: (601) 944-7158
INTELLIGENT INVESTMENT PARTNERS, INC.
By /s/ J. Robert Fugate
--------------------------------
Name: J. Robert Fugate
Title: Vice President - Finance and
Chief Financial Officer
NOTICES:
Address: 200 South Lamar Street
Security Centre
South Building
Jackson, MS 39201
Attention: Thomas R. Ferguson
Telephone No.: (601) 944-1300
Telecopier No.: (601) 944-7158
-142-
<PAGE>
LENDERS:
CHEMICAL BANK, individually and as
Administrative Agent
Executed by Chemical Bank
in New York, New York
By /s/ Edward Divine
--------------------------------
Name: Edward Divine
Title: Managing Director
NOTICES:
Address: 270 Park Avenue
New York, NY 10017-2070
Attention: Bruce M. Yeager
Telephone No.: (212) 261-7840
Telecopier No.: (212) 261-3318
CREDIT LYONNAIS NEW YORK BRANCH,
as Documentation Agent
By /s/ Bruce M. Yeager
-------------------------------
Name: Bruce M. Yeager
Title: Senior Vice President
Address: 1301 Avenue of the
Americas
New York, NY 10019
Attention: Bruce M. Yeager
Telephone No.: (212) 261-7840
Telecopier No.: (212) 261-3318
CREDIT LYONNAIS CAYMAN ISLAND BRANCH
By /s/ Bruce M. Yeager
-------------------------------
Name: Bruce M. Yeager
Title: Authorized Signatory
Address: 1301 Avenue of the
Americas
New York, NY 10019
Attention: Bruce M. Yeager
Telephone No.: (212) 261-7840
Telecopier No.: (212) 261-3318
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<PAGE>
J.P. MORGAN SECURITIES INC.,
as Co-Syndication Agent
By /s/ Stephen J. Kenneally
-------------------------------------
Name: Stephen J. Kenneally
Title: Vice President
Address: 60 Wall Street
New York, NY 10260
Attention:
Telephone No.: (212)
Telecopier No.: (212)
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By /s/ R. Blake Witherington
-------------------------------------
Name: R. Blake Witherington
Title: Vice President
Address: 60 Wall Street
New York, NY 10260
Attention: R. Blake Witherington
Telephone No.: (212) 648-7248
Telecopier No.: (212) 648-5018
ABN AMRO BANK ATLANTA AGENCY
By /s/ W. Pat Fischer and Adam Greene
-------------------------------------
Name: W. Pat Fischer and Adam Greene
Title: Senior Vice President/Vice President
Address: One Ravinia Drive
Suite 1200
Atlanta, GA 30346-2103
Attention: Adam Green
Telephone No.: (770) 399-7375
Telecopier No.: (770) 399-7397
THE FIRST NATIONAL BANK OF BOSTON
By /s/ Shepard D. Rainie
-------------------------------------
Name: Shepard D. Rainie
Title: Director
Address: 100 Federal Street
Boston, MA 02110
Attention: Keith Wilson
Telephone No.: (617) 434-5427
Telecopier No.: (617) 434-3401
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<PAGE>
THE BOATMEN'S NATIONAL BANK OF
ST. LOUIS
By /s/ Dwight D. Erdbruegger
--------------------------------
Name: Dwight D. Erdbruegger
Title: Vice President
Address: 800 Market Street
One Boatmen's Plaza
St. Louis, MO 63166-0236
Attention: Craig Korte
Telephone No.: (314) 466-7222
Telecopier No.: (314) 466-6499
CIBC INC.
By /s/ Marisa J. Harney
--------------------------------
Name: Marisa J. Harney
Title: Vice President
Address: 425 Lexington Avenue
8th Floor
New York, NY 10017
Attention: Marisa J. Harney
Telephone No.: (212) 856-4254
Telecopier No.: (212) 856-3558
VAN KAMPEN AMERICAN CAPITAL
PRIME RATE INCOME TRUST
By /s/ Kathleen A. Zarn
--------------------------------
Name: Kathleen A. Zarn
Title: Vice President
Address: One Park View Plaza
Oakbrook Terrace, IL 60181
Attention: Jeffrey Maillet
Telephone No.: (708) 684-6438
Telecopier No.: (708) 684-6741
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<PAGE>
Schedule 1
Table of Commitments
Lender Commitment
------ ----------
Chemical Bank $ 46,666,666.67
Credit Lyonnais Cayman Island Branch 46,666,666.67
Morgan Guaranty Trust Company
of New York 46,666,666.66
CIBC Inc. 35,000,000.00
ABN AMRO Bank Atlanta Agency 25,000,000.00
Van Kampen American Capital
Prime Rate Income Trust 25,000,000.00
The First National Bank of Boston 15,000,000.00
The Boatmen's National Bank of
St. Louis 10,000,000.00
---------------
TOTAL $250,000,000.00
===============
-146-
<PAGE>
EXHIBIT 4.8
CONTRIBUTION AGREEMENT
This CONTRIBUTION AGREEMENT (as the same may be amended, supplemented or
otherwise modified, renewed or replaced from time to time, the "Agreement") is
entered into as of December 21, 1995 by and among SkyTel Corp., a Delaware
corporation (the "Borrower"), Mobile Telecommunication Technologies Corp., a
Delaware corporation ("Mtel"), Mtel Paging, Inc., a Delaware corporation ("Mtel
Paging"), and the Subsidiaries of Mtel (other than the Borrower and Mtel Paging)
which are party to the Credit Agreement (as hereinafter defined) (such
Subsidiaries being referred to herein collectively as the "Contributors" and
individually as a "Contributor") for the purpose of establishing the respective
rights and obligations of contribution among the Contributors, the Borrower,
Mtel and Mtel Paging in connection with the Credit Agreement. Capitalized terms
used herein and not otherwise defined shall have the meanings set forth in the
Credit Agreement.
Recitals
WHEREAS, SkyTel, Mtel, Mtel Paging and the Contributors have entered into a
Credit, Security, Guaranty and Pledge Agreement dated as of December 21, 1995,
with the lenders referred to therein (the "Lenders"), Chemical Bank, as
Administrative Agent (the "Administrative Agent"), Credit Lyonnais New York
Branch, as Documentation Agent, and J.P. Morgan Securities Inc., as
Co-Syndication Agent (said agreement, as it may be amended, supplemented or
otherwise modified, renewed or replaced from time to time in accordance with its
terms being the "Credit Agreement"), pursuant to which (i) the Lenders have made
certain commitments, subject to the terms and conditions set forth therein, to
extend a credit facility to the Borrower and (ii) Mtel, Mtel Paging and each of
the Contributors has guaranteed the Obligations (such term being used herein as
defined in the Credit Agreement) of the Borrower;
WHEREAS, pursuant to the Credit Agreement, the Borrower, Mtel, Mtel Paging
and each of the Contributors has granted to the Administrative Agent for the
benefit of the Lenders a security interest in the Collateral as security for
their respective obligations under the Credit Agreement;
WHEREAS, as a result of the transactions contemplated by the Credit
Agreement, Mtel, Mtel Paging and the Contributors will benefit, directly and
indirectly, from the Obligations and in consideration thereof desire to enter
into this Agreement to allocate such benefits among themselves and to provide a
fair and equitable arrangement to make contributions and for the Borrower, Mtel
and Mtel Paging to make contributions in the event any payment is made by a
Contributor under the Credit Agreement or
<PAGE>
the Administrative Agent (on behalf of the Lenders) exercises recourse against
any of the Collateral owned by a Contributor (such payment or recourse being
referred to herein as a "Contribution");
NOW, THEREFORE, in consideration of the foregoing premises and for other
good and valuable consideration, the receipt of which is hereby acknowledged,
the Borrower, Mtel, Mtel Paging and the Contributors hereby agree as follows:
SECTION I. Contribution. In order to provide for just and equitable
contribution in the event any Contribution is made by a Contributor (a "Funding
Contributor") under the Credit Agreement, that Funding Contributor shall be
entitled to a contribution from certain other Contributors and from the
Borrower, Mtel and Mtel Paging for all payments, damages and expenses incurred
by that Funding Contributor in discharging any of the Obligations, in the manner
and to the extent set forth in this Agreement. The amount of any Contribution
under this Agreement shall be equal to the payment made by the Funding
Contributor pursuant to the Credit Agreement or the fair saleable value of the
Funding Contributor's portion of the Collateral against which recourse is
exercised, and shall be determined as of the date on which such payment is made
or recourse is exercised, as the case may be.
SECTION II. Benefit Amount Defined. For purposes of this Agreement, the
"Benefit Amount" of any Contributor, the Borrower, Mtel or Mtel Paging (as
applicable) as of any date of determination shall be the net value of the
benefits to such Contributor, the Borrower, Mtel or Mtel Paging (as applicable)
and all of such Credit Party's respective Subsidiaries (including any
Subsidiaries which may be Contributors) from extensions of credit made by the
Lenders to the Borrower under the Credit Agreement. Such benefits (collectively,
the "Benefits") of a Contributor shall include, without limitation, benefits of
funds constituting proceeds of Loans which are advanced to the Borrower by the
Lenders and which are in turn advanced or contributed by the Borrower to such
Contributor or any of its Subsidiaries. In the case of any proceeds of Loans or
Benefits advanced or contributed to, or received by, a Person (an "Owned
Entity") any of the equity interests of which are owned directly or indirectly
by a Contributor, the Borrower, Mtel or Mtel Paging, the Benefit Amount of such
Contributor, the Borrower, Mtel or Mtel Paging (as applicable) with respect
thereto shall be that portion of the net value of the benefits attributable to
such proceeds of Loans or Benefits equal to the direct or indirect percentage
ownership of such Contributor, the Borrower, Mtel or Mtel Paging (as applicable)
in its Owned Entity.
SECTION III. Contribution Obligation. The Borrower,
Mtel, Mtel Paging and each Contributor shall be liable to a
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<PAGE>
Funding Contributor in an amount equal to the greater of (A) the product of (i)
a fraction the numerator of which is the Benefit Amount of the Borrower, Mtel,
Mtel Paging or such Contributor (as applicable), and the denominator of which is
the total amount of Obligations and (ii) the amount of Obligations paid by such
Funding Contributor and (B) 95% of the excess of the fair saleable value of the
property of the Borrower, Mtel, Mtel Paging or such Contributor over the total
liabilities of the Borrower, Mtel, Mtel Paging or such Contributor (including
the maximum amount reasonably expected to become due in respect of contingent
liabilities), as the case may be, determined as of the date on which the payment
by a Funding Contributor is deemed made for purposes of this Agreement or any
recourse is exercised against a Funding Contributor's portion of the Collateral,
as the case may be (giving effect to all payments made by other Funding
Contributors and to the exercise of recourse against any other Funding
Contributor's portion of the Collateral as of such date in a manner to maximize
the amount of such contributions).
SECTION IV. Allocation. In the event that at any time there exists more
than one Funding Contributor with respect to any Contribution (in any such case,
the "Applicable Contribution"), then payment from other Contributors, the
Borrower, Mtel or Mtel Paging pursuant to this Agreement shall be allocated
among such Funding Contributors in proportion to the total amount of the
Contribution made for or on account of the Obligations by each such Funding
Contributor pursuant to the Applicable Contribution. In the event that at any
time any Contributor pays an amount under this Agreement in excess of the amount
calculated pursuant to clause (A) of Section 3 hereof, that Contributor shall be
deemed to be a Funding Contributor to the extent of such excess and shall be
entitled to contribution from the Borrower, Mtel, Mtel Paging and the other
Contributors in accordance with the provisions of this Agreement.
SECTION V. Subrogation. Any payments made hereunder by the Borrower shall
be credited against amounts payable by the Borrower pursuant to any subrogation
rights of the Contributors, Mtel or Mtel Paging which received the payments
under this Agreement.
SECTION VI. Preservation of Rights. This Agreement shall not limit any
right which any Contributor, the Borrower, Mtel or Mtel Paging may have against
any other Person which is not a party hereto.
SECTION VII. Subsidiary Payment. The amount of
contribution payable under this Agreement by any Contributor
shall be reduced by the amount of any contribution paid hereunder
by a Subsidiary of such Contributor.
-3-
<PAGE>
SECTION VIII. Equitable Allocation. If as a result of any reorganization,
recapitalization, or other corporate change in the Borrower, Mtel, Mtel Paging
or any Affiliate or Subsidiary of the Borrower, Mtel or Mtel Paging (including,
without limitation, any Contributor), or as a result of any amendment, waiver or
modification of the terms and conditions governing the Credit Agreement or the
Obligations, or for any other reason, the contributions under this Agreement
become inequitable, then the parties hereto shall promptly modify and amend this
Agreement to provide for an equitable allocation of the contributions. Any of
the foregoing modifications and amendments shall be in writing and signed by all
parties hereto.
SECTION IX. Asset of Party to Which Contribution is Owing. The parties
hereto acknowledge that the right to contribution hereunder shall constitute an
asset in favor of the party to which such contribution is owing.
SECTION X. Subordination. No payments payable by the Borrower, Mtel, Mtel
Paging or a Contributor pursuant to the terms hereof shall be paid until all
Obligations then due and payable by the Borrower to any Lender, are paid in full
in cash and the Commitments are terminated. Nothing contained in this Agreement
shall affect the Obligations or the obligations of any party hereto to any
Lender under the Credit Agreement or any other Fundamental Document.
SECTION XI. Successors and Assigns; Amendments. This Agreement shall be
binding upon each party hereto and its respective successors and assigns and
shall inure to the benefit of the parties hereto and their respective successors
and assigns, and in the event of any transfer or assignment of rights by the
Borrower, Mtel, Mtel Paging or a Contributor (as applicable), the rights and
privileges herein conferred upon the Borrower, Mtel, Mtel Paging or that
Contributor (as applicable) shall automatically extend to and be vested in such
transferee or assignee, all subject to the terms and conditions hereof. Except
as specifically required under Section 8 hereof, this Agreement shall not be
amended without the prior written consent of the Required Lenders.
SECTION XII. Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
SECTION XIII. Termination. This Agreement shall remain in effect and shall
not terminate until the earlier to occur of
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<PAGE>
(a) the Flip Date and (b) the date on which all of the Obligations shall have
been fully paid and performed and the Commitments (including any commitment to
issue any Letter of Credit) shall have terminated and all Letters of Credit
shall have expired, or been terminated or cancelled.
SECTION XIV. CHOICE OF LAW. THIS AGREEMENT AND ANY INSTRUMENT OR AGREEMENT
REQUIRED HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH, AND GOVERNED BY, THE
LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED
WHOLLY WITHIN THE STATE OF NEW YORK.
SECTION XV. Counterparts. This Agreement, and any modifications or
amendments hereto, may be executed in any number of counterparts, each of which
when so executed and delivered shall constitute an original for all purposes,
but all such counterparts taken together shall constitute one and the same
instrument.
SECTION XVI. Effectiveness. This Agreement shall become effective as to any
party upon the execution hereof by such party and delivery of its executed
counterpart to the Administrative Agent.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first written above.
SKYTEL CORP.
By /s/ J. Robert Fugate
---------------------------------
Name : J. Robert Fugate
Title: Vice President - Finance
and Chief Financial
Officer
MOBILE TELECOMMUNICATION
TECHNOLOGIES CORP.
By /s/ J. Robert Fugate
---------------------------------
Name : J. Robert Fugate
Title: Vice President - Finance
and Chief Financial
Officer
MTEL PAGING, INC.
By /s/ J. Robert Fugate
---------------------------------
Name : J. Robert Fugate
Title: Vice President - Finance
and Chief Financial
Officer
-5-
<PAGE>
MTEL INTERNATIONAL, INC.
MTEL LATIN AMERICA, INC.
MTEL PUERTO RICO, INC.
UNITED STATES PAGING CORPORATION
DESTINEER CORPORATION
MOBILECOMM EUROPE INC.
MTEL SPACE TECHNOLOGIES CORPORATION
MTEL TECHNOLOGIES, INC.
MTEL MAINE, INC.
COM/NAV REALTY CORP.
INTELLIGENT INVESTMENT PARTNERS,
INC.
By /s/ J. Robert Fugate
--------------------------------
Name : J. Robert Fugate
Title: Vice President - Finance
and Chief Financial
Officer
-6-
<PAGE>
EXHIBIT 4.9
PATENT SECURITY AGREEMENT
WHEREAS, MOBILE TELECOMMUNICATION TECHNOLOGIES CORP., a Delaware
corporation ("Mtel"), and each other Subsidiary of Mtel whose name appears at
the foot hereof, including SkyTel Corp., a Delaware corporation (Mtel and each
such Subsidiary shall be referred to herein individually as a "Pledgor" and
collectively as the "Pledgors"), now own or hold and may hereafter acquire or
hold Patents (defined as all of the following: all United States and foreign
patents and patent applications, whether now existing or hereafter arising or
acquired and all reissues, continuations, continuations-in-part or extensions
thereof) including, without limitation, the Patents listed on Schedule A annexed
hereto, as such Schedule may be amended from time to time by the addition of
Patents subsequently arising or acquired;
WHEREAS, the Pledgors are parties to a Credit, Security, Guaranty and
Pledge Agreement dated as of December 21, 1995 (as the same may be amended,
supplemented or otherwise modified, renewed or replaced from time to time, the
"Credit Agreement") among SkyTel Corp., Mtel and its Subsidiaries referred to
therein, the Lenders referred to therein, Chemical Bank, as Administrative Agent
(the "Administrative Agent"), Credit Lyonnais New York Branch, as Documentation
Agent, and J.P. Morgan Securities Inc., as Co-Syndication Agent; capitalized
terms used herein and not otherwise defined are used herein as defined in the
Credit Agreement;
WHEREAS, pursuant to the terms of the Credit Agreement, each of the
Pledgors has granted to the Administrative Agent (for the benefit of the
Lenders) a security interest in all personal property of such Pledgor including,
without limitation, all right, title and interest of such Pledgor in, to and
under all of such Pledgor's Patents and Patent licenses (including, without
limitation, those Patent licenses listed on Schedule B hereto), whether
presently existing or hereafter arising or acquired, and all products and
proceeds thereof and all income therefrom, including, without limitation, any
and all causes of action which exist now or may exist in the future by reason of
infringement or dilution of any Patent or Patent license for the full term of
the Patents, to secure, in the case of the Borrower (such term being used herein
as defined in the Credit Agreement), the payment of the Obligations (such term
being used herein as defined in the Credit Agreement) and in the case of each of
the other Pledgors (other than SkyTel Corp.), its obligations under and in
connection with its guaranty of the Obligations pursuant to the Credit
Agreement.
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, each Pledgor does, as security, in
the case of the Borrower, for the Obligations and in the case of each of the
other Pledgors (other than SkyTel Corp.), its obligations under and in
connection with
<PAGE>
its guaranty of the Obligations pursuant to the Credit Agreement, hereby grant
to the Administrative Agent (for the benefit of the Lenders) a continuing
security interest in all of such Pledgor's right, title and interest in, to and
under the following (all of the following items or types of property being
collectively referred to herein as the "Patent Collateral"), whether presently
existing or hereafter arising or acquired:
(i) each Patent, including, without limitation, each Patent and Patent
application referred to in Schedule A annexed hereto;
(ii) each Patent license, including, without limitation, each Patent
license referred to in Schedule B annexed hereto, to the extent such
Patent license does not prohibit the licensee from assigning or
granting a security interest in its rights thereunder; and
(iii) all products and proceeds of, and income from, any of the foregoing,
including, without limitation, any claim by any Pledgor against third
parties for past, present or future infringement or dilution of any
Patent or any Patent licensed under any Patent license.
Each Pledgor agrees to deliver updated copies of Schedule A and Schedule B
to the Administrative Agent at the end of any quarter in which such Pledgor
applies for the registration of, registers or otherwise acquires any Patent not
listed on Schedule A hereto or enters into any Patent license not listed on
Schedule B hereto, and to duly and promptly execute and deliver, or have duly
and promptly executed and delivered, at the cost and expense of the Borrower,
such further instruments or documents (in form and substance satisfactory to the
Administrative Agent), and promptly perform, or cause to be promptly performed,
any and all acts, in all cases, as may be necessary, proper or advisable from
time to time, in the reasonable judgment of the Administrative Agent, to carry
out the provisions and purposes of Article 8 of the Credit Agreement and this
Patent Security Agreement, and to provide, perfect and preserve the Liens (as
defined in the Credit Agreement) of the Administrative Agent for the benefit of
the Lenders under the Credit Agreement, the Fundamental Documents (as defined in
the Credit Agreement) and this Patent Security Agreement, in the Patent
Collateral or any portion thereof.
Each Pledgor agrees that if any person, firm, corporation or other entity
shall do or perform any acts which the Administrative Agent believes constitute
an infringement of any Patent, or violate or infringe any right of a Pledgor or
the Lenders therein or if any person, firm, corporation or other
-2-
<PAGE>
entity shall do or perform any acts which the Administrative Agent believes
constitute an unauthorized or unlawful use thereof, then and in any such event,
at any time while an Event of Default (as defined in the Credit Agreement) is
continuing, the Administrative Agent may and shall have the right to take such
steps and institute such suits or proceedings as the Administrative Agent may
deem advisable or necessary to prevent such acts and conduct and to secure
damages and other relief by reason thereof, and to generally take such steps as
may be advisable or necessary or proper for the full protection of the rights of
the parties. The Administrative Agent may take such steps or institute such
suits or proceedings in its own name or in the name of the applicable Pledgor or
in the names of the parties jointly. The Administrative Agent hereby agrees to
give the applicable Pledgor notice of any steps taken, or any suits or
proceedings instituted, by the Administrative Agent pursuant to this paragraph.
This security interest is granted in conjunction with the security
interests granted to the Administrative Agent (for the benefit of the Lenders)
pursuant to the Credit Agreement. Each Pledgor does hereby further acknowledge
and affirm that the rights and remedies of the Administrative Agent (for the
benefit of the Lenders) with respect to the security interest in the Patent
Collateral made and granted hereby are subject to, and are more fully set forth
in, the Credit Agreement, the terms and provisions of which are incorporated by
reference herein as if fully set forth herein.
This Patent Security Agreement is made for collateral purposes only. At the
earlier of (A) with respect to all the Pledgors, such time as all of the
Obligations shall have been fully paid and performed and the Commitments
(including any commitment to issue any Letter of Credit) shall have terminated
and all Letters of Credit shall have expired or been terminated or cancelled and
(B) with respect to the Pledgors other than Mtel, the Flip Date, the grant of
the security interest hereunder shall terminate and upon the request of the
applicable Pledgors, the Administrative Agent (on behalf of the Lenders) shall
execute and deliver to such Pledgors, at the Borrower's or the applicable
Pledgor's expense, without representation, warranty or recourse, all releases
and reassignments, termination statements and other instruments as may be
necessary or proper to terminate the security interest of the Administrative
Agent (for the benefit of the Lenders) in the Patent Collateral, subject to any
disposition thereof which may have been made by the Administrative Agent
pursuant to the terms hereof or of the Credit Agreement.
The Administrative Agent (on behalf of the Lenders) agrees that there will
be no assignment of the Patent Collateral, other than the security interest
described herein, unless and until there shall occur an Event of Default (such
term being used
-3-
<PAGE>
herein as defined in the Credit Agreement) and the Administrative Agent gives
written notice to the applicable Pledgor of its intention to enforce its rights
against any of the Patent Collateral.
So long as no Event of Default shall have occurred and be continuing, and
subject to the various provisions of the Credit Agreement and the other
Fundamental Documents to which it is a party, each Pledgor may use the Patent
Collateral in any lawful manner.
THIS PATENT SECURITY AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
Capitalized terms used herein and not otherwise defined shall have the
meanings ascribed thereto in the Credit Agreement.
IN WITNESS WHEREOF, the Pledgors have caused this Patent Security Agreement
to be duly executed as of December 21, 1995 by their officers thereunto duly
authorized.
MOBILE TELECOMMUNICATION
TECHNOLOGIES CORP.
By: /s/ J. Robert Fugate
-----------------------------
Name : J. Robert Fugate
Title: Vice President-Finance
and Chief Financial
Officer
SKYTEL CORP.
By: /s/ J. Robert Fugate
-----------------------------
Name : J. Robert Fugate
Title: Vice President-Finance
and Chief Financial
Officer
-4-
<PAGE>
MTEL INTERNATIONAL, INC.
MTEL LATIN AMERICA, INC.
MTEL PUERTO RICO, INC.
MTEL PAGING, INC.
UNITED STATES PAGING CORPORATION
DESTINEER CORPORATION
MOBILECOMM EUROPE INC.
MTEL SPACE TECHNOLOGIES CORPORATION
MTEL TECHNOLOGIES, INC.
MTEL MAINE, INC.
COM/NAV REALTY CORP.
INTELLIGENT INVESTMENT PARTNERS,
INC.
By /s/ J. Robert Fugate
---------------------------------
Name : J. Robert Fugate
Title: Vice President - Finance
and Chief Financial
Officer
Accepted:
CHEMICAL BANK, as Administrative Agent
By: /s/ Edward Divine
---------------------------
Name : Edward Divine
Title: Managing Director
-5-
<PAGE>
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On the 21st day of December, in the year 1995, before me personally came
J. Robert Fugate, to me known, who, being by me sworn, did say that he is
the Vice President and Chief Financial Officer of Mobile Telecommunication
Technologies Corp., which corporation is described in, and which corporation
executed, the above instrument, and that he signed his name by order of the
Board of Directors of said corporation.
/s/ Helen E. Moss
-----------------------------------
Notary Public
-8-
<PAGE>
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On the 21st day of December, in the year 1995, before me personally came
J. Robert Fugate, to me known, who, being by me sworn, did say that he is
the Vice President and Chief Financial Officer of SkyTel Corp., which
corporation is described in, and which corporation executed, the above
instrument, and that he signed his name by order of the Board of Directors of
said corporation.
/s/ Helen E. Moss
-----------------------------------
Notary Public
-9-
<PAGE>
EXHIBIT 4.10
TRADEMARK SECURITY AGREEMENT
(TRADEMARKS, TRADEMARK REGISTRATIONS,
TRADEMARK APPLICATIONS AND TRADEMARK LICENSES)
WHEREAS, MOBILE TELECOMMUNICATION TECHNOLOGIES CORP., a Delaware
corporation ("Mtel"), and each other Subsidiary of Mtel whose name appears at
the foot hereof, including SkyTel Corp., a Delaware corporation (Mtel and each
such Subsidiary shall be referred to herein individually, as a "Pledgor", and
collectively, as the "Pledgors"), now own or hold and may hereafter acquire or
hold Trademarks (defined as all of the following: all trademarks, service marks,
trade names, corporate names, company names, business names, fictitious business
names, trade dress, logos, other source of business identifiers and general
intangibles of like nature, now existing or hereafter adopted or acquired, all
registrations and recordings thereof or similar property rights, and all
applications in connection therewith, including, without limitation,
registrations, recordings and applications in the United States Patent and
Trademark Office or in any similar office or agency of the United States, any
state thereof or any other country or any political subdivision thereof, and all
reissues, extensions or renewals thereof) including, without limitation, the
Trademarks listed on Schedule A annexed hereto, as such Schedule may be amended
from time to time by the addition of Trademarks subsequently registered or
otherwise adopted or acquired;
WHEREAS, the Pledgors are parties to a Credit, Security, Guaranty and
Pledge Agreement dated as of December 21, 1995 (as the same may be amended,
supplemented or otherwise modified, renewed or replaced from time to time, the
"Credit Agreement") among SkyTel Corp., Mtel and its Subsidiaries referred to
therein, the Lenders referred to therein, Chemical Bank, as Administrative Agent
(the "Administrative Agent"), Credit Lyonnais New York Branch, as Documentation
Agent, and J.P. Morgan Securities Inc., as Co-Syndication Agent; capitalized
terms used herein and not otherwise defined are used herein as defined in the
Credit Agreement;
WHEREAS, pursuant to the terms of the Credit Agreement, each of the
Pledgors has granted to the Administrative Agent (for the benefit of the
Lenders) a security interest in all personal property of such Pledgor including,
without limitation, all right, title and interest of such Pledgor in, to and
under all of such Pledgor's Trademarks and Trademark licenses (including,
without limitation, those Trademark licenses listed on Schedule B hereto),
whether presently existing or hereafter arising, adopted or acquired, together
with the goodwill of the business connected with, and symbolized by, the
Trademarks and all products and proceeds thereof and all income therefrom,
including, without limitation, any and all causes of action which exist now or
may exist in the future by reason of infringement or dilution thereof
<PAGE>
or injury to the associated goodwill, to secure, in the case of the Borrower
(such term being used herein as defined in the Credit Agreement), the payment of
the Obligations (such term being used herein as defined in the Credit Agreement)
and in the case of each of the other Pledgors (other than SkyTel Corp.), its
obligations under and in connection with its guaranty of the Obligations
pursuant to the Credit Agreement;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, each Pledgor does, as security, in
the case of the Borrower, for the Obligations and in the case of each of the
other Pledgors (other than SkyTel Corp.), its obligations under and in
connection with its guaranty of the Obligations pursuant to the Credit
Agreement, hereby grant to the Administrative Agent (for the benefit of the
Lenders) a continuing security interest in all of such Pledgor's right, title
and interest in, to and under the following (all of the following items or types
of property being collectively referred to herein as the "Trademark
Collateral"), whether presently existing or hereafter arising or acquired:
(i) each Trademark and all of the goodwill of the business connected
with the use of, and symbolized by, each Trademark, including, without
limitation, each Trademark referred to in Schedule A annexed hereto;
(ii) each Trademark license, including, without limitation, each
Trademark license referred to in Schedule B annexed hereto, to the extent
such Trademark license does not prohibit the licensee from assigning or
granting a security interest in its rights thereunder; and
(iii) all products and proceeds of, and income from, any of the
foregoing, including, without limitation, any claim by any Pledgor against
third parties for the past, present or future infringement or dilution of
any Trademark or any Trademark licensed under any Trademark license, or for
injury to the goodwill associated with any Trademark.
Each Pledgor agrees to deliver updated copies of Schedule A and Schedule B
to the Administrative Agent at the end of any quarter in which such Pledgor
registers or otherwise adopts or acquires any Trademark not listed on Schedule A
hereto or enters into any Trademark license not listed on Schedule B hereto, and
to duly and promptly execute and deliver, or have duly and promptly executed and
delivered, at the cost and expense of the Borrower, such further instruments or
documents (in form and substance satisfactory to the Administrative Agent), and
promptly perform, or cause to be promptly performed, any and all acts, in all
cases, as may be necessary, proper or advisable from time to time, in the
reasonable judgment of the Administrative Agent, to carry out the provisions and
purposes of Article 8 of
-2-
<PAGE>
the Credit Agreement and this Trademark Security Agreement, and to provide,
perfect and preserve the Liens (as defined in the Credit Agreement) of the
Administrative Agent for the benefit of the Lenders under the Credit Agreement,
the Fundamental Documents (as defined in the Credit Agreement) and this
Trademark Security Agreement, in the Trademark Collateral or any portion
thereof.
Each Pledgor agrees that if any person, firm, corporation or other entity
shall do or perform any acts which the Administrative Agent believes constitute
an infringement of any Trademark, or violate or infringe any right of a Pledgor
or the Lenders therein or if any person, firm, corporation or other entity shall
do or perform any acts which the Administrative Agent believes constitute an
unauthorized or unlawful use thereof, then and in any such event, at any time
while an Event of Default (as defined in the Credit Agreement) is continuing,
the Administrative Agent may and shall have the right to take such steps and
institute such suits or proceedings as the Administrative Agent may deem
advisable or necessary to prevent such acts and conduct and to secure damages
and other relief by reason thereof, and to generally take such steps as may be
advisable or necessary or proper for the full protection of the rights of the
parties. The Administrative Agent may take such steps or institute such suits or
proceedings in its own name or in the name of the applicable Pledgor or in the
names of the parties jointly. The Administrative Agent hereby agrees to give the
applicable Pledgor notice of any steps taken, or any suits or proceedings
instituted, by the Administrative Agent pursuant to this paragraph.
This security interest is granted in conjunction with the security
interests granted to the Administrative Agent (for the benefit of the Lenders)
pursuant to the Credit Agreement. Each Pledgor does hereby further acknowledge
and affirm that the rights and remedies of the Administrative Agent (for the
benefit of the Lenders) with respect to the security interest in the Trademark
Collateral made and granted hereby are subject to, and more fully set forth in,
the Credit Agreement, the terms and provisions of which are incorporated by
reference herein as if fully set forth herein.
This Trademark Security Agreement is made for collateral purposes only. At
the earlier of (A) with respect to all the Pledgors, such time as all of the
Obligations shall have been fully paid and performed and the Commitments
(including any commitment to issue any Letter of Credit) shall have terminated
and all Letters of Credit shall have expired or been terminated or cancelled and
(B) with respect to the Pledgors other than Mtel, the Flip Date, the grant of
the security interest hereunder shall terminate and upon the request of the
applicable Pledgors, the Administrative Agent (on behalf of the Lenders), shall
execute and deliver to such Pledgors, at the Borrower's or the
-3-
<PAGE>
applicable Pledgor's expense, without representation, warranty or recourse, all
releases and reassignments, termination statements and other instruments as may
be necessary or proper to terminate the security interest of the Administrative
Agent (for the benefit of the Lenders) in the Trademark Collateral, subject to
any disposition thereof which may have been made by the Administrative Agent
pursuant to the terms hereof or of the Credit Agreement.
The Administrative Agent (on behalf of the Lenders) agrees that there will
be no assignment of the Trademark Collateral, other than the security interest
described herein, unless and until there shall occur an Event of Default (such
term being used herein as defined in the Credit Agreement) and the
Administrative Agent gives written notice to the applicable Pledgor of its
intention to enforce its rights against any of the Trademark Collateral.
So long as no Event of Default shall have occurred and be continuing, and
subject to the various provisions of the Credit Agreement and the other
Fundamental Documents to which it is a party, each Pledgor may use, license and
exploit the Trademark Collateral in any lawful manner.
THIS TRADEMARK SECURITY AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
Capitalized terms used herein and not otherwise defined shall have the
meanings ascribed thereto in the Credit Agreement.
IN WITNESS WHEREOF, the Pledgors have caused this Trademark Security
Agreement to be duly executed as of December 21, 1995 by their officers
thereunto duly authorized.
MOBILE TELECOMMUNICATION
TECHNOLOGIES CORP.
By: /s/ J. Robert Fugate
------------------------------
Name : J. Robert Fugate
Title: Vice President-Finance
and Chief Financial
Officer
-4-
<PAGE>
SKYTEL CORP.
By: /s/ J. Robert Fugate
------------------------------
Name: J. Robert Fugate
Title: Vice President - Finance
and Chief Financial
Officer
MTEL INTERNATIONAL, INC.
MTEL LATIN AMERICA, INC.
MTEL PUERTO RICO, INC.
MTEL PAGING, INC.
UNITED STATES PAGING CORPORATION
DESTINEER CORPORATION
MOBILECOMM EUROPE INC.
MTEL SPACE TECHNOLOGIES CORPORATION
MTEL TECHNOLOGIES, INC.
MTEL MAINE, INC.
COM/NAV REALTY CORP.
INTELLIGENT INVESTMENT PARTNERS,
INC.
By /s/ J. Robert Fugate
--------------------------------
Name: J. Robert Fugate
Title: Vice President - Finance
and Chief Financial
Officer
Accepted:
CHEMICAL BANK, as Administrative Agent
By: /s/ Edward Divine
--------------------------
Name: Edward Divine
Title: Managing Director
-5-
<PAGE>
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On the 21st day of December, in the year 1995, before me personally came
J. Robert Fugate, to me known, who, being by me sworn, did say that he is the
Vice President - Finance and Chief Financial Officer of Mobile Telecommunication
Technologies Corp., which corporation is described in, and which corporation
executed, the above instrument, and that he signed his name by order of the
Board of Directors of said corporation.
/s/ Helen E. Moss
-----------------------------------
Notary Public
<PAGE>
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On the 21st day of December, in the year 1995, before me personally came
J. Robert Fugate,to me known, who, being by me sworn, did say that he is the
Vice President - Finance and Chief Financial Officer of SkyTel Corp., which
corporation is described in, and which corporation executed, the above
instrument, and that he signed his name by order of the Board of Directors of
said corporation.
/s/ Helen E. Moss
-----------------------------------
Notary Public
<PAGE>
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On the 21st day of December, in the year 1995, before me personally came
J. Robert Fugate, to me known, who, being by me sworn, did say that he is an
Authorized Signatory of each of Mtel International, Inc., Mtel Latin America,
Inc., Mtel Puerto Rico, Inc., Mtel Paging, Inc., United States Paging
Corporation, Destineer Corporation, MobileComm Europe Inc., Mtel Space
Technologies Corporation, Mtel Technologies, Inc., Mtel Maine, Inc., COM/NAV
Realty Corp. and Intelligent Investment Partners, Inc., which corporations are
described in, and which corporations executed, the above instrument, and that he
signed his name by order of the Board of Directors of each of the said
corporations.
/s/ Helen E. Moss
-----------------------------------
Notary Public
<PAGE>
EXHIBIT 4.11
COPYRIGHT SECURITY AGREEMENT
WHEREAS, MOBILE TELECOMMUNICATION TECHNOLOGIES CORP., a Delaware
corporation ("Mtel"), and each other Subsidiary of Mtel whose name appears at
the foot hereof, including SkyTel Corp., a Delaware corporation (Mtel and each
such Subsidiary shall be referred to herein individually as a "Pledgor" and
collectively, as the "Pledgors"), now own or hold and may hereafter acquire or
hold Copyrights (defined as all of the following: any right, title or interest
in or to copyrightable works of authorship and the common law and/or statutory
copyrights therein, whether now existing or hereafter arising or acquired, all
registrations and recordings thereof or similar property rights, all
applications in connection therewith, all reissues, extensions or renewals
thereof and all rights to copyright and to renew or extend any copyright)
including, without limitation, those Copyrights listed on Schedule A hereto, as
such Schedule may be amended from time to time by the addition of Copyrights
subsequently arising or acquired;
WHEREAS, the Pledgors are parties to a Credit, Security, Guaranty and
Pledge Agreement dated as of December 21, 1995 (as the same may be amended,
supplemented or otherwise modified, renewed or replaced from time to time, the
"Credit Agreement") among SkyTel Corp., Mtel and its Subsidiaries referred to
therein, the Lenders referred to therein, Chemical Bank, as Administrative Agent
(the "Administrative Agent"), Credit Lyonnais New York Branch, as Documentation
Agent, and J.P. Morgan Securities Inc., as Co-Syndication Agent; capitalized
terms used herein and not otherwise defined are used herein as defined in the
Credit Agreement;
WHEREAS, pursuant to the terms of the Credit Agreement, each of the
Pledgors has granted to the Administrative Agent (for the benefit of the
Lenders) a security interest in all personal property of such Pledgor including,
without limitation, all right, title and interest of such Pledgor in, to and
under all of such Pledgor's Copyrights and Copyright licenses (including,
without limitation, those Copyright licenses listed on Schedule B hereto),
whether now owned, presently existing or hereafter arising, acquired or created,
and all products and proceeds thereof and income therefrom, including, without
limitation, any and all causes of action which exist now or may exist in the
future by reason of any infringement thereof, to secure, in the case of the
Borrower (such term being used herein as defined in the Credit Agreement), the
payment of the Obligations (such term being used herein as defined in the Credit
Agreement) and in the case of each of the other Pledgors (other than SkyTel
Corp.), its obligations under and in connection with its guaranty of the
Obligations pursuant to the Credit Agreement;
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, each
<PAGE>
Pledgor does, as security, inthe case of the Borrower, for the Obligations and
in the case of each of the other Pledgors (other than SkyTel Corp.), its
obligations under and in connection with its guaranty of the Obligations
pursuant to the Credit Agreement, hereby grant to the Administrative Agent (for
the benefit of the Lenders) a continuing security interest in all of such
Pledgor's right, title and interest in and to all personal property, tangible
and intangible, wherever located or situated and whether now owned, presently
existing or hereafter acquired or created, including without limitation, all
goods (including, but not limited to, goods constituting fixtures), accounts,
documents, instruments, chattel paper, inventory, machinery, contract rights,
general intangibles (including copyrights, trademarks, tradenames and patents),
insurance proceeds, cash, bank accounts, intercompany indebtedness, equipment,
all FCC and other licenses and the securities pledged to the Administrative
Agent (for the benefit of the Lenders), and any products or proceeds thereof and
income therefrom; including, without limitation, all of such Pledgor's right,
title and interest in, to and under the following, whether presently existing or
hereafter arising or acquired:
(i) each Copyright, including, without limitation, each Copyright and
Copyright application referred to in Schedule A annexed hereto;
(ii) each Copyright license, including, without limitation, each Copyright
license referred to in Schedule B hereto, to the extent such Copyright
license does not prohibit the licensee from assigning or granting a
security interest in its rights thereunder; and
(iii) all products and proceeds of, and income from, any of the foregoing,
including, without limitation, any claim by any Pledgor against third
parties for past, present or future infringement or dilution of any
Copyright or any Copyright licensed under any Copyright license.
(all of the foregoing items or types of property, whether presently existing or
hereafter arising or acquired, shall be referred to herein collectively as the
"Collateral").
Each Pledgor agrees to deliver updated copies of Schedule A
and Schedule B to the Administrative Agent at the end of any quarter in which
such Pledgor applies for the registration of, registers or otherwise acquires
(other than by their creation in the ordinary course of its business) any
Copyrights not listed on Schedule A hereto which are registrable or have been
registered under the Copyright Act or enters into any Copyright license not
listed on Schedule B hereto, and to duly and promptly
-2-
<PAGE>
execute and deliver, or have duly and promptly executed and delivered, at the
cost and expense of the Borrower, such further instruments or documents (in form
and substance satisfactory to the Administrative Agent), and promptly perform,
or cause to be performed, any and all acts, in all cases, as may be necessary,
proper or advisable from time to time, in the reasonable judgment of the
Administrative Agent, to carry out the provisions and purposes of Article 8 of
the Credit Agreement and this Copyright Security Agreement, and to provide,
perfect and preserve the Liens (as defined in the Credit Agreement) of the
Administrative Agent for the benefit of the Lenders under the Credit Agreement,
the Fundamental Documents (as defined in the Credit Agreement) and this
Copyright Security Agreement, in the Collateral or any portion thereof.
Each Pledgor agrees that if any person, firm, corporation or other entity
shall do or perform any acts which the Administrative Agent believes constitute
a copyright infringement of any Copyright, or constitute a plagiarism, or
violate or infringe any right of a Pledgor or the Lenders therein or if any
person, firm, corporation or other entity shall do or perform any acts which the
Administrative Agent believes constitute an unauthorized or unlawful use
thereof, then and in any such event, at any time while an Event of Default (as
defined in the Credit Agreement) is continuing, the Administrative Agent may and
shall have the right to take such steps and institute such suits or proceedings
as the Administrative Agent may deem advisable or necessary to prevent such acts
and conduct and to secure damages and other relief by reason thereof, and to
generally take such steps as may be advisable or necessary or proper for the
full protection of the rights of the parties. The Administrative Agent may take
such steps or institute such suits or proceedings in its own name or in the name
of the applicable Pledgor or in the names of the parties jointly. The
Administrative Agent hereby agrees to give the applicable Pledgor notice of any
steps taken, or any suits or proceedings instituted, by the Administrative Agent
pursuant to this paragraph.
This security interest is granted in conjunction with the security
interests granted to the Administrative Agent (for the benefit of the Lenders)
pursuant to the Credit Agreement. Each Pledgor does hereby further acknowledge
and affirm that the rights and remedies of the Administrative Agent (for the
benefit of the Lenders) with respect to the security interest in the Collateral
made and granted hereby are subject to, and are more fully set forth in, the
Credit Agreement, the terms and provisions of which are incorporated by
reference herein as if fully set forth herein.
This Copyright Security Agreement is made for collateralpurposes only. At
the earlier of (A) with respect to
-3-
<PAGE>
all the Pledgors, such time as all of the Obligations shall have been fully paid
and performed and the Commitments (including any commitment to issue any Letter
of Credit) shall have terminated and all Letters of Credit shall have expired or
been terminated or cancelled and (B) with respect to the Pledgors other than
Mtel, the Flip Date, the grant of the security interest hereunder shall
terminate and upon the request of the applicable Pledgors, the Administrative
Agent (on behalf of the Lenders) shall execute and deliver to such Pledgors, at
the Borrower's or the applicable Pledgor's expense, without representation,
warranty or recourse, all releases and reassignments, termination statements and
other instruments as may be necessary or proper to terminate the security
interest of the Administrative Agent (for the benefit of the Lenders) in the
Collateral, subject to any disposition thereof which may have been made by the
Administrative Agent pursuant to the terms hereof or of the Credit Agreement.
The Administrative Agent (on behalf of the Lenders) agrees that there will
be no assignment of any Copyright, other than the security interest described
herein, unless and until there shall occur an Event of Default (such term being
used herein as defined in the Credit Agreement) and the Administrative Agent
gives written notice to the applicable Pledgor of its intention to enforce its
rights against any Copyright.
So long as no Event of Default shall have occurred and be continuing, and
subject to the various provisions of the Credit Agreement and the other
Fundamental Documents to which it is a party, each Pledgor may use the
Collateral in any lawful manner.
THIS COPYRIGHT SECURITY AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
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<PAGE>
Capitalized terms used herein and not otherwise defined shall have the
meaning ascribed thereto in the Credit Agreement.
IN WITNESS WHEREOF, the Pledgors have caused this Copyright Security
Agreement to be duly executed as of December 21, 1995 by their officers
thereunto duly authorized.
MOBILE TELECOMMUNICATION
TECHNOLOGIES CORP.
By:/s/ J. Robert Fugate
-----------------------------
Name : J. Robert Fugate
Title: Vice President - Finance
and Chief Financial
Officer
SKYTEL CORP.
By:/s/ J. Robert Fugate
--------------------------------
Title: J. Robert Fugate
Vice President - Finance
and Chief Financial
Officer
MTEL INTERNATIONAL, INC
MTEL LATIN AMERICA, INC.
MTEL PUERTO RICO, INC.
MTEL PAGING, INC.
UNITED STATES PAGING CORPORATION
DESTINEER CORPORATION
MOBILECOMM EUROPE INC.
MTEL SPACE TECHNOLOGIES CORPORATION
MTEL TECHNOLOGIES, INC.
MTEL MAINE, INC.
COM/NAV REALTY CORP.
INTELLIGENT INVESTMENT PARTNERS,
INC.
By /s/ J. Robert Fugate
------------------------------
Name : J. Robert Fugate
Title: Vice President - Finance
and Chief Financial
Officer
Accepted:
CHEMICAL BANK, as Administrative Agent
By: /s/ Edward Divine
----------------------
Name : Edward Divine
Title: Managing Director
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<PAGE>
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On the 21st day of December, in the year 1995, before me personally came
J. Robert Fugate, to me known, who, being by me sworn, did say that he is
the Vice President-Finance and Chief Financial Officer of Mobile
Telecommunication Technologies Corp., which corporation is described in, and
which corporation executed, the above instrument, and that he signed his name by
order of the Board of Directors of said corporation.
/s/ Helen E. Moss
-----------------------------------
Notary Public
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<PAGE>
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On the 21st day of December, in the year 1995, before me personally came
J. Robert Fugate, to me known, who, being by me sworn, did say that he is
the Vice President-Finance and Chief Financial Officer of SkyTel Corp., which
corporation is described in, and which corporation executed, the above
instrument, and that he signed his name by order of the Board of Directors of
said corporation.
/s/ Helen E. Moss
-----------------------------------
Notary Public
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<PAGE>
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On the 21st day of December, in the year 1995, before me personally came
J. Robert Fugate, to me known, who, being by me sworn, did say that he is
an Authorized Signatory of each of Mtel International, Inc., Mtel Latin America,
Inc., Mtel Puerto Rico, Inc., Mtel Paging, Inc., United States Paging
Corporation, Destineer Corporation, MobileComm Europe Inc., Mtel Space
Technologies Corporation, Mtel Technologies, Inc., Mtel Maine, Inc., COM/NAV
Realty Corp. and Intelligent Investment Partners, Inc., which corporations are
described in, and which corporations executed, the above instrument, and that he
signed his name by order of the Board of Directors of each of the said
corporations.
/s/ Helen E. Moss
-----------------------------------
Notary Public
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<PAGE>
EXHIBIT 4.12
SUBORDINATION AGREEMENT
SUBORDINATION AGREEMENT dated as of December 21, 1995 (as
amended, supplemented or otherwise modified, renewed or replaced
from time to time, the "Subordination Agreement") among (i)
SKYTEL CORP., a Delaware corporation ("SkyTel"), (ii) MOBILE
TELECOMMUNICATION TECHNOLOGIES CORP., a Delaware corporation
("Mtel"), (iii) the subsidiaries of Mtel listed on Schedule 1
hereto (the "Mtel Subsidiaries") and (iv) CHEMICAL BANK, as
administrative agent for the Lenders (as defined below) (in such
capacity, the "Administrative Agent").
Introductory Statement
Pursuant to the terms of a Credit, Security, Guaranty and Pledge Agreement
dated as of December 21, 1995 (as amended, supplemented or otherwise modified,
renewed or replaced from time to time, the "Credit Agreement") among SkyTel,
Mtel, the Mtel Subsidiaries referred to therein, the lenders referred to therein
(the "Lenders"), Chemical Bank, as administrative agent (the "Administrative
Agent"), Credit Lyonnais New York Branch, as documentation agent, and J.P.
Morgan Securities Inc., as co-syndication agent, the Lenders have agreed,
subject to the terms and conditions thereof, to make certain loans to the
Borrower (such term being used herein as defined in the Credit Agreement) and to
participate in certain letters of credit to the Borrower. In addition, one or
more of the Lenders may from time to time enter into interest rate swap
agreements, interest rate cap agreements, synthetic caps or other financial
agreements or arrangements designed to protect the Borrower against fluctuations
in interest rates (each an "Interest Rate Protection Agreement") or foreign
exchange contracts, currency swap agreements, futures contracts, option
contracts or other similar agreements designed to protect a Credit Party (as
such term is defined in the Credit Agreement) against fluctuations in currency
values (each a "Currency Agreement"). The Credit Agreement, the Notes referred
to therein, any Interest Rate Protection Agreement, any Currency Agreement, the
other Fundamental Documents and any other documents, instruments and agreements
contemplated by any of the foregoing as they may be amended, supplemented or
otherwise modified, renewed or replaced from time to time, shall hereinafter be
referred to as the "Senior Obligation Documents". All capitalized terms not
otherwise defined herein shall have the meanings given them in the Credit
Agreement.
<PAGE>
Any intercompany loan from SkyTel, Mtel or any of the Mtel Subsidiaries to
SkyTel, Mtel or any of the Mtel Subsidiaries, whether in existence on the date
hereof or hereafter made or incurred, shall be referred to herein individually,
as an "Intercompany Loan" and collectively, as the "Intercompany Loans."
Any party hereto which has made an Intercompany Loan to another party
hereto which Intercompany Loan is outstanding shall be referred to herein
individually, as a "Subordinated Creditor" and collectively, as the
"Subordinated Creditors". Any party hereto to whom an Intercompany Loan is made
which Intercompany Loan is outstanding, shall be referred to herein
individually, as an "Obligor" and collectively, as the "Obligors". No
Intercompany Loan is or will be evidenced by any promissory note(s). The
obligation of any Obligor to repay the principal amount of any Intercompany Loan
and all interest thereon and all other amounts payable to a Subordinated
Creditor in connection therewith is hereinafter referred to individually, as a
"Subordinated Obligation" and collectively, as the "Subordinated Obligations".
Any promissory note(s) evidencing any Intercompany Loan, any replacement or
substitute for any such note, any promissory note issued in satisfaction of any
obligation to pay interest thereon and any purchase agreement, security
agreement or any other agreement relating in any way to any Intercompany Loan
are hereinafter collectively referred to as "Junior Obligation Documents".
In order to induce the Administrative Agent and the Lenders to enter into
the Credit Agreement, the Subordinated Creditors have agreed, subject to the
provisions of this Subordination Agreement, that the Subordinated Obligations
shall be subordinate to the Senior Obligations (as hereinafter defined).
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, receipt of which is hereby acknowledged, the parties
hereto hereby agree as follows:
1. Agreement to Subordinate. Each Subordinated Creditor agrees that the
Subordinated Obligations owed from time to time to such Subordinated Creditor,
are and shall be subordinate and subject in right of payment, to the extent and
in the manner hereinafter set forth, to the prior payment in full of the Senior
Obligations (as hereinafter defined) and that any guarantees, security
interests, mortgages and other Liens securing payment of, or otherwise relating
to, any of the Subordinated Obligations are and shall be subordinate, to the
fullest extent permitted by law and as hereinafter set forth, to the Senior
Obligations, notwithstanding the perfection, order of perfection or failure to
perfect, any such security interest or other Lien, or the filing or recording,
order of filing
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<PAGE>
or recording, or failure to file or record this Subordination Agreement or any
instrument or other document in any filing or recording office in any
jurisdiction. The term "Senior Obligations" shall mean all obligations of the
Obligors under the Senior Obligation Documents including, without limitation,
whether outstanding at the date hereof or hereafter incurred or created, all
obligations to pay principal, premium, if any, interest (including, without
limitation, interest accruing after the commencement of any bankruptcy,
insolvency, reorganization or similar proceedings with respect to any Obligor,
whether or not determined to be an allowed claim in any such proceeding),
charges, costs, expenses and fees (including, without limitation, the
disbursements and reasonable fees of counsel to the Administrative Agent), all
obligations to reimburse or indemnify the Administrative Agent, the Issuing Bank
and/or any Lender for obligations with respect to Letters of Credit or in any
other way, and all renewals, extensions, restructurings, refinancings or
refunding of any indebtedness under the Senior Obligation Documents in the
nature of a "workout" or otherwise.
The expressions "prior payment in full", "payment in full", "paid in full"
or any other similar term(s) or phrase(s) when used herein with respect to the
Senior Obligation Documents shall mean the payment in full, in cash, of all of
the Senior Obligations.
2. Restrictions on Payment of the Subordinated Obligations, etc. No
Subordinated Creditor will ask, demand, sue for, take or receive, directly or
indirectly, from any Obligor, in cash or other property, by set-off, by
realizing upon collateral, foreclosing on any Lien or otherwise, by exercising
any remedies or rights under any Junior Obligation Document or by executions,
garnishments, levies, attachments or by any other action relating to any of the
Subordinated Obligations, or in any other manner, payment of, or additional
security for, all or any part of the Subordinated Obligations unless and until
the Senior Obligations shall have been paid in full; provided, however, that a
Subordinated Creditor may receive, and the Obligor may make, payments with
respect to any Subordinated Obligation owed to such Subordinated Creditor, if,
and only if, at the time of making any such payment and immediately after giving
effect thereto, no Default or Event of Default shall have occurred and be
continuing; and provided, further, however, that if at any time the payment of
cash interest on any Subordinated Obligation is otherwise prohibited by the
terms hereof, then the outstanding principal amount of the Subordinated
Obligations in respect of which such interest is payable may be increased by an
amount equal to such prohibited interest payment. No Obligor will make any
payment of any of the Subordinated Obligations, or take any other action, in
contravention of the provisions of this Subordination Agreement. Each
Subordinated Creditor expressly agrees that, unless and until such time as the
loans under the
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<PAGE>
Credit Agreement shall have been accelerated, any payment in respect of any
Subordinated Obligation owed to such Subordinated Creditor which is not made in
a timely manner by reason of the operation of this Subordination Agreement shall
be deemed to be deferred and the applicable Obligor shall not be in default
under any of the Junior Obligation Documents by reason thereof.
Each Subordinated Creditor further acknowledges and agrees that it will not
take any collateral of any Obligor unless and until the Lenders have been paid
in full.
3. Additional Provisions Concerning Subordination. Each of the Subordinated
Creditors and each of the Obligors hereby agrees as follows:
(a) In the event of (i) any dissolution, winding up, liquidation or other
similar reorganization of an Obligor (whether voluntary or involuntary and
whether in bankruptcy, insolvency or receivership proceedings, or upon an
assignment for the benefit of creditors or proceedings for voluntary or
involuntary liquidation, dissolution or other winding up of such Obligor,
whether or not involving insolvency or bankruptcy, or any other marshalling of
the assets and liabilities of such Obligor or otherwise); or (ii) any Default or
Event of Default which is in effect and continuing, or any default, demand for
payment or acceleration of maturity regarding any Subordinated Obligation:
(1) all Senior Obligations shall first be paid to the Administrative Agent
for the benefit of the Lenders in full before any payment or
distribution is made upon the principal of or interest on or any fees,
costs, charges or expenses in connection with any of the Subordinated
Obligations, and before any remedial action is taken by any
Subordinated Creditor including, without limitation, any action
described in Section 2 or 7 hereof; and
(2) any payment or distribution of assets of such Obligor with respect to
any Subordinated Obligation or pursuant to any Junior Obligation
Document, whether in cash, property or securities (other than equity
securities or debt securities which are subordinated to the Senior
Obligations at least to the same extent as the Subordinated
Obligations) to which any Subordinated Creditor would be entitled with
respect to any Subordinated Obligation or pursuant to any Junior
Obligation Document except for the provisions hereof, shall be paid or
delivered by such Obligor, or any receiver, trustee in bankruptcy,
liquidating
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<PAGE>
trustee, disbursing agent, agent or other Person making such payment
or distribution, directly to the Administrative Agent for the
benefit of the Lenders, to the extent necessary to pay in full
all Senior Obligations remaining unpaid, after giving effect to
any concurrent payment or distribution to the Administrative
Agent for the benefit of the Lenders, before any payment or
distribution is made to any Subordinated Creditor;
(b) In any proceeding referred to, or resulting from any event referred to,
in subsection (a) of this Section 3 commenced by or against any Obligor:
(1) The Administrative Agent may, and is hereby irrevocably
authorized and empowered (in its own name or in the name of any
of the Subordinated Creditors or otherwise) to, but shall have no
obligation to, (i) demand, sue for, collect and receive every
payment or distribution referred to in subsection (a) of this
Section 3 and give acquittance therefor, (ii) file claims and
proofs of claim in respect of any of the Subordinated Obligations
and (iii) take such other action as the Administrative Agent may
deem necessary or advisable for the exercise or enforcement of
any of the rights or interests of the Administrative Agent and/or
the Lenders hereunder; and
(2) Each Subordinated Creditor hereby agrees that it will duly and
promptly take such action as the Administrative Agent may
reasonably request to collect the Subordinated Obligations which
are owed to such Subordinated Creditor for the account of the
Lenders, file appropriate claims or proofs of claim with respect
thereto, execute and deliver to the Administrative Agent such
powers of attorney, assignments or other instruments as the
Administrative Agent may request in order to enable it to enforce
any and all claims with respect to the Subordinated Obligations
which are owed to such Subordinated Creditor and collect and
receive any and all payments or distributions which may be
payable or deliverable upon or with respect to the Subordinated
Obligations which are owed to such Subordinated Creditor;
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<PAGE>
(c) All payments or distributions upon or with respect to any of the
Subordinated Obligations which are received by a Subordinated Creditor contrary
to the provisions of this Subordination Agreement shall be deemed to be the
property of the Lenders, shall be received in trust for the benefit of the
Lenders, shall be segregated from other funds and property held by such
Subordinated Creditor and shall be forthwith paid over to the Administrative
Agent for the benefit of the Lenders in the same form as so received (with any
necessary endorsement) to be applied to the payment or prepayment of the Senior
Obligations until the Senior Obligations shall have been paid in full;
(d) Each Subordinated Creditor hereby waives any requirement for
marshalling of assets by the Administrative Agent or the Lenders in connection
with any foreclosure of any Lien of the Administrative Agent or the Lenders
under the Senior Obligation Documents;
(e) None of the Subordinated Creditors shall take any action to impair or
otherwise adversely affect the foreclosure of, or other realization of, the
Administrative Agent's or the Lenders' rights under the Senior Obligation
Documents; and
(f) The Administrative Agent is hereby authorized to demand specific
performance of this Subordination Agreement at any time when a Subordinated
Creditor shall have failed to comply with any of the provisions of this
Subordination Agreement, and each of the Subordinated Creditors hereby
irrevocably waives any defense based on the adequacy of a remedy at law which
might be asserted as a bar to such remedy of specific performance.
4. Subrogation. Subject to the payment in full of all Senior Obligations,
each Subordinated Creditor shall be subrogated to the rights of the
Administrative Agent and the Lenders to receive payments or distributions of
cash, property or securities of the Obligor(s), applicable to the Senior
Obligations until the principal of (and premium, if any) and interest on the
Subordinated Obligations owed to such Subordinated Creditor shall be paid in
full; and, for the purposes of such subrogation, no payments or distributions to
the Administrative Agent or any Lender of any cash, property or securities to
which such Subordinated Creditor would be entitled except for the provisions of
this Section, and no payments pursuant to the provisions of this Subordination
Agreement to the Administrative Agent or any Lender by such Subordinated
Creditor, shall, as between, the applicable Obligor, its creditors other than
the Administrative Agent and the Lenders, and such Subordinated Creditor, be
deemed to be a payment by the applicable Obligor to or on account of the Senior
Obligations. However, each Subordinated Creditor agrees that no payment or
distribution to the Administrative Agent and/or the Lenders pursuant to the
provisions of this Subordination Agreement shall
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entitle such Subordinated Creditor to exercise any rights of subrogation in
respect thereof until the Senior Obligations shall have been paid in full.
5. Evidence of the Subordinated Obligations. Each of the Subordinated
Creditors and each of the Obligors further agrees that at no time hereafter will
any part of the Subordinated Obligations be represented by any negotiable
instruments or other writings.
6. Legend. Notwithstanding any other provision of this Subordination
Agreement, the applicable Subordinated Creditor and the applicable Obligor will
cause any promissory note evidencing any Subordinated Obligation, any
replacement thereof and any mortgage or security document relating thereto to
include the following provision:
"The indebtedness evidenced or secured by this instrument is
subordinated to other indebtedness pursuant to, and to the extent
provided in, and is otherwise subject to the terms of, the
Subordination Agreement dated as of December 21, 1995 among SkyTel
Corp., Mobile Telecommunication Technologies Corp., the subsidiaries
of Mtel referred to therein and Chemical Bank as Administrative
Agent."
7. Negative Covenants of the Subordinated Creditors. So long as any of the
Senior Obligations shall remain outstanding, none of the Subordinated Creditors
will, without the prior written consent of the Administrative Agent:
(a) Sell, assign, pledge, encumber or otherwise dispose of any instrument
evidencing the indebtedness owed to such Subordinated Creditor or any collateral
securing the Subordinated Obligations unless such sale, assignment, pledge,
encumbrance or other disposition is made expressly subject to this Subordination
Agreement and the other party to such sale, assignment, pledge, encumbrance or
other disposition consents in writing to be bound by the terms hereof;
(b) Permit the terms of any of the Junior Obligation Documents or
collateral securing the Subordinated Obligations to be changed in any way which
would limit or impair the subordination provisions or accept any collateral
therefor;
(c) Declare all or any portion of the Subordinated Obligations due and
payable prior to the date fixed therefor unless the loans under the Credit
Agreement shall have first been accelerated;
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<PAGE>
(d) Realize upon, or otherwise exercise any remedies with respect to, any
collateral securing the Subordinated Obligations or any portion thereof or take
any other action described in Section 2 hereof with respect to any of the
Subordinated Obligations; or
(e) Commence, or join with any creditor other than the Administrative Agent
or the Lenders in commencing, any proceeding referred to in subsection (a) of
Section 3 hereof.
8. Obligations Unconditional. All rights and interests of the
Administrative Agent and the Lenders hereunder, and all agreements and
obligations of the Subordinated Creditors and the Obligors hereunder, shall
remain in full force and effect irrespective of:
(a) Any lack of validity or enforceability of any Senior Obligation
Document or any other agreement or instrument relating thereto;
(b) Any change in the time, manner or place of payment of, or in any other
term of, all or any of the Senior Obligations, or any other amendment or waiver
of, or any consent to departure from, any Senior Obligation Document;
(c) Any exchange, release or nonperfection of any collateral, or any
release or amendment or waiver of or consent to departure from any guaranty, for
all or any of the Senior Obligations; or
(d) Any other circumstances which might otherwise constitute a defense
available to, or a discharge of, either (i) an Obligor in respect of the Senior
Obligations or (ii) any Subordinated Creditor or any Obligor in respect of this
Subordination Agreement.
9. Additional Agreements and Waivers by the Subordinated Creditors. Each
Subordinated Creditor agrees that neither the Administrative Agent nor any
Lender shall have any liability or obligation to such Subordinated Creditor on
account of exercise of the rights and remedies of the Administrative Agent
and/or the Lenders under any Senior Obligation Document. Each Subordinated
Creditor waives the right to commence or pursue any legal action (whether suit,
counterclaim, cross claim or other action) on account of the exercise of the
rights and remedies of the Administrative Agent and/or the Lenders under any
Senior Obligation Document which alleges or is based on a theory of breach of
fiduciary obligations of the Administrative Agent and/or the Lenders, equitable
subordination of claims of the Administrative Agent and/or the Lenders against
an Obligor, conflicts of interest by the Administrative Agent, and/or the
Lenders or similar theories premised in any such case on the
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exercise of control or influence on management by the Administrative Agent
and/or the Lenders, actual management or control of an Obligor by the
Administrative Agent and/or the Lenders, voting any of the stock of an Obligor,
or other pursuit of rights or remedies by the Administrative Agent and/or the
Lenders under any Senior Obligation Document.
10. Present Subordinated Obligations. The Obligors and the Subordinated
Creditors hereby represent and warrant that the aggregate outstanding principal
amount of the Subordinated Obligations as of the date hereof does not exceed
$775,000,000.
11. Further Assurances. Each Subordinated Creditor and each Obligor will,
at its own expense and at any time and from time to time, promptly execute and
deliver all further instruments and documents, and take all further action that
the Administrative Agent may reasonably request, in order to perfect or
otherwise protect any right or interest granted or purported to be granted
hereby or to enable the Administrative Agent to exercise and enforce its rights
and remedies hereunder. Each Subordinated Creditor further authorizes the
Administrative Agent to file UCC financing statements and any amendments thereto
or continuations thereof with regard to the Subordinated Obligations owed to
such Subordinated Creditor without such Subordinated Creditor's signature.
12. Expenses. Each Obligor agrees to pay to the Administrative Agent, upon
demand, the amount of any and all reasonable expenses, including the reasonable
fees and expenses of counsel for the Administrative Agent, which the
Administrative Agent may incur in connection with the exercise or enforcement of
any of the rights or interests of the Administrative Agent or the Lenders
hereunder.
13. Notice. All demands, notices and other communications which any party
hereto may desire or may be required to give to any other party hereunder shall
be in writing and shall be mailed, telecopied or delivered to such other party
at its address as follows:
(a) to the Administrative Agent at:
Chemical Bank
270 Park Avenue
New York, NY 10172
Attn: John J. Huber
Telephone No.: (212) 270-1402
Telecopier No.: (212) 270-2625
(b) to the other parties hereto at their respective
addresses set forth below their names on the
signature pages hereof;
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or to any such party at such other address as shall be designated by such party
in a written notice to each other party hereto, complying as to delivery with
the terms of this Section 13. All such demands, notices, and other
communications shall be effective when received or five (5) business days after
mailing, whichever is earlier.
14. SERVICE OF PROCESS. EACH OF THE SUBORDINATED CREDITORS AND EACH OF THE
OBLIGORS (A) HEREBY IRREVOCABLY SUBMITS ITSELF TO THE JURISDICTION OF THE STATE
COURTS OF THE STATE OF NEW YORK IN NEW YORK COUNTY AND TO THE JURISDICTION OF
THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, FOR THE
PURPOSE OF ANY SUIT, ACTION OR OTHER PROCEEDING ARISING OUT OF OR BASED UPON
THIS SUBORDINATION AGREEMENT OR THE SUBJECT MATTER HEREOF BROUGHT BY THE
ADMINISTRATIVE AGENT, A LENDER OR ANY OF THEIR RESPECTIVE SUCCESSORS OR ASSIGNS
AND (B) TO THE EXTENT PERMITTED BY LAW, HEREBY WAIVES AND AGREES NOT TO ASSERT,
BY WAY OF MOTION, AS A DEFENSE, OR OTHERWISE, IN ANY SUCH SUIT, ACTION OR
PROCEEDING BROUGHT IN SUCH COURTS, ANY CLAIM THAT IT IS NOT SUBJECT PERSONALLY
TO THE JURISDICTION OF THE ABOVE-NAMED COURTS, THAT ITS PROPERTY IS EXEMPT OR
IMMUNE FROM ATTACHMENT OR EXECUTION, THAT THE SUIT, ACTION OR PROCEEDING IS
BROUGHT IN AN INCONVENIENT FORUM, THAT THE VENUE OF THE SUIT, ACTION OR
PROCEEDING IS IMPROPER OR THAT THIS SUBORDINATION AGREEMENT OR THE SUBJECT
MATTER HEREOF MAY NOT BE ENFORCED IN OR BY SUCH COURT, AND (C) HEREBY WAIVES IN
ANY SUCH ACTION, SUIT OR PROCEEDING ANY OFFSETS OR COUNTERCLAIMS (EXCEPT FOR
COMPULSORY COUNTERCLAIMS). EACH OF THE SUBORDINATED CREDITORS AND EACH OF THE
OBLIGORS HEREBY CONSENTS TO SERVICE OF PROCESS BY REGISTERED MAIL AT THE ADDRESS
TO WHICH NOTICES ARE TO BE GIVEN PURSUANT HERETO. EACH OF THE SUBORDINATED
CREDITORS AND EACH OF THE OBLIGORS AGREES THAT ITS SUBMISSION TO JURISDICTION
AND ITS CONSENT TO SERVICE OF PROCESS BY MAIL IS MADE FOR THE EXPRESS BENEFIT OF
THE ADMINISTRATIVE AGENT AND THE LENDERS. FINAL JUDGMENT AGAINST ANY
SUBORDINATED CREDITOR OR ANY OBLIGOR IN ANY SUCH ACTION, SUIT OR PROCEEDING
SHALL BE CONCLUSIVE, AND MAY BE ENFORCED IN OTHER JURISDICTIONS (X) BY SUIT,
ACTION OR PROCEEDING ON THE JUDGMENT, A CERTIFIED OR TRUE COPY OF WHICH SHALL BE
CONCLUSIVE EVIDENCE OF THE FACT AND OF THE AMOUNT OF ANY INDEBTEDNESS OR
LIABILITY OF SUCH SUBORDINATED CREDITOR OR SUCH OBLIGOR THEREIN DESCRIBED OR (Y)
IN ANY OTHER MANNER PROVIDED BY OR PURSUANT TO THE LAWS OF SUCH OTHER
JURISDICTION; PROVIDED, HOWEVER, THAT THE ADMINISTRATIVE AGENT AND/OR A LENDER
MAY AT ITS OPTION BRING SUIT, OR INSTITUTE OTHER JUDICIAL PROCEEDINGS AGAINST A
SUBORDINATED CREDITOR OR AN OBLIGOR OR ANY OF THEIR RESPECTIVE ASSETS IN ANY
STATE OR FEDERAL COURT OF THE UNITED STATES OR OF ANY COUNTRY OR PLACE WHERE
SUCH SUBORDINATED CREDITOR, SUCH OBLIGOR OR THEIR RESPECTIVE ASSETS MAY BE
FOUND. EACH OF THE SUBORDINATED CREDITORS AND EACH OF THE OBLIGORS.
15. WAIVER OF JURY TRIAL. TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW
WHICH CANNOT BE WAIVED, EACH OF THE
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SUBORDINATED CREDITORS AND EACH OF THE OBLIGORS HEREBY WAIVES, AND COVENANTS
THAT IT WILL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT OR OTHERWISE), ANY
RIGHT TO TRIAL BY JURY IN ANY FORUM IN RESPECT OF ANY ISSUE, CLAIM, DEMAND,
ACTION, OR CAUSE OF ACTION ARISING OUT OF, OR BASED UPON, THIS SUBORDINATION
AGREEMENT OR THE SUBJECT MATTER HEREOF, IN EACH CASE WHETHER NOW EXISTING OR
HEREAFTER ARISING OR WHETHER IN CONTRACT OR TORT OR OTHERWISE. EACH OF THE
SUBORDINATED CREDITORS AND EACH OF THE OBLIGORS ACKNOWLEDGES THAT IT HAS BEEN
INFORMED THAT THE PROVISIONS OF THIS SECTION 15 CONSTITUTE A MATERIAL INDUCEMENT
UPON WHICH THE ADMINISTRATIVE AGENT AND THE LENDERS HAVE RELIED, ARE RELYING AND
WILL RELY IN ENTERING INTO THE CREDIT AGREEMENT AND THE OTHER FUNDAMENTAL
DOCUMENTS. THE ADMINISTRATIVE AGENT AND THE LENDERS MAY FILE AN ORIGINAL
COUNTERPART OR A COPY OF THIS SECTION 15 WITH ANY COURT AS WRITTEN EVIDENCE OF
THE CONSENT OF THE SUBORDINATED CREDITORS AND THE OBLIGORS TO THE WAIVER OF
THEIR RIGHTS TO TRIAL BY JURY.
16. Termination.
This Subordination Agreement shall terminate when the Senior Obligations
have been paid in full, the Commitments (including any commitment to issue any
Letter of Credit) shall have terminated and all Letters of Credit shall have
expired or been terminated or cancelled, except to the extent that any
Subordinated Creditor continues to be entitled to a right of subrogation
hereunder.
17. Miscellaneous.
(a) No amendment of any provision of this Subordination Agreement shall be
effective unless it is in writing and signed by the Administrative Agent and all
the other parties hereto, and no waiver of any provision of this Subordination
Agreement, and no consent to any departure therefrom, shall be effective unless
it is in writing and signed by the Administrative Agent, and any such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given.
(b) No failure on the part of the Administrative Agent to exercise, and no
delay in exercising, any right hereunder shall operate as a waiver thereof; nor
shall any single or partial exercise of any such right preclude any other or
further exercise thereof or the exercise of any other right.
(c) Any provision of this Subordination Agreement which is prohibited or
unenforceable in any jurisdiction, shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or invalidity without invalidating
the remaining portions hereof or thereof or affecting the validity or
enforceability of such provision in any other jurisdiction.
-11-
<PAGE>
(d) This Subordination Agreement shall be binding on Skytel, Mtel and the
Subsidiaries of Mtel referred to herein, and their respective successors and
assigns including, without limitation, any holders of instruments evidencing any
of the Subordinated Obligations.
(e) This Subordination Agreement may be executed by one or more of the
parties to this Subordination Agreement on any number of separate counterparts,
and all of said counterparts taken together shall be deemed to constitute one
and the same instrument.
(f) THIS SUBORDINATION AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE
AND TO BE PERFORMED WHOLLY WITHIN SUCH STATE.
-12-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Subordination
Agreement to be duly executed as of the day and year first written above.
SKYTEL CORP.
By /s/ J. Robert Fugate
--------------------------
Name: J. Robert Fugate
Title: Vice President Finance
and Chief Financial Officer
NOTICES:
200 South Lamar Street
Security Centre
South Building
Jackson, MS 39201
Attention: Thomas R. Ferguson
Telephone No.: (601) 944-1300
Telecopier No.: (601) 944-7158
MOBILE TELECOMMUNICATION
TECHNOLOGIES CORP.
By /s/ J. Robert Fugate
--------------------------
Name: J. Robert Fugate
Title: Vice President Finance
and Chief Financial Officer
NOTICES:
200 South Lamar Street
Security Centre
South Building
Jackson, MS 39201
Attention: Thomas R. Ferguson
Telephone No.: (601) 944-1300
Telecopier No.: (601) 944-7158
-13-
<PAGE>
MTEL INTERNATIONAL, INC.
MTEL LATIN AMERICA, INC.
MTEL PUERTO RICO, INC.
MTEL PAGING, INC.
UNITED STATES PAGING CORPORATION
DESTINEER CORPORATION
MOBILECOMM EUROPE INC.
MTEL SPACE TECHNOLOGIES CORPORATION
MTEL TECHNOLOGIES, INC.
MTEL MAINE, INC.
COM/NAV REALTY CORP.
INTELLIGENT INVESTMENT PARTNERS,
INC.
By /s/ J. Robert Fugate
------------------------------
Name : J. Robert Fugate
Title: Vice President - Finance
and Chief Financial
Officer
NOTICES:
200 South Lamar Street
Security Centre
South Building
Jackson, MS 39201
Attention: Thomas R. Ferguson
Telephone No.: (601) 944-1300
Telecopier No.: (601) 944-7158
CHEMICAL BANK,
as Administrative Agent
Executed in
New York, New York
By /s/ Edward Divine
------------------------------
Name : Edward Divine
Title: Managing Director
-14-
<PAGE>
Schedule 1
Mtel Subsidiaries
-----------------
MTEL INTERNATIONAL, INC.
MTEL LATIN AMERICA, INC.
MTEL PUERTO RICO, INC.
MTEL PAGING, INC.
UNITED STATES PAGING CORPORATION
DESTINEER CORPORATION
MOBILECOMM EUROPE INC.
MTEL SPACE TECHNOLOGIES CORPORATION
MTEL TECHNOLOGIES, INC.
MTEL MAINE, INC.
COM/NAV REALTY CORP.
INTELLIGENT INVESTMENT PARTNERS, INC.
-15-
<PAGE>
EXHIBIT 4.13
AMENDMENT NO. 1 (the "Amendment") dated as of March 27,
1996 to the Credit, Security, Guaranty and Pledge Agreement
dated as of December 21, 1995 (the "Agreement"), among
SKYTEL CORP., a Delaware corporation ("SkyTel"), MOBILE
TELECOMMUNICATION TECHNOLOGIES CORP., a Delaware corporation
("Mtel"), the Subsidiaries of Mtel referred to therein, the
lenders referred to therein (the "Lenders"), CHEMICAL BANK,
as administrative agent for the Lenders (the "Administrative
Agent"), CREDIT LYONNAIS NEW YORK BRANCH, as documentation
agent, and J.P. MORGAN SECURITIES INC., as co-syndication
agent.
INTRODUCTORY STATEMENT
----------------------
All capitalized terms not otherwise defined in this Amendment are used
herein as defined in the Agreement.
The Borrower has presented the Lenders with a revised business plan
which includes certain planned asset sales and equity issuances. In connection
therewith, the Borrower has requested that the Agreement be amended to modify
certain provisions of the Agreement as hereinafter set forth.
In consideration of the mutual agreements contained herein and other
good and valuable consideration, the parties hereto hereby agree as follows:
SECTION 1. Amendment to the Agreement. Subject to the provisions of
--------------------------
Section 3 hereof, the Agreement is hereby amended effective as of the Effective
Date (such term being used herein as defined in Section 3 hereof) as follows:
(A) The definition of "Margin" appearing in Article 1 of the
Agreement is hereby amended in its entirety to read as follows:
"'Margin' shall mean (i) at any time on or before March 31, 1997,
------
in the case of Alternate Base Rate Loans, 175 Basis Points per annum
and in the case of Eurodollar Loans, 275 Basis Points per annum and
(ii) at any time after March 31, 1997, in the case of Alternate Base
Rate Loans, 150 Basis Points per annum and in the case of Eurodollar
Loans, 250 Basis Points per annum, subject in each case, at any time
after (but not before) March 31, 1997, to adjustment from time to
<PAGE>
time in accordance with the terms of Section 2.5(c) hereof."
(B) The first sentence of Section 2.2(b) of the Agreement is hereby
amended by inserting the words " at any time after (but not before) March 31,
1997," immediately after the words "in each case" appearing therein.
(C) Section 2.5(c) of the Agreement is hereby amended by (1)
inserting the words "At all times after (but not before) March 31, 1997," at the
beginning of such Section, immediately preceding the words "The ratio of the
Total Debt of Mtel and its Consolidated Subsidiaries" appearing therein, (2)
deleting the words "including the date of the initial Loan hereunder" appearing
in clause (i) of such Section and (3) deleting the date "December 31, 1995"
appearing in clause (ii) of such Section and inserting the date "June 30, 1997"
in lieu thereof.
(D) The parenthetical phrase appearing in Clause (i) of Section
2.7(d) is hereby amended in its entirety to read as follows:
"(excluding any issuance of equity securities permitted under Section
6.4(e) hereof and excluding the issuance of the equity securities
required for the Credit Parties to comply with Section 5.21(c) hereof
but only to the extent that the aggregate gross cash proceeds received
from the issuance of such securities does not exceed $60,000,000)"
(E) The parenthetical phrase appearing in Clause (i) of Section
2.10(c) is hereby amended in its entirety to read as follows:
"(excluding any issuance of equity securities permitted under Section
6.4(e) hereof and excluding the issuance of the equity securities
required for the Credit Parties to comply with Section 5.21(c) hereof
but only to the extent that the aggregate gross cash proceeds received
from the issuance of such securities does not exceed $60,000,000)"
(F) Article 5 of the Agreement is hereby amended by adding the
following new Section:
"SECTION 5.21. Required Asset Sales and Sales of Equity.
----------------------------------------
(a) On or before June 30, 1996, sell or otherwise dispose of (i)
all the equity interests in Mercury Paging Limited owned by Mtel or
any of its Affiliates, in a transaction which results in the receipt
by the
- 2 -
<PAGE>
Credit Parties of Net Cash Proceeds of at least $XX,XXX,XXX and
otherwise complies with the provisions of Section 6.4(e) hereof and
(ii) equity interests in Mtel Latin America, Inc. in a transaction
which results in the receipt by the Credit Parties of Net Cash
Proceeds of at least $XX,XXX,XXX and otherwise complies with the
provisions of Section 6.4(e) hereof.
(b) On or before December 31, 1996, sell or otherwise dispose of
equity interests in Mtel Asia in a transaction which results in the
receipt by the Credit Parties of Net Cash Proceeds of at least
$XX,XXX,XXX and otherwise complies with the provisions of Section
6.4(e) hereof.
(c) On or before May 15, 1996, complete one or more sales of
Acceptable Stock (as such term is defined below) to one or more third
parties which sale(s) shall be pursuant to stock purchase agreement(s)
containing customary terms and conditions and result in the receipt by
Mtel of gross cash proceeds of at least $50,000,000 (inclusive of the
gross cash proceeds from the consummation of the sale contemplated by
Section 3(C) of Amendment No. 1 dated March 27, 1996 to this
Agreement). As used herein, the term "Acceptable Stock" shall mean
----------------
(i) common stock of Mtel or (ii) other securities of Mtel which
satisfy the following criteria:
(A) do not require the payment of any dividend or interest
(other than dividends or interest paid in such other securities
or the common stock of Mtel);
(B) are not required to be redeemed, converted or exchanged
in any manner except that (1) such other securities may be
redeemable, convertible or exchangeable for such other securities
or the common stock of Mtel; (2) such other securities may be
redeemable upon a change of control (as such term is defined in
the Senior Note Indenture) provided that all the Credit Parties'
--------
obligations under the Agreement or any refinancing or replacement
of the Agreement with senior lenders consisting of banks and/or
insurance companies, shall have first been paid in full and any
commitment(s) with respect thereto have been permanently
terminated in their entirety and (3) such other securities may
otherwise be redeemable at any time after December 31, 2002."
- 3 -
<PAGE>
(G) Section 6.11 of the Agreement is hereby amended (i) by deleting
the words "Except for transactions expressly permitted by the other provisions
of this Agreement," and (ii) inserting the following clause at the end of the
existing text:
", except (i) for transactions expressly permitted by the other
provisions of this Agreement and (ii) that a Foreign Subsidiary may
enter into transactions with one or more Credit Parties which
transactions are on terms less favorable to such Foreign Subsidiary
than would be the case if such transaction had been effected at arms
length with a Person other than a Credit Party."
(H) Clause (d) of Section 6.12 of the Agreement is hereby amended in
its entirety to read as follows:
"(d) any certificate of designations of any equity security of
any Credit Party, which security is not common stock, as such
certificate was initially filed with the Secretary of State or other
applicable office in the jurisdiction of incorporation of the
applicable Credit Party, including, without limitation, the
certificate of designations of the Preferred Stock."
(I) The table appearing in Section 6.15 of the Agreement (Total Debt
to EBITDA Ratio of Mtel and Its Consolidated Subsidiaries) is hereby amended in
its entirety to read as follows:
<TABLE>
<CAPTION>
"Period Ratio
------ -----
<S> <C>
From 9/30/97 through 12/30/97 6.00:1.00
From 12/31/97 through 3/30/98 5.50:1.00
From 3/31/98 through 6/29/98 5.00:1.00
From 6/30/98 through 9/29/98 4.50:1.00
From 9/30/98 through 12/30/98 4.00:1.00
From 12/31/98 through 9/29/99 3.50:1.00
From 9/30/99 through 3/30/00 3.00:1.00
3/31/00 and thereafter 2.50:1.00"
</TABLE>
(J) The table appearing in Section 6.17 of the Agreement (Ratio of
Total Debt of Mtel and its Consolidated Subsidiaries to EBITDA of SkyTel) is
hereby amended in its entirety to read as follows:
- 4 -
<PAGE>
<TABLE>
<CAPTION>
"Period Ratio
------ -----
<S> <C>
From 3/31/96 through 6/29/96 6.00:1.00
From 6/30/96 through 9/29/96 5.50:1.00
From 9/30/96 through 12/30/96 5.25:1.00
From 12/31/96 through 3/30/97 4.75:1.00
From 3/31/97 through 9/29/98 4.50:1.00
From 9/30/98 through 12/30/98 4.25:1.00
From 12/31/98 through 12/30/00 4.00:1.00
12/31/00 and thereafter 3.00:1.00"
</TABLE>
(K) The table appearing in Section 6.18(a) of the Agreement (EBITDA
to Consolidated Interest Expense Ratio of Mtel and its Consolidated
Subsidiaries) is hereby amended in its entirety to read as follows:
<TABLE>
<CAPTION>
"Period Ratio
------ -----
<S> <C>
From 3/31/97 through 12/31/97 3.50:1.00
Thereafter 4.00:1.00"
</TABLE>
(L) The table appearing in Section 6.20 of the Agreement (Minimum
EBITDA of Mtel) is hereby amended in its entirety to read as follows:
<TABLE>
<CAPTION>
"Fiscal Quarter Ended Amount (in millions)
-------------------- ------
<S> <C>
March 31, 1997 12.6
June 30, 1997 20.0
September 30, 1997 23.0
December 31, 1997 25.0
March 31, 1998 30.0
June 30, 1998 35.0
September 30, 1998 40.0
December 31, 1998 45.0
March 31, 1999 45.0
June 30, 1999 50.0
September 30, 1999 50.0
December 31, 1999 55.0
March 31, 2000 60.0
June 30, 2000 65.0
September 30, 2000 65.0
December 31, 2000 70.0
March 31, 2001 75.0
June 30, 2001 80.0
September 30, 2001 80.0
December 31, 2001 85.0"
</TABLE>
- 5 -
<PAGE>
(M) The table appearing in Section 6.21 of the Agreement (Limitations
on Capital Expenditures) is hereby amended in its entirety to read as follows:
<TABLE>
<CAPTION>
"Period
(Fiscal Year ending on
December 31) Amount (in millions)
---------------------- ------
<S> <C>
1996 200.0
1997 147.5
1998 135.0
1999 155.0
2000 165.0
2001 175.0"
</TABLE>
(N) Section 6.21 of the Credit Agreement is hereby further amended by
adding the following sentence to the end of the existing text:
"The Credit Parties and the Lenders hereby agree that Capital
Expenditures for any fiscal year which are made from the proceeds of
intercompany loans, which loans are subsequently repaid in the same
fiscal year from the Net Cash Proceeds from the sale or other
disposition of any equity securities (including by way of the issuance
of new equity interests) or assets pursuant to and as contemplated by
Section 6.4(e) hereof, shall be deemed to have been made from such Net
Cash Proceeds for purposes of determining compliance with this Section
6.21."
(O) The table appearing in Section 6.23 of the Agreement (Minimum
Subscriber Level for Destineer) is hereby amended in its entirety to read as
follows:
<TABLE>
<CAPTION>
"Date Subscribers
---- -----------
<S> <C>
March 31, 1997 150,000
June 30, 1997 200,000
September 30, 1997 250,000
December 31, 1997 325,000
March 31, 1998 390,000
June 30, 1998 455,000
September 30, 1998 525,000
December 31, 1998 600,000
March 31, 1999 675,000
June 30, 1999 760,000
September 30, 1999 875,000
December 31, 1999 1,000,000
</TABLE>
- 6 -
<PAGE>
<TABLE>
<S> <C>
March 31, 2000 1,125,000
June 30, 2000 1,250,000
September 30, 2000 1,375,000
December 31, 2000 1,500,000
March 31, 2001 1,625,000
June 30, 2001 1,750,000
September 30, 2001 1,875,000
December 31, 2001 2,000,000"
</TABLE>
(P) Paragraph (c) of Article 7 of the Agreement is hereby amended by
inserting the phrase ", Section 5.21" immediately after the phrase "Section
5.20" appearing therein.
(Q) Section 11.3(a) of the Agreement is hereby amended by inserting
the following clause immediately after the word "issued," appearing therein:
"(other than the issuance(s) of new equity securities the disposition
of which is expressly permitted by the provisions of Section 6.4(e)
hereof)".
SECTION 2. Waiver by the Lenders. Each of the Lenders hereby waives,
---------------------
for all times prior to the Effective Date, (a) the Credit Parties non-compliance
with Sections 6.17 and 6.21 of the Agreement and (b) any Default or Event of
Default that may have occurred and be continuing solely by reason of any of the
Credit Parties or any of their Subsidiaries making an intercompany loan or
advance (which otherwise complies with the provisions of the Agreement) at any
time when a Default or Event of Default had occurred and was then continuing.
SECTION 3. Conditions to Effectiveness. The effectiveness of this
---------------------------
Amendment is subject to the satisfaction in full of the following conditions
precedent (the first date on which all such conditions have been satisfied being
herein referred to as the "Effective Date"):
(A) the Administrative Agent shall have received executed
counterparts of this Amendment, which, when taken together, bear the signatures
of the Credit Parties and those Lenders required by Section 13.9 of the
Agreement;
(B) all fees payable to a Lender in connection with this Amendment
shall have been paid;
(C) the Administrative Agent shall have received a fully executed
copy of a stock purchase agreement (containing customary terms and conditions)
between Mtel and a third party relating to the sale by Mtel to such third party
of Acceptable Stock (as such term is defined in Section 5.21(c) of the Agreement
which Section is being added to the Agreement pursuant
- 7 -
<PAGE>
to this Amendment), which sale shall result in the receipt by Mtel of gross cash
proceeds of at least $25,000,000; and
(D) all legal matters in connection with this Amendment shall be
reasonably satisfactory to Morgan, Lewis & Bockius LLP, counsel for the Agents.
SECTION 4. Representations and Warranties. The Credit Parties hereby
------------------------------
represent and warrant to the Lenders that:
(A) after giving effect to this Amendment, the representations and
warranties contained in the Agreement and in the other Fundamental Documents are
true and correct in all material respects on and as of the date hereof as if
such representations and warranties had been made on and as of the date hereof
(except to the extent such representations and warranties expressly relate to an
earlier date); and
(B) after giving effect to this Amendment, the Credit Parties are in
compliance with all the terms and provisions set forth in the Agreement and the
other Fundamental Documents and no Default or Event of Default has occurred or
is continuing under the Agreement.
SECTION 5. Full Force and Effect.
---------------------
Except as expressly set forth herein, this Amendment does not
constitute a waiver or modification of any provision of the Agreement or a
waiver of any Default or Event of Default under the Agreement, in either case
whether or not known to the Agents. Except as expressly amended hereby, the
Agreement shall continue in full force and effect in accordance with the
provisions thereof on the date hereof. As used in the Agreement, the terms
"Credit Agreement", "this Agreement", "herein", "hereafter", "hereto", "hereof",
and words of similar import, shall, unless the context otherwise requires, mean
the Agreement as amended by this Amendment. References to the terms "Agreement"
or "Credit Agreement" appearing in the Exhibits or Schedules to the Agreement,
shall, unless the context otherwise requires, mean the Agreement as amended by
this Amendment.
SECTION 6. APPLICABLE LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND
--------------
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WHICH ARE
APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED WHOLLY WITHIN THE STATE OF NEW
YORK.
SECTION 7. Counterparts. This Amendment may be executed in two or
------------
more counterparts, each of which shall constitute an original, but all of which
when taken together shall constitute but one instrument.
- 8 -
<PAGE>
SECTION 8. Expenses. The Borrower agrees to pay all reasonable out-
--------
of-pocket expenses incurred by the Agents in connection with the preparation,
execution and delivery of this Amendment and any other documentation
contemplated hereby, including, but not limited to, the reasonable fees and
disbursements of counsel for the Agents.
SECTION 9. Headings. The headings of this Amendment are for the
--------
purposes of reference only and shall not affect the construction of, or be taken
into consideration in interpreting, this Amendment.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed by their duly authorized officers, all as of the date and year
first written above.
BORROWER:
SKYTEL CORP.
By /s/ John E. Welsh III
---------------------------------
Name: John E. Welsh III
Title: Vice Chairman and acting
Chief Financial Officer
GUARANTORS:
MOBILE TELECOMMUNICATION
TECHNOLOGIES CORP.
MTEL PAGING, INC.
MTEL INTERNATIONAL, INC.
MTEL LATIN AMERICA, INC.
MTEL PUERTO RICO, INC.
UNITED STATES PAGING CORPORATION
DESTINEER CORPORATION
MOBILECOMM EUROPE INC.
MTEL SPACE TECHNOLOGIES CORPORATION
MTEL TECHNOLOGIES, INC.
MTEL MAINE, INC.
COM/NAV REALTY CORP.
INTELLIGENT INVESTMENT PARTNERS, INC.
By /s/ John E. Welsh III
----------------------------
Name: John E. Welsh III
Title: Vice Chairman and acting
Chief Financial Officer
- 9 -
<PAGE>
LENDERS:
CHEMICAL BANK, individually and as
Administrative Agent
Executed by Chemical Bank
in New York, New York
By /s/ Ann B. Kerns
---------------------------------
Name: Ann B. Kerns
Title: Vice President
CREDIT LYONNAIS NEW YORK BRANCH,
as Documentation Agent
By /s/ Bruce M. Yeager
--------------------------------
Name: Bruce M. Yeager
Title: Senior Vice President
CREDIT LYONNAIS CAYMAN ISLAND BRANCH
By /s/ Bruce M. Yeager
--------------------------------
Name: Bruce M. Yeager
Title: Authorized Signature
J.P. MORGAN SECURITIES INC.,
as Co-Syndication Agent
By /s/ Michael Y. Leder
--------------------------------
Name: Michael Y. Leder
Title: Vice President
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By /s/ John A. Payne
--------------------------------
Name: John A. Payne
Title: Managing Director
ABN AMRO BANK N.V.
By /s/ R.O. Drake
--------------------------------
Name: R.O. Drake
Title: Senior Vice President
By /s/ William S. Fitzgerald
--------------------------------
William S. Fitzgerald
Authorized Signatory
- 10 -
<PAGE>
THE FIRST NATIONAL BANK OF BOSTON
By /s/ Shepard D. Rainie
--------------------------------
Name: Shepard D. Rainie
Title: Director
THE BOATMEN'S NATIONAL BANK OF
ST. LOUIS
By
--------------------------------
Name:
Title:
CIBC INC.
By /s/ Marisa J. Harney
--------------------------------
Name: Marisa J. Harney
Title: Director
VAN KAMPEN AMERICAN CAPITAL
PRIME RATE INCOME TRUST
By /s/ Jeffrey W. Maillet
--------------------------------
Name: Jeffrey W. Maillet
Title: Senior Vice President -
Portfolio Manager
- 11 -
<PAGE>
EXHIBIT 10.30
LEASE AGREEMENT
THE STATE OF MISSISSIPPI
COUNTY OF HINDS
This Lease, made and entered into on the 14th day of June, 1995, by and between
SECURITY CENTRE, INC., a Mississippi Corporation (the "Landlord"), and MOBILE
TELECOMMUNICATION TECHNOLOGIES CORP., a Delaware corporation (the "Tenant");
WITNESSETH.
In consideration of the mutual covenants set forth herein, Landlord and
Tenant hereby agree as follows:
PREMISES
1. Landlord hereby leases to Tenant and Tenant hereby leases from Landlord
for the rental and on the terms and conditions hereinafter set forth 122,744
square feet of Rentable Area (defined in Paragraph 7) in the buildings known as
Security Centre North and South (collectively, the "Building") comprising 34,491
square feet of Rentable Area in Security Centre North and 88,253 square feet of
Rentable Area in Security Centre South and located at 200 South Lamar Street inn
the City of Jackson, Hinds County, Mississippi, which space (the "Premises")
(less the common areas described in Paragraph 7 below included within the
Rentable Area for the Premises) is shown on Exhibit A attached hereto. The
Premises include space between the top surface of the floor slab of the area
outlined and finished surface of the ceiling immediately above and all Tenant
Improvements (defined in Paragraph 10) constructed within this space.
Provided, however, Tenant's rights to lease the Premises contained in the
North Building relating to the seventh and a portion of the eight floors,
therein, is subject to the rights now help by Phelps Dunbar attorneys to lease
an additional 4,000 square feet of Rentable Area every two (2) years beginning
July 1, 1997. In the event Phelps Dunbar exercises any such option, Landlord
shall provide and Tenant shall release such space to Phelps Dunbar as follows:
The first expansion shall be comprised of any unoccupied space, plus any
additional contiguous seventh floor space contained within Tenant's Premises and
selected by Tenant, so as to total approximately 4,000 square feet of Rentable
Area; the second expansion shall be 4,000 square feet of Rentable Area on the
Seventh (7th) Floor contiguous to the first expansion; the third expansion shall
be the balance of the seventh (7th) floor and a portion of the Eight (8th) Floor
selected by Tenant, so as to total approximately 4,000 square feet of Rentable
Area. In the event Phelps Dunbar exercises any such expansion option, Tenant,
upon at least five (5) months and twenty (20) days prior written notice from
Landlord, shall vacate the applicable portion of the Premises and the Lease
shall terminate as to such space at such time.
<PAGE>
AUTHORIZED USE
2. Tenant shall have the right to occupy and use the Premises for general
business purposes, or any other related use which may be deemed proper by the
Landlord.
TERM
3. Subject to and upon the terms and conditions set forth herein, this
Lease shall be in force for a term (the "Term") of ten (10) years beginning on
the 1st day of the month following the closing of the purchase of the Building
by Landlord, (the "Commencement Date") and ending on the last day of the month
120 months thereafter. An amendment specifying the Commencement Date shall be
executed by Landlord and Tenant within ten (10) days of the close of the
purchase of the Building by the Landlord. Effective upon the Commencement Date,
this Lease shall supersede and replace any and all prior leases executed by
Tenant with respect to the Premises.
RENT
4. Tenant shall pay to Landlord as rent (the "Rent") for the initial five
(5) year period beginning on the Commencement Date and each month thereafter
during this period the annual sum of One Million Five Hundred Thirty-Four
Thousand Three Hundred and No/100 Dollars ($1,534,300.00) per year, in advance
monthly installments of One Hundred Twenty-Seven Thousand Eight Hundred Fifty-
Eight and 33/100 Dollars ($127,858.33) subject to adjustment as hereinafter
provided. The rental rate for the second five year period shall be calculated
by the original rate of $12.50 per square foot of Rentable Area adjusted by the
percentage of any change between the Consumer Price Index for All Urban
Consumers, Jackson, Mississippi Metropolitan Area (1982-1984=100) last published
in or before June 1995 and said Consumer Price Index last published in or before
June 2000, adjusted pro rata for any partial years during such five year period.
Landlord shall notify Tenant of this rental rate within 120 days of commencement
of the sixth year of the Lease Term.
ADJUSTMENT OF RENT
5. In the event that the Operating Expenses (defined in Paragraph 8)
calculated on a rentable square foot basis during any Operating Period (an
Operating Period being defined as each six (6) calendar months beginning January
1 and ending June 30 and beginning July 1 and ending December 31 of each year
during the Term, the first Operating Period for purposes of this Lease beginning
on the January 1 or July 1 immediately preceding the Commencement Date) shall
exceed, on an annualized basis the 1995 actual operating expenses, Tenant shall
pay to Landlord, as additional rent for each Operating Period or Periods, the
amount of such excess multiplied by the number of square feet of Rentable Area
of the Premises, as set forth in Paragraph 1. For all calculations pursuant to
the provisions of this Lease, the parties agree that the Rentable Area of the
Building shall be deemed to be 260,000 square feet. If the Term commences or
expires other than on the beginning date of any Operating Period, the amount of
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additional rent shall be reduced in proportion to the number of days of any such
Operating Period not included within the Term.
Landlord shall have the right to collect monthly from Tenant the
escalations owed or to be owed by Tenant under this paragraph, said monthly
payments to be in such amounts as are estimated by Landlord in its reasonable
discretion. The monthly payments shall be due and payable at the same time as
the Rent provided for in Paragraph 4 is due and payable. Landlord shall, within
the period of one hundred twenty (120) days after the close of any such
Operating Period for which additional rent may be due under the provisions of
this paragraph, give written notice thereof to Tenant, which notice shall also
contain or be accompanied by a statement of the Operating Expenses during such
Operating Period, and by a computation of such additional rent. Failure of
Landlord to give Tenant said notice within a 180 day period after any such
operating period shall constitute a waiver of Landlord's right to collect said
additional rent.
Tenant shall have the right to inspect Landlord's records of the Operating
Expenses referred to in such statement in Landlord's offices during Landlord's
usual business hours and, at Tenant's option cause an independent audit of such
records to be made, within a sixty (60) day period following delivery of the
statement of the Operating Expenses with respect to the entire calendar year.
Unless Tenant delivers to Landlord a notice referring a reasonable detail to one
or more errors in such statement within such sixty (60) day period, it shall
conclusively be deemed to be correct, If any audit conducted by or at the
request of Tenant reveals a discrepancy of five percent (5%) or more in excess
of what the actual additional rent should have been, Landlord shall pay the
reasonable cost and expense of the audit.
Within thirty (30) days after acceptance by Tenant of the Operating Expense
statement, or, if earlier, upon expiration of the sixty (60) day audit and
review period, Tenant shall pay Landlord the difference between the additional
rent so calculated actually to have been due and the amount of additional rent
actually paid by Tenant for the applicable calendar year. If the additional
rent so calculated is less than the amount of monthly payments actually
collected by Landlord as additional rent for the calendar year, Landlord shall,
within ten (10) days after acceptance by Tenant of the Operating Expense
statement, or, if earlier, upon expiration of the sixty (60) day audit and
review period, pay to Tenant the difference between the additional rent paid by
Tenant and the actual amount owed for the applicable calendar year.
PAYMENT OF RENT
6. On or before the first day of each calendar month during the Term
hereof, Tenant shall pay to Landlord for such month the Rent then in effect.
All such payments shall be paid to Landlord in lawful money of the United States
of America at the address of Landlord shown herein or to such other party or to
such other place as Landlord may designate from time to time in a written notice
to Tenant. In the event that the Landlord does not receive rental payments by
the fifth (5th) day of each month, Tenant shall pay, in addition to any interest
which may be due, a late charge equal to four percent (4%) of the rent then due
and payable. The provision for such late charge shall be in addition to all of
Landlord's other rights and remedies hereunder
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and shall not be construed as liquidated damages or as limiting Landlord's
remedies in any manner. If this Lease commences or terminates on any day other
than the first or last day of a calendar month, the Rent due hereunder shall be
prorated except as otherwise provided in this Lease.
RENTABLE AREA
7. The Rentable Area for a full floor of the Building shall be the area
bounded by the exterior Building walls (measured to the interior surface of the
glass windows) excluding the area used for Building stairs, vertical ducts,
elevator shafts, flues, vents, stacks and pipe shafts and including the area
used for the structural columns of the Building and all vertical penetrations
for the special use of Tenant and a pro rata share of the Building common areas
including entry and elevator lobbies, corridors, restrooms, janitor's closets,
skywalks, atriums, mechanical rooms, telephone closets, etc.
The Rentable Area for the Premises shall be the total Rentable Area calculated
for the floor or floors to be occupied by Tenant or where only a portion of a
floor is to be occupied, the Rentable Area for the Premises shall be the area
calculated within the boundaries defined by any exterior Building walls bounding
the Premises (measured to the interior surface of the glass windows), the center
line of any common walls separating the Premises from area leased or to be
leased to other tenants and the exterior of any walls separating the Premises
from any public corridors or other public or common areas on such floors plus a
pro rata portion of the Building common areas including entry and elevator
lobbies, corridors, rest rooms, janitor's closets, skywalks, atriums, mechanical
rooms, telephone closets, etc.
The common area factor for existing space and all expansion space shall be
17.4% for Security Centre South and 15% for Security Centre North.
OPERATING EXPENSES
8. "Operating Expenses," as used in this Lease, refers to the aggregate of
all expenses, costs and disbursements of every kind and nature relating to or
incurred or paid during any Operating Period in connection with the ownership,
operation and maintenance of the Building and underlying land (the "Land"),
equipment, fixtures and facilities used in connection therewith, including, but
not limited to wages and salaries of all employees directly engaged in the
operation, maintenance or security of the Building and Land, including taxes,
insurance and benefits relating thereto; the cost of all labor, supplies,
materials and tools used in the operation and maintenance of the Building, Land,
and public areas; management fees (not exceeding four percent (4%) of the gross
income); the cost of all accounting expenses incurred in connection with the
ownership and operation of the Building and Land; the cost of all utilities for
the Building and Land, including, but not limited to, the cost of water and
sewer services and power for heating, lighting, air conditioning and
ventilating; the cost of all maintenance and service agreements for the
Building, Land and equipment therein or thereon, including but not limited to,
security service for the Building and Land, window cleaning, elevator
maintenance and
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janitorial service; the cost of all insurance relating to the Building and Land,
including, but not limited to, the cost of casualty, rental abatement and
liability insurance applicable to the Building, Land and Landlord's personal
property used in connection therewith, Taxes (defined in Paragraph 9); the cost
of all license and permit fees; the cost of repairs, refurbishing, restoration
and general maintenance; a reasonable amortization charge on account of any
capital expenditure incurred (i) to comply with any governmental rule,
regulation, law or otherwise, or (ii) to effect a reduction in the Operating
Expenses of the Building or Land; and all other items constituting operating and
maintenance costs in connection with the Building and Land according to
generally accepted accounting principles. Except as specifically provided in
the immediately preceding sentence, Operating Expenses shall not include the
following; (i) depreciation, (ii) leasing commissions, (iii) repairs and
restorations paid for by the proceeds of any insurance policy, (iv) construction
of improvements of a capital nature, (v) marketing and advertising expenses,
(vi) fines or penalties for violation of laws, (vii) expenses incurred solely
for the benefit of another tenant, (viii) charitable contributions, (ix) legal
expenses of Landlord, (x) personal accounting expenses of Landlord, or (xi)
income and franchise taxes other than that portion, if any, of income and
franchise taxes which may hereafter be assessed and paid in lieu of or as a
substitute in whole or in part for Taxes.
TAXES
9. Where used in this Lease, the term "Taxes" means all ad valorem taxes,
personal property taxes, and all other taxes, assessments, and all other similar
charges, if any, which are levied, assessed, or imposed upon or become due and
payable in connection with, or a lien upon, the Land, the Building or facilities
used in connection therewith, and all taxes of whatsoever nature that are
imposed in substitution for or in lieu of any of the taxes, assessments, or
other charges included in this definition of Taxes; provided, however, Taxes
shall not include the portion, if any, of ad valorem taxes against the Premises
that is paid by tenants as a separate charge pursuant to Paragraph 19 of this
Lease.
TENANT IMPROVEMENTS
10. Except as otherwise expressly stated herein, Tenant acknowledges that
the Premises are ready for occupancy upon execution of this Lease and accepts
the Premises with doors, floor coverings, ceilings, walls, window coverings,
lighting, heating, cooling, ventilating, water, electrical and all other
interior treatments, fittings, furnishings and fixtures ("Tenant Improvements")
in there existing "AS IS" condition. Landlord shall not be under any obligation
to furnish or pay for any further or additional improvements to the Premises.
MAINTENANCE AND REPAIR
11. Landlord shall provide all maintenance and repair of the exterior and
the structural portions of the Building and common areas such as lobbies,
stairs, corridors, restrooms, roof, elevators, and escalators, and shall provide
painting of partitions and refinishing of doors in the Premises included in the
Building Standard Improvements at times when the Landlord, in its
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discretion, deems it appropriate for the continued use and enjoyment of the
Premises. Landlord shall not have any obligation to maintain, repair, or
replace any Tenant Improvements. Except to the extent that Landlord is
obligated to furnish maintenance, repair and painting of portions of the
Premises pursuant to this Paragraph and to repair damage by fire or other
casualty pursuant to Paragraph 22, Tenant, at its sole cost, shall maintain and
repair the Premises and otherwise keep the Promises in good order and repair;
prior to the commencement of any work on the Premises all workmen, artisans and
contractors employed and the work to be performed shall be submitted to and
specifically approved in writing by Landlord (whose consent shall not be
unreasonably withheld, conditioned or delayed) and subject to the same
requirements as set forth in Paragraph 17.
LANDLORD'S SERVICES
12. Landlord, at its cost, shall furnish the Premises with (i) Cleaning
and Janitorial Services (defined in Exhibit C), (ii) hot and cold domestic water
at those points of supply provided for general use of other tenants in the
building and electricity (110 volt current) for normal office uses available 24
hours a day every day of the year (except electricity for lighting), (iii)
elevator service at the times and frequency required, in Landlord's judgment,
for normal business use of the Premises by Tenant pursuant hereto, provided,
however, at least one elevator will be available for use 24 hours a day, every
day of the year subject to events beyond Landlord's reasonable control, (iv)
lamp and ballast replacement for light fixtures included in Building Standard
Improvements, (v) heating, ventilating and air conditioning service and
electricity for lighting between 7:00 o'clock a.m. and 7:00 o'clock p.m. on
regular business days (Monday thru Friday), except on New Year's Day, Memorial
Day, July 4, Labor Day, Thanksgiving Day and Christmas Day ("Holidays");
however, in the event applicable governmental laws, edicts, etc. cause normal
hours to be modified (e.g., Federal Energy Plan) then such heating, ventilating
and air conditioning service shall be changed to be in compliance with such
promulgations (items i through v collectively "Basic Services"). Landlord shall
furnish heating, ventilating and air conditioning and cooling service and
electricity for lighting on days and at times other than those referred to in
subsection (v) above provided Tenant requests such service a reasonable time in
advance and agrees to reimburse Landlord for said service at the then existing
rate. Landlord shall not be liable for any damages directly or indirectly
resulting from, nor shall any Rent be abated by reason of, the installation, use
or interruption of use of any equipment in connection with the furnishing of any
of the foregoing services, or failure to furnish or delay in furnishing any such
service when such failure or delay is caused by accident or any other occurrence
or condition beyond the reasonable control of Landlord or by the making of
necessary repairs or improvements to the Premises or to the Building. The
failure to furnish any of such services shall not be construed as an eviction of
Tenant or relieve Tenant from the duty of observing and performing any of its
obligations under this Lease unless such failure substantially handicaps,
impedes or impairs the normal use of the Premises by Tenant for the purposes
authorized in this Lease and unless within a reasonable time after delivery to
Landlord by Tenant of a written notice setting forth in reasonable detail a
description of the services not so furnished, Landlord fails to commence curing
any such failure or thereafter fails to continue the curing thereof with
appropriate diligence and speed under the
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circumstances until cured. Landlord shall furnish security service for the
inside Building perimeters and entrances; however, Landlord shall not be
responsible for providing security service for Tenant, its employees, agent,
visitors or licensees or for the Premises. Notwithstanding anything to the
contrary in this Lease, in the event of interruption of essential Building
Services (electricity, water, heating or air conditioning) for a period in
excess of three (3) consecutive business days or for more than ten (10) business
days in a calendar year, the Rent due hereunder shall be abated for each day
from the date of occurrence.
ADDITIONAL SERVICES
13. Should Tenant use or require Additional Services beyond the Basic
Services referred to in Paragraph 12, Tenant agrees to pay within thirty (30)
days of invoicing, as additional rent, Landlord's actual expense (without any
markup or profit) of all Additional Services, and Landlord shall be entitled to
impose and collect charges for such Additional Services. As a condition
precedent to giving any consent requested of Landlord for Additional Services,
Landlord may cause a switch and metering system to be installed at Tenant's
expense so as to measure the amount of utility services consumed for any use.
In addition, in the event Tenant desires to contest the charges levied by
Landlord under this Paragraph 13, Tenant may, as its sole remedy, have Landlord
install in the Premises at the Tenant's expense a switch and metering system.
In either event, the cost of any such meters and of the installation,
maintenance, repair and replacement thereof shall be paid by Tenant, as
Additional Rent, and Tenant agrees to pay to Landlord, as Additional Rent,
within 30 days after demand, for all Additional Services consumed, as shown by
the meters, at the rate charged for such services by the utility company
furnishing the same, if applicable, plus any reasonable additional expense
incurred in keeping accounts of the Additional Services so consumed.
All separately metered usage by Tenant as of the commencement of the Term
shall be considered an Additional Service and shall be paid by Tenant, as
provided in this Paragraph 13, in addition to Tenant's proportionate share of
Operating Expenses. However, if Tenant's utilities are submetered, then
Tenant's share of Operating Expenses shall not include any submetered utilities
---
used in the Building except in common areas or for common facilities.
PROHIBITED USE
14. Tenant shall not use or permit any other party to use all or any part
of the Premises for any purpose not authorized in Paragraph 2 of this Lease.
Tenant shall not do or permit anything to be done in or about the Building nor
bring or keep or permit anything to be brought to or kept therein, which is
prohibited by or which will in any way conflict with any law, statute, ordinance
or governmental rule or regulation now in force or hereafter enacted or
promulgated, or which is prohibited by any standard form of fire insurance
policy or which will in any way increase the existing rate of or affect any fire
or other insurance which Landlord carries upon the Building or any of its
contents, or cause a cancellation of any insurance policy covering the Building
or any part thereof or any of its contents. Tenant shall not do or permit
anything to be done in or about the Premises which will in any way unreasonably
obstruct or
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interfere with the rights of other tenants of the Building, or unreasonably
injure or annoy them or use or allow the Premises to be used for any unlawful or
objectionable purpose. Tenant shall not cause, maintain or permit any nuisance
in, on or about the Premises or Building or commit or suffer to be committed any
waste to, in, on or about the Premises or Building. In addition, Tenant shall
be liable for and indemnify Landlord against any and all damages, fines or
losses resulting from Tenant's failure to comply with the provisions of this
paragraph.
RULES AND REGULATIONS OF BUILDING
15. Tenant and its employees, agent, visitors and licensees shall perform
and comply in all material respects with the Rules and Regulations of the
Building set out in Exhibit D and, upon written notice thereof, all other
reasonable rules and regulations with respect to safety, care, cleanliness, and
preservation of good order in the Building that may be established from time to
time by Landlord for tenants of the Building. Landlord shall not have any
liability to Tenant for any failure of any other tenants of the Building to use
reasonable efforts to enforce such Rules and Regulations; provided, however,
Landlord agrees to not discriminate against Tenant in enforcing such Rules and
Regulations. It is mutually agreed that all the Rules and Regulations attached
hereto shall be and are hereby made a part of this Lease and any violation
thereof shall be a breach of this Lease at the option of Landlord. In the event
of conflict between the Rules and Regulations and the terms of this Lease, the
terms of this Lease shall govern.
COMPLIANCE WITH LAWS AND OTHER REGULATIONS
16. Tenant shall, at its sole cost and expense, promptly comply with all
laws, statutes, ordinances and governmental rules, regulations or requirements
now in force or which may hereafter be in force, with the requirements of any
board of fire underwriters or other similar body now or hereafter constituted,
and with any directive or occupancy certificate issued pursuant to any law by
any public officer or officers insofar as any thereof relate to or affect the
condition, use or occupancy of the Premises.
ALTERATIONS AND ADDITIONS
17. Tenant shall make no installations, alterations, additions or
improvements to the Premises except for cosmetic or decorative changes without
submitting plans and specifications to Landlord and securing Landlord's advance
written consent in each instance, which shall not be unreasonably withheld,
conditioned or delayed. Such work shall be performed in accordance with the
plans and specifications approved by Landlord. All Tenant Improvements,
alterations and additions to the Tenant Improvements, to the Premises and to the
Building shall be the property of the Landlord and shall not be removed by
Tenant either during or after the end of the Term without the express written
approval of Landlord. Tenant shall not be entitled to any reimbursement or
compensation resulting from its payment of the cost of constructing all or any
portion of the Tenant Improvements or any alterations thereto unless otherwise
expressly agreed by Landlord in writing. Tenant shall, before making any
installations, alterations, additions or
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improvements, at its expense, obtain all permits, approvals and certificates
required by any governmental body or agency and certificates of final approval
thereof and shall deliver promptly duplicates of all such permits, approvals and
certificates to Landlord. Tenant agrees to carry, or cause Tenant's contractors
and sub-contractors to carry, such worker's compensation, general liability,
personal and property damage insurance as Landlord may require. Tenant agrees
to obtain and deliver to Landlord, written and unconditional waivers of
mechanic's liens upon the real property in which the Premises are located, for
all work, labor and services to be performed and materials to be furnished in
connection with such work, signed by all contractors, sub-contractors,
materialmen and laborers involved in such work. Upon termination of this Lease
for any reason, Tenant shall have no obligation to remove any Tenant
Improvements or any other fixtures, alterations, improvements or additions
constructed or installed with Landlord's consent unless otherwise agreed to in
writing by Landlord or Tenant.
TENANT'S EQUIPMENT AND INSTALLATIONS
18. Except for desk or table mounted typewriters, adding machines, office
calculators, dictation equipment, personal computers and other similar equipment
currently in use by Tenant, Tenant shall not install within the Premises any
fixtures, equipment, facilities or other improvements until the plans therefor
have been approved by Landlord and shall not, without the specific written
consent of Landlord and Tenant's written agreement to pay additional costs,
install or maintain any apparatus or devices within the Premises which will
increase the usage of electrical power, water or gas for the Premises to an
amount greater than would be normally required for general office use.
TAXES ON PERSONALTY AND TENANT IMPROVEMENTS
19. Tenant shall pay all ad valorem and similar taxes or assessments
levied upon or applicable to all equipment, fixtures, furniture, and other
property placed by Tenant in the Premises and all license and other fees or
charges imposed on the business conducted by Tenant on the Premises. If the
Tenant Improvements do not consist entirely of Building Standard Improvements
and Landlord shall be required to pay a higher ad valorem tax with respect to
the Building than would have been payable had the Tenant Improvements consisted
entirely of Building Standard Improvements, Tenant shall pay to Landlord, within
thirty (30) days after demand, the amount by which the ad valorem taxes payable
by Landlord with respect to the Building for such tax period exceed the amount
of ad valorem taxes that otherwise would have been payable by Landlord.
LANDLORD'S ACCESS
20. Landlord and Landlord's agents shall have the right, but shall not be
obligated, during the Term to enter the Premises in any emergency at any time
and without notice, and at other reasonable times and with reasonable prior
written notice, and shall be accompanied by a representative of Tenant during
any such inspection, to inspect the condition thereof to determine if Tenant is
performing its obligations under this Lease, and to perform the services
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or to make the repairs and restoration that Landlord is obligated or elects to
perform, or furnish under this Lease, to make repairs to adjoining space, to
cure any defaults of Tenant hereunder that Landlord elects to cure, and to
remove from the Premises any improvements thereto or property placed therein in
violation of this Lease. If Tenant is not present to open and permit entry into
the Premises, Landlord or Landlord's agent may enter the same whenever such
entry may be necessary or permissible, by master key or by force, provided
reasonable care is exercised to safeguard Tenant's property; such entry shall
not render Landlord or its agents liable for prosecution. Landlord shall also
have the right to show the Premises at reasonable hours to prospective new
tenants during the last six (6) months of the Lease Term.
INSURANCE
21. Landlord shall maintain, during the Term of this Lease, fire and
extended coverage insurance ("Insurance") insuring the Building and Premises,
but excluding Tenant's goods, furniture or property of Tenant's Improvements not
consisting wholly of Building Standard Improvements placed in the Premises,
against damage or loss from fire or other casualty normally insured against
under the terms of standard policies of fire and extended coverage insurance.
Tenant shall be responsible for providing, at Tenant's own expense, all
insurance coverage necessary for the protection against loss or damage from fire
or other casualty of Tenant's goods, furniture, Tenant's Improvements not
consisting wholly of Building Standard Improvements or other property placed in
the Premises.
DAMAGES TO PREMISES
22. If the Premises or Building shall be damaged from any cause whatsoever
to an extent that the Premises, or a substantial part thereof, cannot reasonably
be used for the purpose intended, and if the Premises are incapable, in the
reasonable opinion of Landlord, of being repaired and restored to the same
condition as before the damage occurred with reasonable diligence within one
hundred eighty days of the happening of such damage, then this Lease shall
terminate as of the date of such damage. Tenant shall then deliver possession
of the Premises to the Landlord and Rent and additional rent shall abate from
the date of the damage for the unexpired term. If the Premises or Building
shall be damaged to an extent that the Premises, or a substantial part thereof,
cannot reasonably be used for the purpose intended, and if the Premises shall be
capable, in the reasonable opinion of Landlord, with reasonable diligence of
being repaired and restored to the same condition as before the damage within
one hundred eighty days of the happening of such damage, then Landlord, at its
own expense, shall immediately undertake to cause such repairs and restorations
to commence and be properly completed within a reasonable time, and Rent and
additional rent shall be equitably adjusted so that Tenant pays for only that
portion of the Premises which is tenantable; provided, however, if the damage
shall have occurred subsequent to the final six months of the Term, Landlord may
at its option, elect not to repair and restore, whereupon Tenant shall have the
option to terminate this Lease, and Rent and additional rent shall abate from
the date of the damage for the unexpired Term. If, as a result of such damage
or repair of such damage, the Premises are rendered untenantable and cannot
reasonably be used for the purpose intended, and if the
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Premises are capable of being repaired and restored to the same condition as
before the damage occurred within one hundred eighty days of the happening of
such damage, and if the damage occurred prior to the final six months of the
Term, the entire Rent and additional rent payable under the terms and conditions
of this Lease shall abate until such time as the Premises can be used for the
purpose intended. If, however, as a result of such damage or repair of such
damage, only part of the Premises cannot be used for the purpose intended, the
Rent and additional rent payable under the terms and conditions of this Lease
shall abate in proportion that the part of the Premises that cannot be
reasonable be used for the purpose intended, relates to the whole Premises.
Full Rent shall begin the earlier of when the entire Premises can reasonably be
used for the purpose intended or when Tenant actually takes possession of the
Premises.
WAIVER OF CLAIMS
23. Anything in this Lease to the contrary notwithstanding, each party
hereto releases and waives all claims, rights of recovery, and causes of action
that either such party or any party claiming by, through, or under such party by
subrogation or otherwise may now or hereafter have against the other party or
any of the other party's directors, officers, partners, employees, or agents for
any loss or damage that may occur to the Building, Premises, Tenant
Improvements, or any of the contents of any of the foregoing by reason of fire,
Act of God, the elements, or any other cause, excluding gross negligence or
willful misconduct but including negligence of the parties hereto or their
directors, officers, partners, employees, or agents that could have been insured
against under the terms of standard fire and extended coverage insurance
policies. Except as otherwise expressly stated herein, Landlord shall not be
liable to Tenant for any inconvenience or loss to Tenant in connection with any
of the repair, maintenance, damage, destruction, restoration, or replacement
referred to in this Lease. Landlord shall not be obligated to insure any of the
Tenant Improvements not consisting wholly of Building Standard Improvements or
any of Tenant's goods, furniture, or other property placed in or incorporated in
the Building and, except with respect to the portion of the Tenant Improvements
that Landlord is expressly obligated to repair, maintain or replace pursuant to
the provisions of Paragraph 11 hereof Landlord shall not be obligated to repair,
maintain, restore, or replace or otherwise be liable for any damage to or
destruction of any of the foregoing.
INDEMNITY
24. Except for the claims, rights of recovery and causes of action that
each party has released and waived pursuant to Paragraph 23 hereof, each party
hereto (the "Indemnifying Party") shall indemnify and hold harmless the other
party (the "Indemnified Party") and its agents, directors, officers, partners,
employees, invitees, and contractors, from all claims, losses, costs, damages,
or expenses (including, but not limited to, attorney's fees) resulting or
arising from any and all injuries to, including death of, any person or damage
to any property caused by any act, omission, or neglect of the indemnifying
Party or its directors, officers, employees, agents, invitees, or guests, or any
parties contracting with the Indemnifying Party relating to the Premises. Each
party shall not be liable for any damage of any kind or for any
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damage to property, death or injury to persons from any cause whatsoever by
reason of the use and occupancy of the Building by the other. Landlord shall
not be liable to Tenant and Tenant hereby waives all claims against Landlord or
Landlord's directors, officers, partners, employees, or agents for any damage or
loss of any kind, for direct damages, consequential damages, loss of profits,
business interruption, and for any damage to property, death or injury to
persons from any cause whatsoever, including, but not limited to, acts of other
tenants, vandalism, loss of trade secrets or other confidential information, any
damage, loss or injury caused by a defect in the Premises or the Building,
pipes, air conditioning, heating, plumbing or by water leakage of any kind from
the roof, walls, windows or other portion of the Premises or the Building, or
caused by electricity, gas, oil, fire or any other cause in, on, or about the
Premises, Building or Land or any part thereof, unless caused by the willful
misconduct or negligence of Landlord.
TENANT'S INSURANCE
25. During the term of this Lease, Tenant, at its sole cost, shall obtain
and maintain with insurance companies approved by Landlord, commercial general
liability insurance, including property damage, insuring Tenant, Landlord and
Landlord's designees, if any, against liability for injury to persons or
property occurring in or about the Premises or arising out of the ownership,
maintenance, use or occupancy thereof. The liability under such insurance shall
not be less than $1,000,000.00 per occurrence for bodily injury and property
damage and $1,000,000.00 per occurrence for personal injury, and $100,000 for
property damage to Premises, all such amounts to be increased if, in the
reasonable judgment of Landlord, any such increase is necessary for Landlord's
protection. A certificate of such insurance shall be furnished to Landlord,
naming Landlord as "additional insured", and such policy shall provide that it
may not be altered or canceled without thirty (30) days' notice being first
given to Landlord. Tenant shall provide such insurance as it desires against
damage to its property in the Premises.
NON-WAIVER
26. No consent or waiver, express or implied, by Landlord to or of any
breach in the performance or observance by Tenant of any of its obligations
under this Lease shall be construed as or constitute a consent or waiver to or
of any other breach in the performance or observance by Tenant of such
obligation or any other obligations of Tenant. Neither the acceptance by
Landlord of any Rent or other payment hereunder, whether or not any default
hereunder by Tenant is then known to Landlord, nor any custom or practice
followed in connection with this Lease shall constitute a waiver of any of
Tenant's obligations under this Lease. Failure by Landlord to complain of any
action or non-action on the part of Tenant or to declare Tenant in default
irrespective of how long such failure may continue, shall not be deemed to be a
waiver by Landlord of any of its rights hereunder. Time is of the essence with
respect to the performance of every obligation of Tenant under this Lease in
which time of performance is a factor. Except where expressly provided herein
to the contrary, all Rent and other amounts payable by Tenant under this Lease
shall be paid without abatement, offset, counterclaim or diminution to any
extent whatsoever. Except for the execution and delivery of
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a written agreement expressly accepting surrender of the Premises, no act taken
or failed to be taken by Landlord shall be deemed an acceptance of surrender of
the Premises.
No payment by Tenant or receipt by Landlord of a lesser amount than the
monthly rent herein stipulated shall be deemed to be other than on account of
the earliest stipulated rent, nor shall any endorsement or statement of any
check or any letter accompanying any check or payment as rent be deemed an
accord and satisfaction, and Landlord may accept such check or payment without
prejudice to Landlord's right to recover the balance of such rent or pursue any
other remedy provided in this Lease.
QUIET POSSESSION
27. Provided Tenant has performed all its obligations under this Lease,
including, but not limited to, the payment of Rent and all other sums due
hereunder, Tenant shall peaceably and quietly hold and enjoy the Premises for
the Term, subject to the provisions and conditions set forth in this Lease.
NOTICES
28. Each notice required or permitted to be given hereunder by one party
to the other shall be in writing with a statement therein to the effect that
notice is given pursuant to this Lease, and the same shall be given and shall be
deemed to have been delivered, served and given upon receipt after it is placed
in the United States mail, postage prepaid, by United States registered or
certified mail, return receipt requested, addressed to such party at the address
provided for such party herein. Any notices to the Landlord or Tenant shall be
addressed and given as follows:
The Parkway Company Mobile Telecommunications Technologies Corp.
300 One Jackson Place Security Centre South
188 East Capitol Street 200 South Lamar Street, Suite 900
Jackson, Mississippi 39201 Jackson, Mississippi 39201
Attn: Corporate Counsel
The address for Tenant shall be the Premises. The addresses stated herein
for Landlord shall be effective for all notices until written notice of a change
in address is given pursuant to the provisions hereof.
LANDLORD'S FAILURE TO PERFORM
29. If Landlord fails to perform any of its obligations under this Lease,
Landlord shall not be in default hereunder and Tenant shall not have any rights
or remedies growing out of such failure unless Tenant gives Landlord written
notice thereof setting forth in reasonable detail the nature and extent of such
failure and such failure by Landlord is not cured within the thirty (30) day
period following delivery of such notice or such longer period therefor provided
elsewhere
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in this Lease. If such failure cannot reasonably be cured within such thirty
(30) day period, the length of such period shall be extended for the period
reasonably required therefor if Landlord commences curing such failure within
such thirty (30) day period and continues the curing thereof with reasonable
diligence and continuity.
TENANT'S FAILURE TO PERFORM
30. If Tenant fails to perform any one or more of its obligations
hereunder, in addition to the other rights of Landlord hereunder, Landlord shall
have the right, but not the obligation, to perform all or any part of such
obligations of Tenant. Upon receipt of a demand therefor from Landlord, Tenant
shall reimburse Landlord for (i) the cost to Landlord of performing such
obligations and a reasonable profit and overhead, plus (ii) interest thereon at
the then maximum legal rate from the date of demand. If the obligation so
performed by Landlord involves any repair or maintenance or the removing by
Landlord of any improvements to or use of the Premises not authorized by this
Lease, such reasonable profit and overhead shall be fifteen percent (15%) of the
cost to Landlord of performing such obligation.
ACT OF DEFAULT
31. The term "Act of Default" refers to the occurrence of any one or more
of the following: (i) failure of Tenant to pay when due any Rent or other
amount required to be paid under this Lease within 5 days of the due date or
(ii) failure of Tenant after thirty (30) days written notice from Landlord of
Tenant's default in the performance of any of Tenant's obligations, covenants or
agreements under this Lease, to do, observe, keep and perform with diligence and
continuity any of such obligations, covenants, or agreements; or (iii) the
adjudication of Tenant to be a bankrupt: or (iv) the filing by Tenant of a
voluntary petition in bankruptcy, receivership, or other related or similar
proceedings: or (v) the making by Tenant of a general assignment for the benefit
of its creditors; or (vi) the appointment of a receiver of Tenant's interests in
the Premises in any action, suit or proceeding by or against Tenant's interest
in the Premises or by or against Tenant; or (vii) any other voluntary or
involuntary proceedings instituted by or against Tenant under any bankruptcy or
similar laws, unless the occurrence of any such involuntary receivership or
proceeding is cured by the same being dismissed or stayed within sixty (60) days
thereafter; or (viii) the failure of Tenant to discharge any judgment against
Tenant within sixty (60) days after such judgment becomes final; or (ix) the
sale or attempted sale under execution or other legal process of the interest of
Tenant in the Premises, or (x) abandonment of the Premises for any period of
time consisting of thirty (30) consecutive days.
RIGHTS UPON DEFAULT
32. If an Act of Default occurs, Landlord at any time thereafter prior to
the curing of such Act of Default and without waiving any other rights herein
available to Landlord at law or in equity, may either terminate this Lease or
terminate Tenant's right to possession without terminating the Lease, whichever
Landlord elects. In either event, Landlord may, without
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additional notice and without court proceedings, reenter and repossess the
Premises, and remove all persons and property therefrom using such force as may
be reasonably necessary, and Tenant hereby waives any claim arising by reason
thereof or by reason of issuance of any distress warrant and agrees to hold
Landlord harmless from any such claims. If Landlord elects to terminate this
Lease, it may treat the Act of Default as an entire breach of this Lease and
Tenant immediately shall become liable to Landlord for damages for the entire
breach in an amount equal to the total Rent (being the Rent set forth in
Paragraph 4 hereof as adjusted pursuant to Paragraph 5 hereof for any increase
and estimated increase in Operating Expenses which would be payable by Tenant
during the unexpired balance of the Term) and all other payments due for the
balance of the Term, less the fair market rental value of the Premises for what
would have been the balance of the term, both discounted at a rate of 10% per
annum to the then present value. If Landlord elects to terminate Tenant's right
to possession of the Premises without terminating the Lease, Landlord may rent
the Premises or any part thereof for the account of Tenant to any person, or
persons for such rent and for such terms and other conditions as Landlord deems
practical, and Tenant shall be liable to Landlord for the amount, if any, by
which the total rent and all other payments herein provided for the unexpired
balance of the Term exceed the net amount, if any, received by Landlord from
such re-renting, being the gross amount so received by Landlord less the cost of
repossession, re-renting, remodeling and other expenses. Such sum or sums shall
be paid by Tenant in monthly installments on the first day of each month of the
Term. In no case shall Landlord be liable for failure to re-rent the Premises
or collect the rental due under such re-renting and such failure by Landlord
shall not relieve Tenant from its liability to Landlord for the total rent and
all other payments due for the balance of the term. If Landlord elects to
terminate Tenant's right to possession without terminating the Lease, Landlord
shall have the right at any time thereafter to terminate this Lease, whereupon
the foregoing provisions with respect to termination will thereafter apply. If
an Act of Default occurs or in case of any holding over or possession by Tenant
of the Premises after the expiration or termination of this Lease, Tenant shall
reimburse Landlord on demand for all costs incurred by Landlord in connection
therewith including, but not limited to, reasonable attorney's fees, court costs
and related costs plus interest thereon at the then maximum legal rate from the
date such costs are paid by Landlord. Actions by Landlord to collect amounts
due from Tenant as provided in this Paragraph 31 may be brought at any time, and
from time to time, on one or more occasions, without the necessity of Landlord's
waiting until the termination of this Lease. The remedies expressed herein are
cumulative and not exclusive, and the election by Landlord to terminate Tenant's
right to possession without terminating the Lease shall not deprive Landlord of
the right, and Landlord shall have the continuing right to terminate this Lease.
The "Default Rate" shall be the prime or base rate announced from time to time
by Deposit Guaranty National Bank, Jackson, Mississippi plus 3% per annum.
In no event shall this Lease be assigned or assignable by operation of law
or by voluntary bankruptcy proceedings or otherwise and in no event shall this
Lease or any rights or privileges hereunder be an asset of Tenant under any
bankruptcy, insolvency or reorganization proceedings.
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SURRENDER
33. On the last day of the Term, or upon the earlier termination of this
Lease, Tenant shall peaceably and quietly surrender the Premises to Landlord,
broom clean, in good order, repair and condition at least equal to the condition
when delivered to Tenant, excepting only reasonable wear and tear resulting from
normal use and damage by fire or other casualty covered by the insurance carried
by Landlord. Prior to the surrender of the Premises to Landlord, Tenant, at its
sole cost and expense, shall remove all liens and other encumbrances which may
have resulted from the acts or omissions of Tenant. If Tenant fails to do any
of the foregoing, Landlord, in addition to other remedies available to it at law
or in equity, may, without notice, enter upon, reenter, possess and repossess
itself thereof, by force, summary proceedings, ejectment, or otherwise, and may
dispossess and remove Tenant and all persons and property from the Premises; and
Tenant waives any and all damages or claims for damages as a result thereof.
Such dispossession and removal of Tenant shall not constitute a waiver by
Landlord of any claims by Landlord against Tenant. Tenant shall be liable for
any and all costs to restore the Premises to the original condition, as provided
for herein, and shall be liable for any damage caused to the Premises, whether
said damage was caused before or during the time Tenant vacated the Premises.
Upon vacating the Premises, Tenant may request that Landlord accompany Tenant on
an inspection to establish the condition of the Premises; however, Tenant must
schedule said inspection to take place within forty-eight (48) hours of the time
Tenant vacates the Premises.
HOLDING OVER
34. If Tenant does not surrender possession of the Premises at the end of
the Term or upon earlier termination of this Lease, at the election of Landlord,
Tenant shall be a tenant-at-sufferance of Landlord and the Rent and other
payments due during the period of such holdover shall be one and on-half (1.5)
times the amount set forth above in effect immediately prior to the end of the
Term or termination of this Lease. The inclusion of the preceding sentence
shall not be construed as the Landlord's consent for the Tenant to holdover and
no notice to vacate need be given to Tenant during any holdover period to
entitle Landlord to the immediate right to exclusive occupancy of the Premises.
Any holdover by Tenant shall not operate to extend any of the rights or remedies
of Tenant under this Lease.
REMOVAL OF TENANT'S PROPERTY
35. Tenant shall retain the ownership of all movable equipment, furniture,
and supplies placed in or on the Premises by Tenant and shall have the right to
remove such movable equipment, furniture, and supplies prior to termination of
this Lease provided that no Act of Default has been committed by Tenant which
has not been fully cured in a manner acceptable to Landlord and further provided
that Tenant repairs any injury to the Premises or the Building resulting from
such removal. Unless Tenant has made prior arrangements with Landlord and
Landlord has agreed in writing to permit Tenant to leave such equipment,
furniture or supplies on the Premises for an agreed period, if Tenant does not
remove such movable equipment,
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furniture and supplies within 30 days after such termination, then, in addition
to its other remedies at law or in equity, Landlord shall have the right to have
such items removed and stored at Tenant's expense and all damage to the Premises
or Building resulting therefrom repaired at the cost of Tenant or elect that
such movable equipment, furniture and supplies automatically become the property
of the Landlord upon termination of this Lease, and, in the latter case, Tenant
shall not have any further right with respect thereto or for reimbursement
therefor. In the event a third party asserts a lien or other such claim of
interest, in writing, against such moveable equipment, furniture, or supplies
left on the Premises by Tenant, Landlord, to the extent required by applicable
law and with prior written notice to Tenant, may permit the removal of such
equipment, furniture or supplies by such third party claimant; such action shall
not render Landlord or its agents liable to Tenant for any losses or claims
resulting therefrom and Tenant agrees to indemnify and hold Landlord harmless
from any claims or actions by third parties caused by or resulting from
Landlord's actions as to such equipment, furniture and supplies. The foregoing
does not restrict or limit Tenant's right or ability to sell inventory in the
ordinary course of its business.
LIENS
36. Tenant shall not permit any mechanics', materialmen's or other liens
to be fixed or placed against the Premises or the Building or the Land, and
agrees promptly to discharge any mechanics', materialmen's or other lien which
is allegedly fixed or placed against any of the foregoing.
INTEREST
37. All amounts of money payable to a party under this Lease, if not paid
when due, shall bear interest from the date due until paid at the Default Rate,
not to exceed the then maximum legal rate.
ASSIGNMENT AND SUBLETTING
38. Landlord shall have the right to transfer and assign in whole or in
part, by operation of law or otherwise, its rights and obligations hereunder
whenever Landlord, in its sole judgment, deems it appropriate without any
liability to Tenant and Tenant shall attorn to any party to which Landlord
transfers the Building. Tenant shall not assign or otherwise transfer,
mortgage, pledge, hypothecate or otherwise encumber this Lease, or any interest
herein, and shall not sublet the Premises or any part thereof, or any right or
privilege appurtenant thereto, or permit any other party to occupy or use the
Premises, or any portion thereof, without the express written consent of
Landlord, which consent shall not be unreasonably withheld, conditional or
delayed; provided, however, that Tenant may assign this lease to any wholly
owned subsidiary of Tenant, or may sublease all or any portion of the Premises
to any subsidiary or affiliated entity of Tenant, or to any entity into or with
which Tenant is merged or consolidated, or any entity acquiring all or
substantially all of the business and assets of Tenant, without the prior
written consent of Landlord, provided a copy of such sublease or assignment
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is promptly delivered to Landlord, Any such assignment or sublease by Tenant or
consent by Landlord shall not release Tenant from any of Tenant's obligations
hereunder or be deemed to be a consent to any subsequent assignment, subletting,
occupation or use by another person. Subject to the foregoing, the rights and
obligations of the parties hereunder shall inure to the benefit of and being
binding on the parties hereto and their respective successors, assigns, heirs,
and legal representatives.
MERGER OF ESTATES
39. The voluntary or other surrender of this Lease by Tenant or a mutual
cancellation thereof, shall not work a merger, but shall, at the option of
Landlord, terminate all or any existing subleases or subtenancies, or may, at
the option of Landlord, operate as an assignment to it of Tenant's interest in
any or all such subleases or subtenancies.
LANDLORD'S LIABILITY
40. Any provisions of this Lease to the contrary notwithstanding, Tenant
hereby agrees that no personal or corporate liability of any kind or character
whatsoever now attaches or at any time hereafter under any condition shall
attach to Landlord for payment of any amounts payable under this Lease or for
the performance of any obligation under this Lease. The exclusive remedies of
Tenant for the failure of Landlord to perform any of its obligations under this
Lease shall be to proceed against the interest of Landlord in and to the
Building.
LIGHT AND AIR
41. Neither diminution nor shutting off of light or air or both nor any
other effect on the Premises by any structure erected or condition now or
hereafter existing on lands adjacent to the Building shall effect this Lease,
abate Rent, or otherwise impose any liability on Landlord.
CONDEMNATION
42. If ail or more than twenty-five percent (25%) of the interest in the
Premises shall be taken as a result of the exercise of the power of eminent
domain, this Lease shall terminate as to the part so taken as of the date of
taking. If more than 25% of the interest in the Premises or if a substantial
portion of the Building is so taken, either Landlord or Tenant shall have the
right to terminate this Lease as to the balance of the Premises by written
notice to the other within thirty (30) days after the date of taking; provided,
however, that a condition to the exercise by Tenant of such right to terminate
shall be that the portion of the Premises or Building taken shall be of such
extent and nature as to substantially handicap, impede or impair Tenant's use of
the Premises or the balance of the Premises remaining. In the event of any
taking, Landlord shall be entitled to any and all compensation, damages, income,
rent and awards with respect thereto, except for an award, if any, specified by
the condemning authority for any property that Tenant has the right to remove
upon termination of this Lease. Tenant shall have no claim against Landlord for
the value of any unexpired Term. In the event of a
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partial taking of the Premises which does not result in a termination of this
Lease, the Rent thereafter to be paid shall be equitably reduced by being
proportionately reduced as to the square footage so taken.
SUBORDINATION
43. Subject to the terms of a written nondisturbance agreement to be
executed by Tenant, the rights and interests of Tenant under this Lease and in
and to the Premises shall be subject and subordinate to first deeds of trust,
mortgages, and other security instruments and to all renewals, modifications,
consolidations, replacements and extensions thereof (the "Security Documents")
heretofore or hereafter executed by Landlord covering the Premises, the Building
and the Land or any parts thereof, to the same extent as if the Security
Documents had been executed, delivered and recorded prior to the execution of
this Lease. After the delivery to Tenant of a notice from Landlord that it has
entered into one or more Security Documents, then during the term of such
Security Documents Tenant shall deliver to the holder or holders of all Security
Documents a copy of all notices to Landlord and shall grant to such holder or
holders the right to cure all defaults, if any, of Landlord hereunder within the
same time period provided in this Lease for curing such defaults by Landlord
and, except with the prior written consent of the holder or holders of the
Security Documents, shall not (i) amend this Lease, (ii) surrender or terminate
this Lease except pursuant to a right to terminate expressly set forth in this
Lease, or (iii) pay any Rent more than one month in advance or pay any Rent or
other amounts payable hereunder other than in strict accordance with the terms
hereof. The provisions of this subsection shall be self-operative and shall not
require further agreement by Tenant; however, at the request of Landlord, Tenant
shall execute such further documents as may be required to evidence and set
forth for the benefit of the holder of any Security Documents the obligations of
Tenant hereunder. Contemporaneous with obtaining financing Landlord shall
obtain a nondisturbance agreement with any such lender providing Tenant the
right to continue to occupy the Premises pursuant to the terms of this Lease and
so long as no Act of Default exists. At any time and from time to time upon not
less than ten (10) days' prior notice by Landlord, Tenant shall execute,
acknowledge and deliver to the Landlord a statement of the Tenant in writing
certifying that this Lease is unmodified and in full force and effect (or if
there have been modifications, that the same is in full force and effect as
modified and stating the modifications, if any), and stating whether or not to
the best knowledge of Tenant the Landlord is in default in the keeping,
observance or performance of any covenant, agreement, term, provision or
condition contained in this Lease and, if so, specifying each such default of
which Tenant may have knowledge, it being intended that any such statement may
be relied upon by any prospective purchaser, tenant, mortgagee or assignee of
any mortgage of the Building or of the Landlord's interest therein. If
requested by Tenant, Landlord shall use reasonable efforts to obtain a Non-
distribution Agreement from the holder of any Security Documents. Tenant shall
additionally appoint Landlord its attorney in fact for the purpose of executing
subordinations, such appointment being a power coupled with an interest and
irrevocable during the term of this Lease.
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LEGAL INTERPRETATION
44. This Lease and the rights and obligations of the parties hereto shall
be interpreted, construed and enforced in accordance with the laws of the State
of Mississippi. The determination that any one or more provisions of this Lease
is invalid, void, illegal or unenforceable shall not affect or invalidate the
remainder. All obligations of either party requiring any performance after the
expiration of the Term shall survive the expiration of the Term and shall be
fully enforceable in accordance with those provisions pertaining thereto. If
the rights of the Tenant hereunder are owned by two or more parties, or two or
more parties are designated herein as Tenant, then all such parties shall be
jointly and severally liable for the obligations of Tenant hereunder. Tenant
and all parties executing by or on behalf of Tenant, represent to Landlord that
this Lease has been duly authorized by Tenant and constitutes a valid and
binding agreement. Landlord and all parties executing by or on behalf of
Landlord, represent to Tenant that this Lease has been duly authorized by
Landlord and constitutes a valid and binding agreement. Additionally, each
party agrees to submit, upon the other party's request, satisfactory written
evidence of such party's authority to enter into this Lease. Paragraph titles
appearing in the margins are for convenient reference only and shall not be used
to interpret or limit the meaning of any provision of this Lease.
USE OF NAMES
45. Tenant shall not have the right to use the name Security Centre except
in connection with giving the address of Tenant, and then such terms cannot be
emphasized or displayed with more prominence, than the rest of such address.
Landlord shall have the right to change the name of the Building whenever
Landlord in its sole judgment deems appropriate without any consent of or
liability to Tenant.
EXPANSION RIGHTS
46. Provided no Act of Default by Tenant exists hereunder, before Landlord
shall, during the term, lease any space in the Building, Landlord shall give
Tenant written notice (a "Lease Notice") specifying the space to be leased;
provided, however, such expansion rights of Tenant shall be subject to all
existing renewal and expansion rights of the other Tenants of the Buildings as
listed on Exhibit 46 attached hereto. Landlord shall not be obligated to have
----------
received any offer to lease such space at the time the Lease Notice is given.
Tenant shall have twenty (20) days following the Lease Notice to irrevocably
elect to lease the space identified therein, which election shall be given by
written notice from Tenant to Landlord a ("Lease Acceptance Notice").
If Tenant timely gives the Lease Acceptance Notice, the identified space
shall be added to the Premises by amendment to this Lease effective as of the
execution of such amendment, which amendment shall be executed within five (5)
days of the Lease Acceptance Notice. The amendment shall only modify the Lease
to add the new premises to the Premises,
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correspondingly increase the base rent and Tenant's proportionate share of
Operating Expenses, and any other terms and conditions described in the Lease
Notice.
If Tenant fails timely to give a Lease Acceptance Notice, Landlord shall be
free for a period of six months after giving the Lease Notice to lease such
space to any other party or parties on such terms as Landlord, in its sole
discretion, deems advisable.
Tenant's expansion rights shall be based upon base rental of $16.50 per
square foot of Rentable Area (as defined in Paragraph 7 above), with no
allowance for tenant improvements or actual improvements and the 1995 actual
expenses shall serve as the basis for Operating Expense escalations.
PARKING
47. Tenant shall be entitled to unreserved parking places at the rate
charged to other Tenants in the valet parking facility owned by Landlord located
adjacent to the Building. Tenant shall be entitled to as many spaces as it
currently occupies and upon expansion Tenant shall be entitled to any parking
places allocated to any such expansion space.
CONDITION PRECEDENT TO LEASE
48. Tenant acknowledges that Landlord intends to make a bid to purchase
the Building from the current owner of the Building in accordance with the
Resolution Trust Corporation's Security Centre Office Building Bid Package ("Bid
Package"). If Landlord does not consummate the purchase of the Building, then
this Lease shall be void and of no effect and neither party shall have any
further liability pursuant to this Lease. If Landlord closes the purchase of
the Building pursuant to the Bid Package, then this Lease shall be in full force
and effect as if the Landlord had owned the Building on the date which this
Lease was executed. It is the intention of the parties that upon execution,
this Lease shall constitute the legal, valid and binding obligations of each
party enforceable in accordance with its terms subject only to Landlord's
successful purchase of the Building.
WHOLE AGREEMENT
49. No oral statements or prior written material not specifically
incorporated herein shall be of any force or effect. Tenant agrees that in
entering into and taking this Lease, it relies solely upon the representations
and agreements contained in this Lease and no others. This Lease, including the
Exhibits which are attached hereto and a part hereof to all purposes,
constitutes the whole agreement of the parties and shall in no way be
conditioned, modified or supplemented except by a written agreement executed by
and delivered to both parties. The relationship created by this Lease is solely
that of Landlord and Tenant and nothing contained herein shall make either party
the agent, legal representative, partner, subsidiary, joint venturer or employer
of the other party.
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IN WITNESS WHEREOF, this Lease is hereby executed as of the date first
above set forth.
Landlord
SECURITY CENTRE, INC.
By: /s/ Steven G. Rogers
--------------------------------------
Name: Steven G. Rogers
------------------------------------
Title: President
-----------------------------------
By: /s/ David R. Fowler
--------------------------------------
Name: David R. Fowler
------------------------------------
Title: Vice President
-----------------------------------
Tenant
MOBILE TELECOMMUNICATION
TECHNOLOGIES CORP.
By: /s/ Jere T. Little
--------------------------------------
Name: Jere T. Little
------------------------------------
Title: Vice President - Administration
-----------------------------------
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EXHIBIT A
FLOORPLAN
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EXHIBIT B
BUILDING STANDARD IMPROVEMENTS
(for the purposes of Paragraph 21 - Insurance)
As used in this Lease, Building Standard Improvements shall refer to the
following:
1. Partitioning, painted and in place. The partitions are 3-3/4" nominal
thickness, consisting of two (2) 5/8" thick, full-height gypsum boards, attached
to each side of 2-1/2" metal studs. Demising partitions include batt-type
insulation for sound insulation purposes.
2. Doors are full-height solid core with nonglare laminate-clad exterior
finish. One (1) entry door included with additional corridor doors as required
by the Fire Code section of the City of Jackson Building Code. Interior doors
equipped with passage sets. Corridor doors furnished with heavy duty lockset
and closers. Door stops provided for all doors.
3. Light fixtures are recessed 2' x 4' ceiling-mounted parabolic fixtures.
4. Each convenience outlet is wall-mounted at standard height.
5. Telephone outlets to be wall-mounted at standard height.
6. Ceiling: Acoustical tile ceiling hung throughout Premises.
7. Carpet: Building Standard carpet provided throughout office areas.
8. Window Covering: Building Standard window coverings on all exterior window
openings.
9. Heating, Ventilating, and Air Conditioning: Landlord's Building Standard
air conditioning system throughout the Premises.
10. Automatic Fire Sprinkler System: Building Standard automatic fire
sprinkler system throughout the Premises.
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EXHIBIT C
CLEANING AND JANITORIAL SERVICES
NIGHTLY CLEANING
1. Empty, clean and damp dust all waste receptacles, wash as necessary.
2. Empty and clean all ash trays.
3. Vacuum all rugs and carpeted areas.
4. Dust furniture, files, fixtures, etc.
5. Damp wipe and polish all glass furniture tops.
6. Remove finger marks and smudges from vertical surfaces.
7. Clean all water coolers.
8. Sweep all private stairways nightly, vacuum if carpeted.
9. Damp mop spillage in office and public areas as required.
10. Damp dust all telephones as necessary.
WASH ROOMS (NIGHTLY)
1. Damp mop, rinse and dry floors nightly.
2. Scrub floors as necessary.
3. Clean all mirrors, bright work and enameled surfaces nightly.
4. Wash and disinfect all fixtures.
5. Damp wipe and disinfect all partitions, tile walls, etc.
6. Empty and sanitize all receptacles.
7. Fill toilet tissue, soap, towel, and sanitary napkin dispensers.
8. Clean flushometers and other metal work.
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9. Wash and polish all wall partitions, tile walls and enamel surfaces from
trim to floor monthly.
10. Vacuum all louvers, ventilating grilles and dust light fixtures monthly.
FLOORS
1. Ceramic tile, marble and terrazzo floors to be swept and buffed nightly and
washed or scrubbed as necessary.
2. Vinyl composition floors and bases to be swept nightly.
3. Tile floors to be waxed and buffed monthly.
4. All carpeted areas and rugs to be vacuum cleaned nightly.
5. Carpet shampooing will be performed at Tenant's request and billed to
Tenant.
GLASS
1. Clean all perimeter windows quarterly, inside and outside.
2. Clean glass entrance doors and adjacent glass panels nightly.
3. Clean partition glass and interior glass doors quarterly.
HIGH DUSTING (QUARTERLY)
1. Dust and wipe clean all closet shelving when empty.
2. Dust all picture frames, charts, graphs, etc.
3. Dust clean all vertical surfaces.
4. Damp dust all ceiling air conditioning diffusers.
5. Dust the exterior surfaces of lighting fixtures.
26
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DAY SERVICE
1. Check men's washrooms for toilet tissue replacement.
2. Check ladies' washrooms for toilet tissue and sanitary napkin replacements.
3. Supply toilet tissue, soap and towels in men's and ladles' washrooms.
Anything hereinabove to the contrary notwithstanding, it is understood that no
services of the character provided for in this Exhibit shall be performed on
Saturdays, Sundays or Holidays defined in this Lease.
27
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EXHIBIT D
RULES AND REGULATIONS OF BUILDING
RULES AND REGULATIONS
1. Landlord will provide and maintain a directory for all tenants of the
Building. No signs, advertisements or notices visible to the general public
shall be permitted within the Building unless first approved in writing by
Landlord.
2. Sidewalks, doorways, vestibules, halls, stairways and other similar areas
shall not be obstructed by tenants or used by any tenant for any purpose other
than ingress and egress to and from the leased premises and for going from one
to another part of the Building.
3. Corridor doors, when not in use, shall be kept closed.
4. Plumbing fixtures and appliances shall be used only for the purposes for
which designed, and no sweepings, rubbish, rags or other unsuitable material
shall be thrown or placed therein. Damage resulting to any such fixtures or
appliances from misuse by a tenant shall be paid by tenant.
5. Landlord shall provide all locks for doors into each tenant's leased area,
and no tenant shall place any additional lock or locks on any door in its leased
area without Landlord's prior written consent. Two keys for each lock on the
doors in each tenant's leased area shall be furnished by Landlord. Additional
keys shall be made available to tenants at tenant's cost. Tenants shall not
have any duplicate keys made except by Landlord.
6. Electric current shall not be used for cooking (which term does not include
microwaves, coffee makers and other common small kitchen appliances), or heating
without Landlord's prior written permission.
7. All Tenants will refer all contractors, contractors' representatives and
installation technicians who are to perform any work within the Building to
Landlord for Landlord's supervision, approval and control before the performance
of any such work. This provision shall apply to all work performed in the
Building including, but not limited to installation of telephones, medical type
equipment, telegraph equipment, electrical devices and attachments, and any and
all installations of every nature affecting floors, walls, woodwork, trim,
windows, ceilings, equipment and any other physical portion of the Building.
8. Movement in or out of the Building of furniture or office equipment, or
dispatch or receipt by tenants of any heavy equipment, bulky material or
merchandise shall be performed only in such manner, during such hours and using
such elevators and passageways as the Building Manager may designate and approve
in advance and, if reasonable, necessary or
28
<PAGE>
appropriate in view of all the circumstances, then only upon having been
scheduled in advance with the Building Manager.
9. The location, weight and supporting devices for any medical type equipment,
safes and other heavy equipment shall in all cases be approved by Landlord prior
to initial installation or relocation.
10. No portion of any tenant's leased area shall at any time be used for
cooking, sleeping or lodging quarters. No birds, animals or pets of any type,
with the exception of guide dogs accompanying visually handicapped persons,
shall be brought into or kept in, on or about tenant's leased area.
11. Tenants shall not make or permit any loud or improper noises in the
Building or otherwise interfere in any way with other tenants or persons having
business with them.
12. Each Tenant shall endeavor to keep its leased area neat and clean. Nothing
shall be swept or thrown into the corridors, halls, elevator shafts or
stairways, nor shall tenants place any trash receptacles in these areas.
13. Tenants shall not employ any person for the purpose of cleaning other than
the authorized cleaning and maintenance personnel for the Building unless
otherwise approved in writing by Landlord.
14. To insure orderly operation of the Building, Landlord reserves the right to
approve all concessionaires, vending machine operators or other distributors of
cold drinks, coffee, food or other concessions, water, towels or newspapers.
15. Landlord shall not be responsible to the tenants, their agents, patients,
employees or invitees for any loss of money, jewelry or other personal property
from the leased premises or public areas or for any damages to any property
therein from any cause whatsoever whether such loss or damage occurs when an
area is locked against entry or not.
16. Tenants shall exercise reasonable precautions in protection of their
personal property from loss or damage by keeping doors to unattended areas
locked. Tenants shall also report any thefts or losses to the Building Manager
and security personnel as soon as reasonably possible after discovery and shall
also notify the Building Manager and security personnel of the presence of any
persons whose conduct is suspicious or causes a disturbance.
17. Tenants, their employees, patients, guests and invitees may be called upon
to show suitable identification and sign a building register when entering or
leaving the Building at times other than normal Building operating hours, and
all tenants shall cooperate fully with Building personnel in complying with such
requirements.
29
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18. Tenants shall not solicit from or circulate advertising material among
other tenants of the Building except through the regular use of the U. S. Postal
Service. Tenants shall notify the Building Manager or the Building personnel
promptly if it comes to their attention that any unauthorized persons are
soliciting from or causing annoyance to tenants, their employees, guests or
invitees.
19. Landlord reserves the right to deny entrance to the Building or remove any
person or persons from the Building in any case where the conduct of such person
or persons involves a hazard or nuisance to any tenant of the Building or to the
public or in the event or other emergency, riot, civil commotion or similar
disturbance involving risk to the Building, tenants or the general public.
20. Tenant shall not tamper with or attempt to adjust temperature control
thermostats in the Building. Landlord shall adjust thermostats as required to
maintain the Building standard temperature.
21. All requests for after hours air conditioning or heating must be submitted
in writing to the Building management office by 2:00 p.m. on the day desired for
weekday requests, by 2:00 p.m. Friday for weekend requests, and by 2:00 p.m. on
the preceding business day for Holiday requests. Requests for after hours
lighting may be made to the Building management office or after hours to any on
duty security guard.
22. No flammable or explosive fluids or materials shall be kept or used within
the Building except in areas approved by Landlord, and Tenant shall comply with
all applicable building and fire codes relating thereto.
23. Landlord reserves the right to rescind any of these rules and regulations
and to make such other and further rules and regulations as in its judgment
shall from time to time be needful for the safety, protection, care and
cleanliness of the Building, the operation thereof, the preservation of good
order therein and the protection and comfort of the tenants and their agents,
employees and invitees, which rules and regulations, when made and written
notice thereof is given to a tenant, shall be binding upon it in like manner as
if originally herein prescribed.
30
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EXHIBIT 10.31
STOCK EXCHANGE AGREEMENT
Dated as of July 19, 1995
by and among
MOBILE TELECOMMUNICATION TECHNOLOGIES CORP.,
MICROSOFT CORPORATION,
KLEINER PERKINS CAUFIELD & BYERS VI, L.P.,
KPCB VI FOUNDERS FUND, L.P.,
WILLIAM H. GATES,
PAUL G. ALLEN,
INTEGRAL CAPITAL PARTNERS, L.P.
and
INTEGRAL CAPITAL PARTNERS INTERNATIONAL C.V.
<PAGE>
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
Section 1.1 "Affiliate"........................................ 2
Section 1.2 "Agreement"........................................ 3
Section 1.3 "Commission"....................................... 3
Section 1.4 "Communications Act"............................... 3
Section 1.5 "Closing".......................................... 3
Section 1.6 "Closing Date"..................................... 3
Section 1.7 "Code"............................................. 3
Section 1.8 "Commissioner"..................................... 3
Section 1.9 "Destineer"........................................ 3
Section 1.10 "Destineer Common Stock".......................... 3
Section 1.11 "Destineer Minority Shares"....................... 3
Section 1.12 "Destineer Stockholders Agreement"................ 4
Section 1.13 "Exchange"........................................ 4
Section 1.14 "Exchange Act".................................... 4
Section 1.15 "Exchange Ratio".................................. 4
Section 1.16 "Exchange Transaction"............................ 4
Section 1.17 "Fairness Order".................................. 4
Section 1.18 "HSR Act"......................................... 4
Section 1.19 "Integral"........................................ 4
Section 1.20 "Integral Capital"................................ 4
Section 1.21 "Integral International".......................... 4
Section 1.22 "KP".............................................. 4
Section 1.23 "KPI"............................................. 4
Section 1.24 "KPII"............................................ 4
Section 1.25 "Microsoft"....................................... 5
Section 1.26 "Minority Stockholders"........................... 5
Section 1.27 "Mtel"............................................ 5
Section 1.28 "Mtel Common Stock"............................... 5
Section 1.29 "Mtel SEC Reports"................................ 5
Section 1.30 "PA".............................................. 5
Section 1.31 "Person".......................................... 5
Section 1.32 "Securities Act".................................. 5
Section 1.33 "Stockholder"..................................... 5
Section 1.34 "Stockholders".................................... 5
Section 1.35 "Transfer"........................................ 5
Section 1.36 "WG".............................................. 5
ARTICLE II
EXCHANGE OF SHARES
SECTION 2.1 Exchange of Shares................................ 6
SECTION 2.2 Closing........................................... 7
SECTION 2.3 Destineer Stockholders Agreement.................. 8
i
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ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1 Representations and Warranties of the
Minority Stockholders................................ 8
(a) Authority................................... 8
(b) Title to Destineer Minority Shares.......... 9
(c) Organization................................ 10
(d) Consents and Approvals...................... 10
(e) No Violations............................... 11
SECTION 3.2 Representations and Warranties of Mtel.......... 12
(a) Capitalization.............................. 12
(b) Mtel Common Stock........................... 12
(c) Authority................................... 12
(d) Organization................................ 13
(e) Consents and Approvals...................... 13
(f) No Violations............................... 14
(g) Mtel SEC Reports............................ 15
(h) Absence of Certain Changes or Events........ 15
(i) Disclosure.................................. 15
(j) Tax Representations......................... 16
ARTICLE IV
COVENANTS
SECTION 4.1 No Transfer Before Closing...................... 19
SECTION 4.2 Covenants of Mtel............................... 20
(a) Current Reports............................. 20
(b) Approvals................................... 20
SECTION 4.3 Hart-Scott-Rodino Filing........................ 21
ARTICLE V
CONDITIONS
SECTION 5.1 Conditions to Closing Obligations of the
Minority Stockholders................................ 21
SECTION 5.2 Conditions to Closing Obligations of
Mtel................................................. 22
ARTICLE VI
MISCELLANEOUS
SECTION 6.1 Waivers......................................... 24
SECTION 6.2 Assignability................................... 25
SECTION 6.3 Notices......................................... 25
SECTION 6.4 Third Party Rights.............................. 26
SECTION 6.5 Choice of Law................................... 27
SECTION 6.6 Severability.................................... 27
SECTION 6.7 Enforcement of Agreement........................ 27
SECTION 6.8 References to Agreement......................... 28
SECTION 6.9 Headings, etc................................... 28
SECTION 6.10 Counterparts.................................... 28
SECTION 6.11 Survival........................................ 29
SECTION 6.12 Amendments...................................... 29
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SECTION 6.13 Agreement to Cooperate.......................... 29
SECTION 6.14 Further Action.................................. 29
SECTION 6.15 Expenses........................................ 30
SECTION 6.16 Corporate Securities Law........................ 30
Appendix
Appendix I List of Minority Stockholders and Number of Shares of Mtel
Common Stock Received in the Exchange
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STOCK EXCHANGE AGREEMENT
THIS STOCK EXCHANGE AGREEMENT (this "Agreement"), dated as of July 19,
1995, by and among Mobile Telecommunication Technologies Corp., a Delaware
corporation ("Mtel"), Microsoft Corporation, a Washington corporation
("Microsoft"), Kleiner Perkins Caufield & Byers VI, L.P., a California limited
partnership ("KPI"), KPCB VI Founders Fund, L.P., a California limited
partnership ("KPII") (KPI and KPII collectively, "KP"), William H. Gates ("WG")
and Paul G. Allen ("PA") in their individual capacities, Integral Capital
Partners, L.P., a Delaware limited partnership ("Integral Capital"), and
Integral Capital Partners International C.V., a Netherlands Antilles partnership
("Integral International") (Integral Capital and Integral International
collectively, "Integral").
WITNESSETH:
WHEREAS, Mtel, Microsoft, KP, WG, PA and Integral (each individually a
"Stockholder" and collectively the "Stockholders") are the holders of all of the
issued and outstanding capital stock of Destineer Corporation, a Delaware
corporation ("Destineer");
WHEREAS, the parties have agreed that it is in their best interests that
Mtel acquire all of the issued and outstanding shares of (i) Class A Common
Stock, par value $.01 per share, and (ii) Class B Common Stock, par value $.01
per share, of Destineer (collectively, the "Destineer Common Stock") owned by
Microsoft, KP, WG, PA and Integral (collectively, the
<PAGE>
"Minority Stockholders") solely in exchange for shares of Common Stock, par
value $.01 per share, of Mtel ("Mtel Common Stock"); and
WHEREAS, upon completion of the exchange of the Destineer Common Stock
owned by the Minority Stockholders for Mtel Common Stock (the "Exchange
Transaction"), Destineer will be a wholly owned subsidiary of Mtel and, as such,
will provide Mtel with enhanced flexibility to pursue commercial opportunities
for Destineer, including the ability to utilize the distribution systems,
technology and general operational know-how possessed by certain Mtel
affiliates, which flexibility will also inure to the benefit of the Minority
Stockholders in their capacity as Mtel stockholders.
NOW, THEREFORE, in consideration of the premises, agreements and covenants
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby confirmed, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
The following terms used in this Agreement shall have the meanings set
forth hereinbelow.
Section 1.1 "Affiliate" shall mean any Person that, directly or indirectly,
through one or more intermediaries, controls or is controlled by, or is under
common control with, the Person specified. As used in this definition, "control"
shall mean the power through the ownership of voting securities, contract, or
otherwise to direct the affairs of another Person. Notwithstanding the
foregoing, the parties hereto expressly
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acknowledge and agree that PA is not an Affiliate of Microsoft based on the
status of PA's relationships with Microsoft as of the date hereof.
Section 1.2 "Agreement" shall mean this Agreement as originally executed
or, as the context or subject matter otherwise requires, as amended, modified,
supplemented or restated from time to time.
Section 1.3 "Commission" shall mean the United States Securities and
Exchange Commission or any other Federal agency at the time administering the
Securities Act.
Section 1.4 "Communications Act" shall mean the Communications Act of 1934,
as amended.
Section 1.5 "Closing" shall have the meaning ascribed to such term in
Section 2.2.
Section 1.6 "Closing Date" shall have the meaning ascribed to such term in
Section 2.2.
Section 1.7 "Code" shall mean the Internal Revenue Code of 1986, as
amended, and the rules and regulations promulgated thereunder.
Section 1.8 "Commissioner" shall have the meaning ascribed to such term in
Section 4.2(b).
Section 1.9 "Destineer" shall mean Destineer Corporation, a Delaware
corporation.
Section 1.10 "Destineer Common Stock" shall have the meaning set forth in
the recitals to this Agreement.
Section 1.11 "Destineer Minority Shares" shall have the meaning ascribed to
such term in Section 2.1(a).
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Section 1.12 "Destineer Stockholders Agreement" shall have the meaning
ascribed to such term in Section 2.3.
Section 1.13 "Exchange" shall have the meaning ascribed to such term in
Section 2.1(a).
Section 1.14 "Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
Section 1.15 "Exchange Ratio" shall have the meaning ascribed to such term
in Section 2.1(a).
Section 1.16 "Exchange Transaction" shall have the meaning set forth in the
recitals to this Agreement.
Section 1.17 "Fairness Order" shall have the meaning ascribed to such term
in Section 4.2(b).
Section 1.18 "HSR Act" shall mean the Hart-Scott- Rodino Antitrust
Improvements Act of 1976, as amended.
Section 1.19 "Integral" shall collectively mean Integral Capital and
Integral International.
Section 1.20 "Integral Capital" shall mean Integral Capital Partners, L.P.,
a Delaware limited partnership.
Section 1.21 "Integral International" shall mean Integral Capital Partners
International C.V., a Netherlands Antilles limited partnership.
Section 1.22 "KP" shall collectively mean KPI and KPII.
Section 1.23 "KPI" shall mean Kleiner Perkins Caufield & Byers VI, L.P., a
California limited partnership.
Section 1.24 "KPII" shall mean KPCB VI Founders Fund, L.P., a California
limited partnership.
4
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Section 1.25 "Microsoft" shall mean Microsoft Corporation, a Washington
corporation.
Section 1.26 "Minority Stockholders" shall have the same meaning set forth
in the recitals to this Agreement.
Section 1.27 "Mtel" shall mean Mobile Telecommunications Technologies
Corp., a Delaware corporation.
Section 1.28 "Mtel Common Stock" shall have the meaning set forth in the
recitals to this Agreement.
Section 1.29 "Mtel SEC Reports" shall have the meaning ascribed to such
term in Section 3.2(g).
Section 1.30 "PA" shall mean Paul G. Allen in his individual capacity.
Section 1.31 "Person" shall mean an individual, firm, trust, association,
corporation, partnership, government (whether federal, state, local or other
political subdivision, or any agency or bureau of any of them) or other entity.
Section 1.32 "Securities Act" shall mean the Securities Act of 1933, as
amended.
Section 1.33 "Stockholder" shall have the meaning set forth in the recitals
to this Agreement.
Section 1.34 "Stockholders" shall have the meaning set forth in the
recitals to this Agreement.
Section 1.35 "Transfer" shall have the meaning ascribed to such term in
Section 4.1.
Section 1.36 "WG" shall mean William H. Gates in his individual capacity.
5
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ARTICLE II
EXCHANGE OF SHARES
SECTION 2.1 Exchange of Shares. (a) Upon the terms and subject to the
conditions set forth herein, at the Closing, Mtel shall acquire, and each of the
Minority Stockholders shall sell and transfer to Mtel, all of the Destineer
Common Stock owned of record or beneficially by each of the Minority
Stockholders (the "Destineer Minority Shares"), and solely in exchange therefor,
Mtel shall issue to each of the Minority Stockholders 1,170 shares of Mtel
Common Stock (the "Exchange Ratio") for each share of Destineer Common Stock
held by the Minority Stockholders as of the Closing Date (the "Exchange"). Upon
the completion of the Exchange, Destineer shall be a wholly owned subsidiary of
Mtel. Each Minority Stockholder expressly acknowledges and agrees that the
difference in the rights of the holders of the Class A and Class B Common Stock
of Destineer upon any liquidation of Destineer are not such as to warrant
differing Exchange Ratios with respect to such classes of Destineer Common
Stock.
(b) At the Closing, (i) each of the Minority Stockholders shall deliver to
Mtel the certificates representing all of the issued and outstanding Destineer
Minority Shares owned of record or beneficially by such Minority Stockholder,
duly and properly endorsed for transfer to Mtel, accompanied by a written
instrument or instruments of transfer, in form and content satisfactory to Mtel,
duly executed by each of the Minority Stockholders; and (ii) Mtel shall deliver
to each of the Minority Stockholders certificates representing such number of
shares of
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Mtel Common Stock as is calculated by multiplying the number of shares of
Destineer Common Stock held by each of such Minority Stockholders by the
Exchange Ratio. The number of shares of Mtel Common Stock to be delivered to
each Minority Stockholder is set forth on Appendix I hereto opposite the name of
each of the Minority Stockholders; provided, however, that if, prior to the
Closing Date (as defined below), Mtel should split or combine the Mtel Common
Stock, or pay a stock dividend or other stock distribution in Mtel Common Stock,
or otherwise change the Mtel Common Stock into any other type or kind of
securities, then the Exchange Ratio will be appropriately adjusted to reflect
such split, combination, stock dividend or other stock distribution or change.
SECTION 2.2 Closing. Subject to satisfaction or waiver of all covenants or
conditions precedent set forth in Articles II, IV and V hereof, the Exchange
shall be completed (the "Closing") at the offices of Brobeck, Phleger &
Harrison, 550 West C Street, Suite 1300, San Diego, California 92101, at 10:00
a.m. local time on the date immediately following the later of (i) the issuance
of the Fairness Order (as defined in Section 4.2(b)) or (ii) the expiration or
termination of the waiting period applicable to the consummation of the Exchange
Transaction under the HSR Act, or at such other place and on such other date and
time as the parties may agree (the "Closing Date"); provided, however, that if
the transactions contemplated by this Agreement have not been consummated by
11:59 p.m. (Pacific Standard Time) on December 31, 1995, then this Agreement
shall, without further action by any party hereto, be terminated and shall
thereafter be
7
<PAGE>
of no further force and effect, and no party shall have any liability hereunder
except for its or his prior breach.
SECTION 2.3 Destineer Stockholders Agreement. The existing Stockholders
Agreement dated as of March 23, 1994 by and among the Stockholders and amended
on July 27, 1994 (the "Destineer Stockholders Agreement") shall be deemed
terminated simultaneously with the Closing.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1 Representations and Warranties of the Minority Stockholders.
Each of the Minority Stockholders, solely with respect to itself, hereby
represents and warrants to Mtel as follows:
(a) Authority. Such Minority Stockholder has the full right, power and
authority to enter into, execute, deliver and carry out the terms of this
Agreement and the transactions contemplated hereby and to perform his or its
obligations hereunder, including, without limitation, to sell, assign, surrender
and deliver his or its Destineer Minority Shares to Mtel. Such Minority
Stockholder, if it is a corporation, has taken all necessary corporate action to
authorize the execution, delivery and performance of this Agreement and the
transactions contemplated hereby. Such Minority Stockholder, if it is a natural
person, (i) has the full right, power and capacity necessary to enter into,
execute and perform his obligations under this Agreement and the transactions
contemplated hereby, (ii) has read all provisions of this Agreement, has
reviewed such provisions with counsel to the extent such Minority Stockholder
8
<PAGE>
deemed appropriate, understands each of such provisions and voluntarily agrees
to be bound hereby and (iii) if such Minority Stockholder is married and such
Minority Stockholder's Destineer Minority Shares constitute community property,
this Agreement and the transactions contemplated hereby has been duly
authorized, executed and delivered by, and constitutes a valid and binding
agreement of, such Minority Stockholder's spouse, enforceable against such
person in accordance with its terms. Such Minority Stockholder, if it is a
partnership, is duly formed, validly existing and in good standing under the
laws of its jurisdiction of formation with full partnership power and authority
necessary to enter into, execute, deliver and carry out the terms of this
Agreement and the transactions contemplated hereby and to perform its
obligations hereunder. This Agreement constitutes the valid and binding
obligation of such Minority Stockholder enforceable in accordance with its
terms, except (i) as the enforceability hereof may be limited by applicable
bankruptcy or other laws affecting the enforcement of creditors' rights
generally and (ii) as to equitable remedies, to the equitable discretion of the
courts.
(b) Title to Destineer Minority Shares. As of the Closing Date, such
Minority Stockholder will have good and valid title to the Destineer Minority
Shares owned of record or beneficially by such Minority Stockholder, free and
clear of all liens, claims, security interests, proxies, voting trusts or any
other encumbrances whatsoever (other than pursuant to the Destineer Stockholders
Agreement being terminated as of the Closing Date); and upon surrender to Mtel
of such Destineer
9
<PAGE>
Minority Shares against the delivery by Mtel of the Mtel Common Stock pursuant
hereto, Mtel will receive good and valid title to such Destineer Minority
Shares, free and clear of any liens, claims, security interests, proxies, voting
trusts or any other encumbrances whatsoever.
(c) Organization. (i) Microsoft is a corporation duly formed, validly
existing and in good standing under the laws of its state of incorporation and
has full corporate power and authority to own and operate its assets and
properties and carry on its business as presently conducted and is duly
qualified to do business and is in good standing in all jurisdictions in which
the ownership or occupancy of its properties or its activities presently makes
such qualification necessary, except where the failure to so qualify would not
have a material adverse effect upon its business, properties or assets and (ii)
KPI, KPII, Integral Capital and Integral International are each partnerships
duly formed, validly existing and in good standing under the laws of their
jurisdiction of formation with full partnership power and authority to own and
operate their assets and properties and carry on their businesses as presently
conducted.
(d) Consents and Approvals. Except for the filings by Mtel and Microsoft
mandated by the HSR Act with respect to the Exchange Transaction, which filings
shall be made by Mtel and Microsoft as soon as practicable after the date
hereof, all authorizations, approvals and consents, if any, required to be
obtained from, and all registrations, declarations and filings, if any, required
to be made with, all governmental authorities and regulatory bodies to permit
such Minority Stockholder to
10
<PAGE>
execute and deliver this Agreement, and to perform his or its obligations
hereunder, have been obtained or made, as the case may be, and all such
authorizations, approvals, consents, registrations, declarations and filings are
in full force and effect; provided, that no such representation and warranty is
given with respect to the Communications Act.
(e) No Violations. Neither the execution or delivery by such Minority
Stockholder of this Agreement, nor the consummation by such Minority Stockholder
of the transaction herein contemplated, nor the fulfillment by such Minority
Stockholder of the terms and provisions hereof (i) will conflict with, violate
or result in a breach of, any of the terms, conditions or provisions of any law,
regulation, order, writ, injunction, decree, judgment or award of any court,
governmental department, board, agency or instrumentality or any arbitrator,
applicable to such Minority Stockholder; provided, that no such representation
and warranty is given with respect to the Communications Act, (ii) will conflict
with, violate or result in a breach of, or constitute a default under, any of
the terms, conditions or provisions of Microsoft's, KPI's, KPII's, Integral
Capital's or Integral International's constituent documents, (iii) will conflict
with, violate or result in a breach of, or constitute a default under, any of
the terms, conditions or provisions of any loan agreement, indenture, trust,
deed or other agreement or instrument to which such Minority Stockholder is a
party or by which he or it is bound or (iv) except as provided herein, result in
the creation or imposition of any lien, charge, security interest or encumbrance
of any nature whatsoever upon
11
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such Minority Stockholder's property or assets (including, without limitation,
the Mtel Common Stock to be acquired by such Minority Stockholder pursuant to
this Agreement). Such Minority Stockholder is not in default under any agreement
to which it is a party which default could impair its ability to perform its
obligations under this Agreement and the transactions contemplated hereby.
SECTION 3.2 Representations and Warranties of Mtel. Mtel hereby represents
and warrants as follows:
(a) Capitalization. The authorized capital stock of Mtel consists of
75,000,000 shares of Mtel Common Stock of which 49,807,141 shares are issued and
outstanding as of June 30, 1995; and 25,000,000 shares of preferred stock, par
value $.01 per share, of which 750,000 shares have been designated as Series C
Junior Participating Preferred Stock, 3,750,000 shares have been designated
$2.25 Cumulative Convertible Exchangeable Preferred Stock and are issued and
outstanding as of June 30, 1995, and 20,500,000 shares remain undesignated.
(b) Mtel Common Stock. The shares of Mtel Common Stock, when issued and
delivered to each of the Minority Stockholders in exchange for the Destineer
Minority Shares pursuant to this Agreement, will be duly authorized, validly
issued, fully paid and nonassessable, and each of the Minority Stockholders will
receive good title to such shares, free and clear of any liens, claims, security
interests or encumbrances whatsoever.
(c) Authority. Mtel has the full corporate power and authority to enter
into, execute, deliver and carry out the
12
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terms of this Agreement and the transactions contemplated hereby. Mtel has taken
all necessary corporate action to authorize the execution, delivery and
performance of this Agreement and the transactions contemplated hereby, and this
Agreement constitutes a valid and binding agreement of Mtel, enforceable in
accordance with its terms, except (i) as the enforceability hereof may be
limited by applicable bankruptcy or other laws affecting the enforcement of
creditors' rights generally and (ii) as to equitable remedies, to the equitable
discretion of the courts.
(d) Organization. Mtel is a corporation duly formed, validly existing and
in good standing under the laws of its state of incorporation and has full
corporate power and authority to own and operate its assets and properties and
carry on its business as presently conducted and is duly qualified to do
business and is in good standing in all jurisdictions in which the ownership or
occupancy of its properties or its activities presently makes such qualification
necessary, except where the failure to so qualify would not have a material
adverse effect upon its business, properties or assets.
(e) Consents and Approvals. Except for the filings by Mtel and Microsoft
mandated by the HSR Act with respect to the Exchange Transaction, which filings
shall be made by Mtel and Microsoft as soon as practicable after the date
hereof, all authorizations, approvals and consents, if any, required to be
obtained from, and all registrations, declarations and filings, if any, required
to be made with, all governmental authorities and regulatory bodies to permit
Mtel to execute and deliver, and to perform its obligations under, this
Agreement have been
13
<PAGE>
obtained or made, as the case may be, and all such authorizations, approvals,
consents, registrations, declarations and filings are in full force and effect.
(f) No Violations. Neither the execution or delivery by Mtel of this
Agreement, nor the consummation by Mtel of the transaction herein contemplated,
nor the fulfillment by Mtel of the terms and provisions hereof (i) will conflict
with, violate or result in a breach of, any of the terms, conditions or
provisions of any law, regulation, order, writ, injunction, decree, judgment or
award of any court, governmental department, board, agency or instrumentality or
any arbitrator, applicable to Mtel including, without limitation, the
Communications Act and the rules and regulations promulgated thereunder, (ii)
will conflict with, violate or result in a breach of, or constitute a default
under, any of the terms, conditions or provisions of Mtel's constituent
documents, (iii) will conflict with, violate or result in a breach of, or
constitute a default under, any of the terms, conditions or provisions of any
loan agreement, indenture, trust, deed or other agreement or instrument to which
Mtel is a party or by which it is bound or (iv) except as provided herein,
result in the creation or imposition of any lien, charge, security interest or
encumbrance of any nature whatsoever upon any of Mtel's property or assets
(including, without limitation, the Mtel Common Stock to be acquired by the
Minority Stockholders pursuant to this Agreement). Mtel is not in default under
any agreement to which it is a party which default could impair its ability to
perform its obligations under this Agreement and the transactions contemplated
hereby.
14
<PAGE>
(g) Mtel SEC Reports. Mtel has previously delivered to each of the Minority
Stockholders, the receipt of which is hereby acknowledged, copies of (i) Mtel's
Annual Report on Form 10-K for the fiscal year ended December 31, 1994, as filed
with the Commission, (ii) Mtel's Annual Report to stockholders for the most
recent fiscal year in the form provided to stockholders, (iii) Mtel's proxy
statement relating to the 1995 annual meeting of stockholders, (iv) Mtel's
Quarterly Report on Form 10-Q for the quarter ended March 31, 1995 and (v) all
of the reports and registration statements filed by Mtel with the Commission
since December 31, 1994 (other than registration statements on Form S-8)
(collectively, the "Mtel SEC Reports"). As of their respective dates, the Mtel
SEC Reports did not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
(h) Absence of Certain Changes or Events. Since December 31, 1994, there
has not been any material adverse change or any event which would reasonably be
expected to result in material adverse change in the business, operations,
properties, assets, liabilities, condition (financial or other) or results of
operations of Mtel.
(i) Disclosure. No statement contained in this Agreement or in any
schedule, exhibit or other instrument furnished by Mtel to the Minority
Stockholders pursuant to the provisions hereof contains or will contain any
untrue statement of any material fact or omits or will omit to state a material
15
<PAGE>
fact necessary in order to make the statements contained herein or therein not
misleading.
(j) Tax Representations.
(i) Mtel is participating in the Exchange Transaction for good and
valid business reasons;
(ii) The terms of this Agreement, including the Exchange Ratio, were
bargained for and agreed to between unrelated parties in an arm's-length
negotiation;
(iii) At the time of the Closing, Destineer will have no outstanding
equity interests other than shares of Destineer Common Stock. At the time
of the Closing, Destineer will have no outstanding warrants (other than
warrants issued to Microsoft), options or convertible securities nor any
other type of right outstanding pursuant to which any person could acquire
shares of Destineer Common Stock or any other equity interest in Destineer;
(iv) In the Exchange Transaction, all shares of Destineer Common Stock
(other than shares already owned by Mtel) will be exchanged solely for
voting stock of Mtel and Mtel will own, immediately following the Exchange
Transaction, all of the issued and outstanding stock of Destineer;
(v) At the time of the Closing, there will exist no rights to acquire
Destineer capital stock or to vote (or restrict or otherwise control the
vote of) Destineer capital stock which, if exercised, could affect Mtel's
acquisition and retention of Control of Destineer. As used in this Section
3.2(j), "Control" of a corporation shall consist of ownership of stock
possessing at least eighty percent (80%) of the total
16
<PAGE>
combined voting power of all classes of stock entitled to vote and at least
eighty percent (80%) of the total number of shares of all other classes of
stock of the corporation. For purposes of determining Control, a person
shall not be considered to own voting stock if rights to vote such stock
(or to restrict or otherwise control the voting of such stock) are held by
a third party (including a voting trust) other than an agent of such
person;
(vi) There will be no dissenters to the Exchange Transaction;
(vii) Destineer has no obligation, understanding, agreement, plan or
intention to issue additional shares of its capital stock after the
Exchange Transaction that would result in Mtel losing Control of Destineer,
and Mtel has no obligation, understanding, agreement, plan or intention to
cause Destineer to issue additional shares of its capital stock after the
Exchange Transaction that would result in Mtel losing Control of Destineer;
(viii) Mtel has no plan or intention to reacquire any of its stock
issued in the Exchange Transaction;
(ix) Mtel has no plan or intention to sell, exchange, distribute,
transfer or otherwise dispose of any capital stock of Destineer (other than
transfers described in Section 368(a)(2)(C) of the Code); to liquidate
Destineer; or to merge Destineer with or into any other corporation
(including Mtel or its affiliates);
(x) Destineer has no plan or intention to sell or otherwise dispose of
any of its assets except for
17
<PAGE>
dispositions made in the ordinary course of business, and Mtel has no plan
or intention to cause Destineer to sell or otherwise dispose of any of its
assets except for dispositions made in the ordinary course of business;
(xi) Destineer will, following the Closing, either continue to conduct
Destineer's historic business or use a significant portion of Destineer's
historic business assets in another business;
(xii) On the Closing Date, the fair market value of Destineer's assets
will exceed the sum of its liabilities plus the liabilities, if any, to
which the Destineer assets are subject;
(xiii) Neither Mtel nor Destineer is under the jurisdiction of a court
in a Title 11 or similar case within the meaning of Section 368(a)(3)(A) of
the Code;
(xiv) Neither Mtel nor Destineer is an investment company within the
meaning of Section 368(a)(2)(F)(iii) and (iv) of the Code;
(xv) Mtel does not intend to pay any consideration (directly or
indirectly, actually or constructively) for Destineer capital stock other
than Mtel Common Stock;
(xvi) Mtel has not acquired any other shares of Destineer capital
stock in contemplation of the Exchange Transaction or as part of any plan,
intention or prearrangement which included the acquisition of the Destineer
capital stock in the Exchange;
18
<PAGE>
(xvii) There is no intercorporate indebtedness existing between Mtel
and Destineer that was issued, acquired or will be settled at a discount as
a result of the Exchange Transaction, and Mtel will assume no liabilities
of Destineer or any Destineer stockholder in connection with the Exchange
Transaction; and
(xviii) Mtel and Destineer both intend that the Exchange Transaction
qualify as a "reorganization" within the meaning of Code Section
368(a)(1)(B) and each will report the Exchange Transaction on all tax
returns, reports, and on all other instruments, documents, statements and
reports, consistent with such qualification.
ARTICLE IV
COVENANTS
SECTION 4.1 No Transfer Before Closing. Each of the Minority Stockholders,
as to itself, covenants with Mtel that from and after the date hereof to the
Closing Date such Minority Stockholder shall not (i) transfer or encumber (which
terms shall include, without limitation, for the purposes of this Agreement, any
sale, gift, pledge, alienation, assignment or other disposition, directly or
indirectly, by operation of law or otherwise (collectively, a "Transfer")), or
consent to any transfer of, any or all of such Minority Stockholder's Destineer
Minority Shares or any interest therein, except pursuant to this Agreement or by
transfer upon an individual Minority Stockholder's death, (ii) enter into any
contract, option or other agreement or understanding with respect to any
Transfer of any or all such Destineer Minority Shares or any interest
19
<PAGE>
therein, (iii) grant any proxy, power-of-attorney or other authorization in or
with respect to such Destineer Minority Shares, (iv) deposit such Destineer
Minority Shares into a voting trust or enter into a voting agreement or
arrangement with respect to such Destineer Minority Shares.
SECTION 4.2 Covenants of Mtel. Mtel covenants with each of the Minority
Stockholders as follows:
(a) Current Reports. Mtel shall, for a period of three years from the
Closing Date, keep current in the filing of all reports required to be filed
with the Commission pursuant to the Exchange Act.
(b) Approvals. Mtel shall use its best efforts to obtain, and to cause to
be maintained in effect, all authorizations, approvals, exemptions or permits,
if any, of any governmental authority or regulatory body of any state or the
United States that may be required in connection with the lawful issuance of the
Mtel Common Stock by Mtel pursuant to this Agreement. Promptly following the
execution and delivery of this Agreement, Mtel shall file with the Department of
Corporations for the State of California such applications, motions, pleadings
and other papers as may be necessary or desirable to cause the California
Commissioner of Corporations (the "Commissioner") to give notice of and convene
a hearing pursuant to Section 25142 of the California Corporations Code pursuant
to which the Commissioner is authorized to approve the terms and conditions in
order to obtain an order (the "Fairness Order") issued by the Commissioner
reflecting such approval.
20
<PAGE>
SECTION 4.3 Hart-Scott-Rodino Filing. Mtel and Microsoft shall use their
respective best efforts to make all filings that are mandated by the HSR Act
with respect to the Exchange Transaction. Mtel and Microsoft shall promptly file
any additional information requested by any governmental agency with respect to
said filing as soon as practicable after receipt of such request.
ARTICLE V
CONDITIONS
SECTION 5.1 Conditions to Closing Obligations of the Minority Stockholders.
The obligation of each of the Minority Stockholders hereunder to transfer the
Destineer Minority Shares to Mtel at the Closing is subject to satisfaction of
each of the following conditions at or prior to the Closing Date, unless waived
by each of the Minority Stockholders:
(a) The representations and warranties of Mtel set forth in Section 3.2
hereof shall be true in all material respects as of the Closing Date and Mtel
shall have complied with or performed in all material respects all of the
agreements, covenants and obligations hereunder required to be performed by it
as of such date and each Minority Stockholder shall have received at the Closing
a certificate from an appropriate officer of Mtel to that effect, dated as of
the Closing Date;
(b) All authorizations, approvals, exemptions or permits, if any, of any
governmental authority or regulatory body of any state or the United States that
are required in connection with the lawful issuance of the Mtel Common Stock
pursuant to this Agreement shall have been duly obtained and shall be
21
<PAGE>
effective on and as of the Closing Date, and the Commissioner shall have issued
the Fairness Order and such order shall be in full force and effect and shall
not have been modified or amended in any material respect;
(c) No preliminary or permanent injunction or other order or decree by any
Federal or state court which prevents the consummation of the transactions
contemplated by this Agreement shall have been issued and remain in effect (each
party hereto agreeing to use its best efforts to have any such injunction, order
or decree vacated);
(d) All governmental consents, orders and approvals legally required for
the consummation of the transactions contemplated hereby shall have been
obtained and be in effect as of the Closing Date, and all consents, orders and
approvals legally required for the consummation of the transaction contemplated
hereby shall become final orders; and
(e) The Minority Stockholders shall have received an opinion from Powell,
Goldstein, Frazer & Murphy, dated the Closing Date, to the effect that this
Agreement has been duly authorized, executed and delivered by Mtel and is a
valid and binding obligation of Mtel, subject to applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and similar laws
affecting creditor's rights generally and remedies generally.
SECTION 5.2 Conditions to Closing Obligations of Mtel. Mtel's obligations
hereunder to acquire the Destineer Minority Shares from the Minority
Stockholders and to issue and deliver the Mtel Common Stock to the Minority
Stockholders at the
22
<PAGE>
Closing, are subject to satisfaction of each of the following conditions at or
prior to the Closing Date, unless waived by Mtel:
(a) The representations and warranties of each Minority Stockholders set
forth in Section 3.1 hereof shall be true in all material respects as of the
Closing Date and each Minority Stockholder shall have complied with or performed
all of the agreements, covenants and obligations hereunder required to be
performed in all material respects by it as of such date, including, without
limitation, the surrender of the Destineer Minority Shares as contemplated in
Section 2.1 hereof; and Mtel shall have received at the Closing a certificate
from each such Minority Stockholder to that effect, dated as of the Closing
Date;
(b) All authorizations, approvals, exemptions or permits, if any, of any
governmental authority or regulatory body of any state or the United States that
are required in connection with the lawful issuance and sale of the Mtel Common
Stock by Mtel pursuant to this Agreement shall have been duly obtained and shall
be effective on and as of the Closing Date, and the Commissioner shall have
issued the Fairness Order and such order shall be in full force and effect and
shall not have been modified or amended in any material respect;
(c) Mtel shall have received an opinion from Marilyn J. Fried, Esq. in form
and substance reasonably satisfactory to Mtel, dated the Closing Date, to the
effect that (i) the Commissioner has the power, authority and standing to
approve the terms and conditions of the Exchange and issue the
23
<PAGE>
Fairness Order, and (ii) upon issuance of the Fairness Order, the shares of Mtel
Common Stock issued to the Minority Stockholders in the Exchange Transaction
shall be deemed "exempted securities" as provided in Section 3(a)(10) of the
Securities Act;
(d) No preliminary or permanent injunction or other order or decree by any
Federal or state court which prevents the consummation of the transactions
contemplated by this Agreement shall have been issued and remain in effect (each
party hereto agreeing to use its best efforts to have any such injunction, order
or decree vacated); and
(e) All governmental consents, orders and approvals legally required for
the consummation of the transactions contemplated hereby shall have been
obtained and be in effect as of the Closing Date, and all consents, orders and
approvals legally required for the consummation of the transactions contemplated
hereby shall have become final orders.
ARTICLE VI
MISCELLANEOUS
SECTION 6.1 Waivers. The failure at any time of any party hereto to require
performance by any other party hereto of any responsibility or obligation
required by this Agreement shall in no way affect a party's right to require
such performance at any time thereafter, nor shall the waiver by the party of a
breach of any provision of this Agreement by any other party constitute a waiver
of any other breach of the same or any other provision of this Agreement nor
constitute a waiver of the responsibility or obligation itself.
24
<PAGE>
SECTION 6.2 Assignability. This Agreement shall be binding upon and inure
to the benefit of the successors and assigns of each party hereto, and, if such
party is a natural person, such party's personal representatives, heirs or
legatees.
SECTION 6.3 Notices. In any case where any notice or other communication is
required or permitted to be given hereunder such notice or communication shall
be in writing and (a) personally delivered, (b) sent by registered United States
mail, postage prepaid, return receipt requested, (c) transmitted by telecopy or
(d) sent by way of a recognized overnight courier service, postage prepaid,
return receipt requested with instructions to deliver on the next business day,
in each case as follows:
(i) If to Mtel, to:
Mobile Telecommunication Technologies Corp.
2055 Gateway Place, Suite 400
San Jose, California 95110
Attention: Leonard G. Kriss, Esq.
Telecopy: (408) 451-3991
with a copy to:
Powell, Goldstein, Frazer & Murphy
Sixteenth Floor
191 Peachtree Street, NE
Atlanta, Georgia 30303
Attention: Richard H. Miller, Esq.
Telecopy: (404) 572-5958
(ii) If to Microsoft, to:
Microsoft Corporation
One Microsoft Way
Redmond, Washington 98052-6399
Attention: Greg Maffei
Telecopy: (206) 936-2625
with a copy to:
Microsoft Corporation
One Microsoft Way
25
<PAGE>
Redmond, Washington 98052-6399
Attention: Law and Corporate Affairs
Telecopy: (206) 869-1327
(iii) If to KP, to:
Kleiner Perkins Caufield & Byers
2750 Sand Hill Road
Menlo Park, California 94025
Attention: Kevin Compton
Telecopy: (415) 233-0300
(iv) If to WG, to:
William H. Gates
c/o Microsoft Corporation
One Microsoft Way
Redmond, Washington 98052-6399
Telecopy: (206) 869-1327
(v) If to PA, to:
Paul G. Allen
c/o Vulcan Northwest
110 110th Avenue N.E.
Suite 550
Bellevue, Washington 98004
Attention: William D. Savoy
Telecopy: (206) 453-1985
(vi) If to Integral, to:
Integral Capital Management
2750 Sand Hill Road
Menlo Park, California 94025
Attention: John Powell
Telecopy: (415) 233-0366
All such notices or other communications shall be deemed to have been given
or received (i) upon receipt if personally delivered, (ii) on the fifth day
following posting if by registered United States mail, (iii) when sent if by
confirmed telecopy or (iv) on the next business day following deposit with an
overnight courier.
SECTION 6.4 Third Party Rights. Nothing in this Agreement, whether express
or implied, is intended or shall be construed to confer, directly or indirectly,
upon or give to any
26
<PAGE>
person other than Mtel and the Minority Stockholders, any legal or equitable
right, remedy or claim under or in respect of this Agreement or any covenant,
condition or other provision contained herein.
SECTION 6.5 Choice of Law. This Agreement shall be construed and enforced
in accordance with and governed by the laws of the State of California without
giving effect to the principles of conflict of laws thereof. The parties
acknowledge that Mtel's offer to enter into the Exchange Transaction was made in
California and that the Exchange Transaction is to be consummated in California.
SECTION 6.6 Severability. Should any provision of this Agreement be deemed
in contradiction with the laws of any jurisdiction in which it is to be
performed or unenforceable for any reason, such provision shall be deemed null
and void, but this Agreement shall remain in force in all other respects. Should
any provision of this Agreement be or become ineffective because of changes in
applicable laws or interpretations thereof or should this Agreement fail to
include a provision that is required as a matter of law, the validity of the
other provisions of this Agreement shall not be affected thereby. If such
circumstances arise, the parties hereto shall negotiate in good faith
appropriate modifications to this Agreement to reflect those changes that are
required by law.
SECTION 6.7 Enforcement of Agreement. Any action or proceeding brought by
any party to this Agreement, in connection with or relating to this Agreement or
any provision hereof shall be brought only in a federal or state court of
competent
27
<PAGE>
jurisdiction in California. Each of the parties hereto, solely in connection
with any such action or proceeding, does hereby (a) submit to the jurisdiction
of any such court and (b) waive any defense of or relating to lack of
jurisdiction with respect to any such action or proceeding in any such court.
SECTION 6.8 References to Agreement. Any reference herein to this Agreement
shall be deemed to be a reference to such Agreement as the same may be modified,
varied, amended or supplemented from time to time by the parties hereto in
accordance with the provisions hereof. Unless the context otherwise expressly
requires, the words "herein," "hereof" and "hereunder" and other words of
similar importance refer to this Agreement as a whole and not to any particular
Article, Section or other subdivision. SECTION 6.9 Headings, etc. The Article
and Section headings in this Agreement, and the table of contents included
herein, are inserted for convenience of reference only and shall not affect the
interpretation of this Agreement. Whenever the context shall require, each term
stated in either the singular or plural shall include the singular and the
plural. References herein to masculine, feminine or neuter pronouns shall be
construed to refer to another gender when the context may require.
SECTION 6.9 Headings, etc. The Article and Section headings in this
Agreement, and the table of contents included herein, are inserted for
convenience of reference only and shall not affect the interpretation of this
Agreement. Whenever the context shall require, each term stated in either the
singular or plural shall include the singular and the plural. References herein
to masculine, feminine or neuter pronouns shall be construed to refer to another
gender when the context may require.
SECTION 6.10 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same instrument.
28
<PAGE>
SECTION 6.11 Survival. All covenants, representations and warranties made
by any party herein or in any certificate or other instrument delivered at the
Closing by it or on its behalf under this Agreement shall survive the Closing.
All statements in any such certificate or other instrument shall constitute
warranties and representations by the party delivering the same hereunder. The
covenants, representations and warranties made by each Minority Stockholder
hereunder are several and not joint.
SECTION 6.12 Amendments. This Agreement may be amended or modified only by
a written instrument executed by each of the parties hereto or by their
respective successors and assigns.
SECTION 6.13 Agreement to Cooperate. Subject to the terms and conditions
herein provided, each of the parties hereto shall cooperate and use their
respective best efforts to take, or cause to be taken, all action and to do, or
cause to be done, all things necessary, proper or advisable under applicable
laws and regulations to satisfy the closing conditions to consummate and make
effective the transactions contemplated by this Agreement.
SECTION 6.14 Further Action. If at any time after the Closing Date Mtel or
any Minority Stockholder shall consider that any further agreements, documents,
instruments or assurances in law or any other things are necessary or desirable
to carry out the provisions of this Agreement, the parties to this Agreement
shall execute and deliver any and all such agreements, documents, instruments or
assurances in law and do all other
29
<PAGE>
things necessary or proper which shall be reasonably requested to carry out the
provisions of this Agreement.
SECTION 6.15 Expenses. All expenses incurred by the parties hereto in
connection with or related to the authorization, preparation and execution of
this Agreement and the Closing of the transactions contemplated hereby,
including, without limitation of the generality of the foregoing, all fees and
expenses of agents, representatives and counsel employed by any such party,
shall be borne solely and entirely by the party which has incurred the same.
SECTION 6.16 Corporate Securities Law. THE SALE OF THE SECURITIES WHICH ARE
THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH THE COMMISSIONER OF
CORPORATIONS OF THE STATE OF CALIFORNIA AND THE ISSUANCE OF THE SECURITIES OR
THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION THEREFOR PRIOR TO THE
QUALIFICATION IS UNLAWFUL, UNLESS THE SALE OF SECURITIES IS EXEMPT FROM
QUALIFICATION BY SECTION 25100, 25102 OR 25105 OF THE CALIFORNIA CORPORATIONS
CODE. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY CONDITIONED UPON
THE QUALIFICATION BEING OBTAINED, UNLESS THE SALE IS SO EXEMPT.
[Balance of Page Intentionally Left Blank]
30
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Stock Exchange
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the day and year first written above.
MOBILE TELECOMMUNICATION
TECHNOLOGIES CORP.
By: /s/ John E. Welsh III
--------------------------
Name: John E. Welsh III
Title: Vice Chairman
MICROSOFT CORPORATION
By: /s/ Gergory Maffei
--------------------------
Name: Gergory Maffei
Title: Treasurer
KLEINER PERKINS CAUFIELD & BYERS VI, L.P.
By: /s/ James Lally
--------------------------
Name: James Lally
Title: General Partner
KPCB VI FOUNDERS FUND, L.P.
By: /s/ James Lally
--------------------------
Name: James Lally
Title: General Partner
INTEGRAL CAPITAL PARTNERS, L.P.
By: /s/ Authorized Signature
--------------------------
Name: Authorized Person
Title: General Partner
31
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INTEGRAL CAPITAL PARTNERS INTERNATIONAL, C.V.
By: /s/ Authorized Signature
--------------------------
Name: Authorized Person
Title: Authorized Signature
/s/ William H. Gates
-------------------------------
William H. Gates
/s/ Paul G. Allen
-------------------------------
Paul G. Allen
32
<PAGE>
Appendix I
List of Minority Stockholders and Number of Shares
of Mtel Common Stock Received in the Exchange
Name of Number of Shares Number of
Minority of Destineer Exchange Shares of Mtel
Stockholder Common Stock Ratio Common Stock
- ----------- ------------ ----- ------------
Microsoft 1,500 1,170:1 1,755,000
KPI 710 1,170:1 830,700
KPII 110 1,170:1 128,700
WG 500 1,170:1 585,000
PA 500 1,170:1 585,000
Integral
Capital 91 1,170:1 106,470
Integral 9 1,170:1 10,530
International
33
<PAGE>
EXHIBIT 10.32
================================================================================
STOCKHOLDER AGREEMENT
Dated as of September 15, 1995
by and between
MOBILE TELECOMMUNICATION
TECHNOLOGIES CORP.
and
MICROSOFT CORPORATION
================================================================================
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
<S> <C> <C>
ARTICLE I
CERTAIN DEFINITIONS
1.1 "Advisory Committee"............................................. 2
1.2 "Affiliate"...................................................... 2
1.3 "Agreement"...................................................... 2
1.4 "Charitable Institution"......................................... 2
1.5 "Code"........................................................... 3
1.6 "Communications Act"............................................. 3
1.7 "Destineer"...................................................... 3
1.8 "Destineer Network".............................................. 3
1.9 "Excess Transfer Notice"......................................... 3
1.10 "Exchange Act"................................................... 3
1.11 "Exchange Transaction"........................................... 3
1.12 "Group".......................................................... 3
1.13 "Microsoft"...................................................... 3
1.14 "Mtel"........................................................... 3
1.15 "Mtel Common Stock".............................................. 4
1.16 "Mtel Voting Securities"......................................... 4
1.17 "Non-Rule 144 Exempt Transaction"................................ 4
1.18 "Option Period".................................................. 4
1.19 "Period"......................................................... 4
1.20 "Permitted Transfer"............................................. 4
1.21 "Person"......................................................... 4
1.22 "SEC"............................................................ 4
1.23 "Securities Act"................................................. 5
1.24 "Stock Exchange Agreement"....................................... 5
1.25 "Term of this Agreement"......................................... 5
1.26 "Transfer"....................................................... 5
ARTICLE II
COVENANTS
2.1 Microsoft Covenants............................................... 5
(a) Microsoft Investment in Mtel............................... 5
(b) Standstill Provisions...................................... 6
(c) Restriction on Transfer.................................... 8
(d) Right of First Refusal..................................... 9
(e) Acceptance by Mtel......................................... 10
(f) Rejection or Waiver by Mtel................................ 10
2.2 Mtel Covenants.................................................... 11
(a) Advisory Committee......................................... 11
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF MTEL
<S> <C> <C>
3.1 Capitalization.................................................... 11
3.2 Authority......................................................... 12
3.3 Organization...................................................... 12
3.4 Consents and Approvals............................................ 13
3.5 No Violations..................................................... 13
3.6 No Brokers........................................................ 14
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF MICROSOFT
4.1 Authority......................................................... 14
4.2 Organization...................................................... 15
4.3 Consents and Approvals............................................ 15
4.4 No Violations..................................................... 15
4.5 Certificated Shares, Legend and Stop Transfer Instructions........ 16
4.6 No Brokers........................................................ 17
ARTICLE V
MISCELLANEOUS
5.1 Termination...................................................... 17
5.2 Assignability.................................................... 17
5.3 Notices.......................................................... 17
5.4 Waivers.......................................................... 18
5.5 Third Party Rights............................................... 19
5.6 Choice of Law.................................................... 19
5.7 Severability..................................................... 19
5.8 Enforcement of Agreement......................................... 20
5.9 References to Agreement.......................................... 20
5.10 Entire Agreement................................................. 20
5.11 Headings, etc.................................................... 21
5.12 Counterparts..................................................... 21
5.13 Survival......................................................... 21
5.14 Amendment........................................................ 21
</TABLE>
ii
<PAGE>
STOCKHOLDER AGREEMENT
THIS STOCKHOLDER AGREEMENT dated as of September 15, 1995 (this
"Agreement") by and between Mobile Telecommunication Technologies Corp., a
Delaware corporation ("Mtel"), and Microsoft Corporation, a Washington
corporation ("Microsoft").
WITNESSETH:
WHEREAS, Mtel, Microsoft and the other stockholders of Destineer
Corporation, a Delaware corporation ("Destineer"), have entered into a Stock
Exchange Agreement dated as of July 19, 1995 (the "Stock Exchange Agreement")
pursuant to which Mtel will acquire all of the issued and outstanding shares of
capital stock of Destineer owned by Microsoft and the other stockholders of
Destineer solely in exchange for shares of Common Stock, par value $.01 per
share, of Mtel ("Mtel Common Stock"), in accordance with the terms and
conditions set forth in the Stock Exchange Agreement (the "Exchange
Transaction");
WHEREAS, upon completion of the Exchange Transaction, Destineer will
be a wholly owned subsidiary of Mtel; and
WHEREAS, Mtel and Microsoft desire to enter into certain additional
agreements concerning their continuing relationship as set forth herein.
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements contained herein and in
the Stock Exchange Agreement, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto, intending to be legally bound hereby, agree as
follows:
<PAGE>
ARTICLE I
CERTAIN DEFINITIONS
Unless the context otherwise requires, capitalized terms not otherwise
defined herein shall have the respective meanings assigned to them in the Stock
Exchange Agreement. Unless the context otherwise requires, the following terms
shall have the following meanings:
1.1 "ADVISORY COMMITTEE" shall have the meaning ascribed to such term
------------------
in Section 2.2(a).
1.2 "AFFILIATE" shall mean, with respect to any Person, (a) in the
---------
case of an individual, any relative of such Person; (b) any officer, director,
trustee, partner, member, manager, employee or holder of ten percent (10%) or
more of any class of the voting securities of or equity interest in such Person;
(c) any corporation, partnership, limited liability company, trust or other
entity controlling, controlled by or under common control with such Person; or
(d) any officer, director, trustee, partner, manager, employee or holder of ten
percent (10%) or more of the outstanding voting securities of any corporation,
partnership, limited liability company, trust or other entity controlling,
controlled by or under common control with such Person.
1.3 "AGREEMENT" shall mean this Stockholder Agreement, as the same
---------
may be modified, amended or superseded, from time to time, in accordance with
the terms hereof.
1.4 "CHARITABLE INSTITUTION" shall mean an organization qualified
----------------------
under Section 501(c)(3) of the Code.
2
<PAGE>
1.5 "CODE" shall mean the Internal Revenue Code of 1986, as amended,
----
and the rules and regulations promulgated thereunder.
1.6 "COMMUNICATIONS ACT" shall mean the Communications Act of 1934,
------------------
as amended.
1.7 "DESTINEER" shall mean Destineer Corporation, a Delaware
---------
corporation, formerly known as Nationwide Wireless Network Corp.
1.8 "DESTINEER NETWORK" shall mean a new two-way nationwide wireless
-----------------
messaging system to be constructed and operated by Mtel in the United States
that will provide two-way narrowband personal data communications services.
1.9 "EXCESS TRANSFER NOTICE" shall have the meaning ascribed to such
----------------------
term in Section 2.1(d).
1.10 "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934,
------------
as amended.
1.11 "EXCHANGE TRANSACTION" shall have the same meaning set forth in
--------------------
the recitals to this Agreement.
1.12 "GROUP" shall mean two or more persons acting in concert as a
-----
partnership, limited partnership, syndicate or other entity for the purpose of
acquiring, holding, taking action with respect to or disposing of Mtel Voting
Securities.
1.13 "MICROSOFT" shall mean Microsoft Corporation, a Washington
---------
corporation.
1.14 "MTEL" shall mean Mobile Telecommunication Technologies Corp., a
----
Delaware corporation.
3
<PAGE>
1.15 "MTEL COMMON STOCK" shall have the meaning set forth in the
-----------------
recitals to this Agreement.
1.16 "MTEL VOTING SECURITIES" shall have the meaning ascribed to such
----------------------
term in Section 2.1(a).
1.17 "NON-RULE 144 EXEMPT TRANSACTION" shall have the meaning
-------------------------------
ascribed to such term in Section 2.1(c).
1.18 "OPTION PERIOD" shall have the meaning ascribed to such term in
-------------
Section 2.1(e) hereof.
1.19 "PERIOD" shall have the meaning ascribed to such term in Section
------
2.1(a).
1.20 "PERMITTED TRANSFER" shall mean:
------------------
(a) any Transfer in which the only person or persons who become
the "beneficial owner" (as determined pursuant to Rule 13d-3 under the
Exchange Act) of Mtel Common Stock is an Affiliate or member of the
"immediate family" (as such term is defined in Rule 16a-1(e) under the
Exchange Act) of the transferring party; and
(b) any gift to a bona fide Charitable Institution.
1.21 "PERSON" shall mean an individual, firm, trust, association,
------
corporation, partnership, limited partnership, government (whether federal,
state, local or other political subdivision, or any agency or bureau of any of
them) or other entity.
1.22 "SEC" shall mean the United States Securities and Exchange
---
Commission, or any successor agency.
4
<PAGE>
1.23 "SECURITIES ACT" shall mean the Securities Act of 1933, as
--------------
amended.
1.24 "STOCK EXCHANGE AGREEMENT" shall have the meaning set forth in
------------------------
the recitals to this Agreement.
1.25 "TERM OF THIS AGREEMENT" shall mean the period from the date
----------------------
hereof until the later to occur of (i) the expiration or termination of the
Technology Development and Marketing Agreement dated March 23, 1994 by and
between Destineer and Microsoft (as specified in Article X thereof) or (ii) such
time as Microsoft owns (of record or beneficially) less than two percent (2%) of
the outstanding shares of Mtel Common Stock.
1.26 "TRANSFER" shall mean any offer, transfer, sale, exchange,
--------
assignment, pledge, hypothecation, gift, grant of security interest in or lien
on, placement in a trust (voting or otherwise) or any other disposition or
encumbrance of Mtel Common Stock received by Microsoft in the Exchange
Transaction.
ARTICLE II
COVENANTS
2.1 MICROSOFT COVENANTS. Microsoft covenants with Mtel as follows:
-------------------
(A) MICROSOFT INVESTMENT IN MTEL. During the period commencing on
----------------------------
the date hereof and ending on the fifth anniversary of the date of this
Agreement (the "Period"), Microsoft shall not, and shall cause each of its
Affiliates not to, without the prior written consent of Mtel, duly authorized by
Mtel's Board of Directors, directly or indirectly, through one or more
5
<PAGE>
intermediaries or otherwise, acting singly or as part of a Group, purchase,
acquire or own (of record or beneficially), or offer or agree to purchase,
acquire or own (of record or beneficially), any securities of Mtel entitled to
vote generally in the election of directors of Mtel ("Mtel Voting Securities")
if, after giving effect to such purchase or acquisition, Microsoft and its
Affiliates would own (of record or beneficially) more than ten percent (10%) of
the total of all outstanding Mtel Voting Securities.
(B) STANDSTILL PROVISIONS. During the Period, without the prior
---------------------
written consent of Mtel, duly authorized by Mtel's Board of Directors,
Microsoft, directly or indirectly, through one or more intermediaries or
otherwise, acting singly or as part of a Group, shall not, and shall cause each
of its Affiliates not to:
(1) (i) Make, or in any way participate in, directly or
indirectly, any "solicitation" of "proxies" (as such terms are defined or
used in Regulation 14A promulgated pursuant to the Exchange Act) or become
a "participant" or "participant in a solicitation" (as such terms are
defined or used in Rule 14a-11 promulgated pursuant to the Exchange Act)
with respect to Mtel, (ii) seek to advise or influence any third person
(within the meaning of Section 13(d)(3) of the Exchange Act) with respect
to the voting of any Mtel Voting Securities, (iii) call or seek to call,
directly or indirectly, any special meeting of stockholders of Mtel for any
reason whatsoever, (iv) seek, request, or take any action
6
<PAGE>
to obtain or retain, directly or indirectly, any list of holders of any
Mtel Voting Securities, or (v) assist or encourage any attempt by any other
person to do or seek any of the foregoing;
(2) Initiate, propose or otherwise solicit holders of Mtel
Voting Securities for the approval of one or more stockholder proposals
with respect to Mtel as described in Rule 14a-8 promulgated pursuant to the
Exchange Act;
(3) Directly or indirectly participate in or encourage the
formation of any Group which beneficially owns or seeks to acquire
beneficial ownership of Mtel Voting Securities;
(4) Deposit any Mtel Voting Securities in a voting trust or
subject them to any voting agreement or arrangement, and Microsoft
represents and warrants to Mtel that there are no such voting trusts,
voting agreements or arrangements with respect to it which would include
the Mtel Common Stock to be received pursuant to the Stock Exchange
Agreement in effect on the date of this Agreement;
(5) Otherwise act, directly or indirectly, alone or in concert
with others, to seek to control or influence in any manner, other than as
may be permitted by the terms of this Agreement, the management, Board of
Directors, policies or affairs of Mtel or any Affiliate of Mtel, or seek to
effect any form of business combination or acquisition or other business
transaction with Mtel or any Affiliate of Mtel or any
7
<PAGE>
restructuring, recapitalization or similar transaction with respect to Mtel
or any Affiliate of Mtel, or instigate or encourage any third party to do
any of the foregoing;
(6) Make any public or private communication with any holder of
Mtel Voting Securities or other person regarding the management, Board of
Directors, control, policies or affairs of Mtel; or
(7) Propose, or publicly disclose an intent to propose, any of
the foregoing, unless and until in any such case such offer or proposal
shall have been specifically invited in writing by Mtel or by an authorized
representative of Mtel.
(C) RESTRICTION ON TRANSFER. During the period commencing on the
-----------------------
date hereof and ending on July 27, 1996, Microsoft shall not make or cause to be
made any Transfer of Mtel Voting Securities except for Permitted Transfers.
Thereafter, Microsoft shall be permitted to Transfer Mtel Voting Securities (i)
pursuant to the provisions of Rule 144 under the Securities Act or (ii) subject
to the provisions of Section 2.1(d) hereof, in a transaction or series of
transactions exempt from registration under the Securities Act other than under
Rule 144 (a "Non-Rule 144 Exempt Transaction"); provided, however, that no
-------- -------
transaction pursuant to Rule 144 or Non-Rule 144 Exempt Transaction shall be
made during a period of one hundred eighty (180) days after the declaration of
effectiveness of any registration statement relating to the public offering of
Mtel Voting Securities or any securities
8
<PAGE>
that may be convertible into or exchangeable or exercisable for Mtel Voting
Securities. In the event of any Transfer of Mtel Voting Securities (including a
Permitted Transfer) by Microsoft, such Transfer shall be accompanied by an
opinion of counsel, in form and substance reasonably satisfactory to Mtel, to
the effect that the proposed Transfer complies with the applicable provisions of
the Securities Act and the rules and regulations thereunder, and any applicable
state securities laws; provided, however, that such opinion of counsel shall not
-------- -------
be required if such Transfer of Mtel Voting Securities is made pursuant to the
provisions of Rule 144.
(D) RIGHT OF FIRST REFUSAL. In the event that Microsoft shall
----------------------
propose to Transfer to any persons or Group during any period of twelve (12)
consecutive months in a Non-Rule 144 Exempt Transaction (or series of Non-Rule
144 Exempt Transactions) a number of shares of Mtel Voting Securities that
exceeds at the time of such Transfer two percent (2%) of the issued and
outstanding shares of Mtel Voting Securities, then Microsoft shall give written
notice to Mtel of the proposed Transfer by confirmed telecopy in accordance with
Section 5.3 hereof (hereinafter referred to as the "Excess Transfer Notice").
The Excess Transfer Notice shall specify the material terms and conditions of
the proposed Transfer, the amount of Mtel Voting Securities subject thereto, the
proposed transfer price (which may be expressed as fixed dollar amount or a
percentage of the average trading price as determined by a methodology set forth
in the Excess Transfer Notice) and the proposed purchaser thereof. The Excess
Transfer Notice shall
9
<PAGE>
constitute an irrevocable offer to sell all of the Mtel Voting Securities
specified in the Excess Transfer Notice to Mtel at a transfer price equal to the
proposed transfer price set forth in the Excess Transfer Notice and on the other
terms and conditions set forth in the Excess Transfer Notice.
(E) ACCEPTANCE BY MTEL. Mtel may accept the offer to purchase all of
------------------
the Mtel Voting Securities specified in the Excess Transfer Notice by means of a
confirmed telecopy in accordance with Section 5.3 hereof delivered within ten
(10) business days (the "Option Period") after the Excess Transfer Notice is
given by Microsoft.
(F) REJECTION OR WAIVER BY MTEL. If Mtel rejects the offer to
---------------------------
purchase the Mtel Voting Securities specified in the Excess Transfer Notice or
does not accept or reject the subject offer on or before the expiration of the
Option Period, then Microsoft may Transfer the Mtel Voting Securities described
in the Excess Transfer Notice in the amount and on the terms specified in the
Excess Transfer Notice. Any such Transfer pursuant to this Section 2.1(f) must
be effected no later than the twenty (20) business days following the earlier of
(i) the expiration of the Option Period or (ii) the date on which Mtel rejects
the subject offer.
10
<PAGE>
2.2 MTEL COVENANTS. Mtel covenants with Microsoft as follows:
--------------
(A) ADVISORY COMMITTEE. Mtel shall, and shall cause the Board of
------------------
Directors of Destineer to, establish an Advisory Committee which shall consist
of five (5) members, three (3) members of which shall be designated by Mtel and
two (2) members designated by Microsoft (the "Advisory Committee"). The
Advisory Committee shall meet periodically to review Destineer's implementation
of two-way narrowband nationwide wireless messaging, technological developments
that may have potential applications to the services and/or related products to
be offered by Destineer, new marketing opportunities and any other matters that
may, in the judgment of the members of the Advisory Committee, have relevance to
the design, development, construction, implementation and operation of the
Destineer Network. The Advisory Committee shall, from time-to-time, meet with
senior management of Destineer for the purpose of advising such senior
management with respect to the views and suggestions that the Advisory Committee
may have developed regarding the business and affairs of Destineer.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF MTEL
Mtel hereby represents and warrants to Microsoft as follows:
3.1 CAPITALIZATION. The authorized capital stock of Mtel consists of
--------------
75,000,000 shares of Mtel Common Stock of which
11
<PAGE>
49,807,141 shares are issued and outstanding as of June 30, 1995; and 25,000,000
shares of preferred stock, par value $.01 per share, of which 750,000 shares
have been designated as Series C Junior Participating Preferred Stock, 3,750,000
shares have been designated $2.25 Cumulative Convertible Exchangeable Preferred
Stock and are issued and outstanding as of June 30, 1995, and 20,500,000 shares
remain undesignated.
3.2 AUTHORITY. Mtel has the full corporate power and authority to
---------
enter into, execute, deliver and carry out the terms of this Agreement and the
transactions contemplated hereby. Mtel has taken all necessary corporate action
to authorize the execution, delivery and performance of this Agreement and the
transactions contemplated hereby, and this Agreement constitutes a valid and
binding agreement of Mtel, enforceable in accordance with its terms, except (i)
as the enforceability hereof may be limited by applicable bankruptcy or other
laws affecting the enforcement of creditors' rights generally and (ii) as to
equitable remedies, to the equitable discretion of the courts.
3.3 ORGANIZATION. Mtel is a corporation duly formed, validly
------------
existing and in good standing under the laws of its state of incorporation and
has full corporate power and authority to own and operate its assets and
properties and carry on its business as presently conducted and is duly
qualified to do business and is in good standing in all jurisdictions in which
the ownership or occupancy of its properties or its activities presently makes
such qualification necessary, except where the failure to so qualify
12
<PAGE>
would not have a material adverse effect upon its business, properties or
assets.
3.4 CONSENTS AND APPROVALS. All authorizations, approvals and
----------------------
consents, if any, required to be obtained from, and all registrations,
declarations and filings, if any, required to be made with, all governmental
authorities and regulatory bodies to permit Mtel to execute and deliver, and to
perform its obligations under, this Agreement have been obtained or made, as the
case may be, and all such authorizations, approvals, consents, registrations,
declarations and filings are in full force and effect.
3.5 NO VIOLATIONS. Neither the execution or delivery by Mtel of this
-------------
Agreement, nor the consummation by Mtel of the transactions herein contemplated,
nor the fulfillment by Mtel of the terms and provisions hereof (i) will conflict
with, violate or result in a breach of, any of the terms, conditions or
provisions of any law, regulation, order, writ, injunction, decree, judgment or
award of any court, governmental department, board, agency or instrumentality or
any arbitrator, applicable to Mtel, including, without limitation, the
Communications Act and the rules and regulations promulgated thereunder, (ii)
will conflict with, violate or result in a breach of, or constitute a default
under, any of the terms, conditions or provisions of Mtel's constituent
documents, (iii) will conflict with, violate or result in a breach of, or
constitute a default under, any of the terms, conditions or provisions of any
loan agreement, indenture, trust, deed or other
13
<PAGE>
agreement or instrument to which Mtel is a party or by which it is bound or (iv)
except as provided herein, result in the creation or imposition of any lien,
charge, security interest or encumbrance of any nature whatsoever upon any of
Mtel's property or assets.
3.6 NO BROKERS. Except for the fees to be paid by Mtel to Bear,
----------
Stearns & Co. Inc. in connection with the rendering of a fairness opinion to the
effect that the Exchange Transaction is fair from a financial point of view, to
Mtel, no broker, investment banker, financial adviser or other person is
entitled to any broker's, finder's or financial adviser's fee or commission in
connection with the Exchange Transaction based upon arrangements made by or on
behalf of Mtel.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF MICROSOFT
Microsoft hereby represents and warrants to Mtel as follows:
4.1 AUTHORITY. Microsoft has the full corporate power and authority
---------
to enter into, execute, deliver and carry out the terms of this Agreement and
the transactions contemplated hereby. Microsoft has taken all necessary
corporate action to authorize the execution, delivery and performance of this
Agreement and the transactions contemplated hereby, and this Agreement
constitutes a valid and binding agreement of Microsoft, enforceable in
accordance with its terms, except (i) as the enforceability hereof may be
limited by applicable bankruptcy or other laws affecting the
14
<PAGE>
enforcement of creditors' rights generally and (ii) as to equitable remedies, to
the equitable discretion of the courts.
4.2 ORGANIZATION. Microsoft is a corporation duly formed, validly
------------
existing and in good standing under the laws of its state of incorporation and
has full corporate power and authority to own and operate its assets and
properties and carry on its business as presently conducted and is duly
qualified to do business and is in good standing in all jurisdictions in which
the ownership or occupancy of its properties or its activities presently makes
such qualification necessary, except where the failure to so qualify would not
have a material adverse effect upon its business, properties or assets.
4.3 CONSENTS AND APPROVALS. All authorizations, approvals and
----------------------
consents, if any, required to be obtained from, and all registrations,
declarations and filings, if any, required to be made with, all governmental
authorities and regulatory bodies to permit Microsoft to execute and deliver,
and to perform its obligations under, this Agreement have been obtained or made,
as the case may be, and all such authorizations, approvals, consents,
registrations, declarations and filings are in full force and effect.
4.4 NO VIOLATIONS. Neither the execution or delivery by Microsoft of
-------------
this Agreement, nor the consummation by Microsoft of the transactions herein
contemplated, nor the fulfillment by Microsoft of the terms and provisions
hereof (i) will conflict with, violate or result in a breach of, any of the
terms,
15
<PAGE>
conditions or provisions of any law, regulation, order, writ, injunction,
decree, judgment or award of any court, governmental department, board, agency
or instrumentality or any arbitrator, applicable to Microsoft, including,
without limitation, the Communications Act and the rules and regulations
promulgated thereunder, (ii) will conflict with, violate or result in a breach
of, or constitute a default under, any of the terms, conditions or provisions of
Microsoft's constituent documents, (iii) will conflict with, violate or result
in a breach of, or constitute a default under, any of the terms, conditions or
provisions of any loan agreement, indenture, trust, deed or other agreement or
instrument to which Microsoft is a party or by which it is bound or (iv) except
as provided herein, result in the creation or imposition of any lien, charge,
security interest or encumbrance of any nature whatsoever upon any of
Microsoft's property or assets.
4.5 CERTIFICATED SHARES, LEGEND AND STOP TRANSFER INSTRUCTIONS.
----------------------------------------------------------
(a) Microsoft acknowledges that all shares of Mtel Common Stock
delivered to Microsoft pursuant to the Stock Exchange Agreement shall
be held by Microsoft for the Term of this Agreement in certificated
form and that each certificate representing shares of Mtel Common
Stock to be issued pursuant to the Stock Exchange Agreement shall bear
the following legend:
"TRANSFER OF THIS SECURITY IS SUBJECT TO RESTRICTIONS CONTAINED
IN THAT CERTAIN STOCKHOLDER AGREEMENT DATED AS OF SEPTEMBER 15,
1995, BETWEEN THE ISSUER HEREOF AND MICROSOFT CORPORATION."
16
<PAGE>
(b) Mtel is hereby authorized to, and shall, issue to its
transfer agent, and shall note upon its books, "stop transfer"
instructions with respect to all Mtel Common Stock to be issued to
Microsoft pursuant to the Stock Exchange Agreement.
4.6 NO BROKERS. No broker, investment banker, financial adviser or
----------
other person is entitled to any broker's, finder's or financial adviser's fee or
commission in connection with the Exchange Transaction based upon arrangements
made by or on behalf of Microsoft.
ARTICLE V
MISCELLANEOUS
5.1 TERMINATION. This Agreement, and all rights and obligations of
-----------
the parties hereunder, shall terminate upon the expiration of the Term of this
Agreement.
5.2 ASSIGNABILITY. This Agreement shall be binding upon and inure to
-------------
the benefit of the successors and assigns of each party hereto. Neither this
Agreement nor any right or obligation hereunder may be assigned or delegated in
whole or in part to any other without the prior written consent of each other
party hereto.
5.3 NOTICES. In any case where any notice or other communication is
-------
required or permitted to be given hereunder (including, without limitation, any
change in the information set forth in this Section 5.3) such notice or
communication shall be in writing and (a) personally delivered, (b) sent by
registered
17
<PAGE>
United States mail, postage prepaid, return receipt requested, (c) transmitted
by telecopy or (d) sent by way of a recognized overnight courier service,
postage prepaid, return receipt requested with instructions to deliver on the
next business day, in each case as follows:
(i) If to Mtel, to:
Mobile Telecommunication Technologies Corp.
200 South Lamar Street
Security Centre, South Building
Jackson, Mississippi 39201
Attention: Leonard G. Kriss, Esq.
Telecopy: (601) 944-7194
with a copy to:
Powell, Goldstein, Frazer & Murphy
191 Peachtree Street, N.E.
Atlanta, Georgia 30303
Attention: Richard H. Miller, Esq.
Telecopy: (404) 572-6999
(ii) If to Microsoft, to:
Microsoft Corporation
One Microsoft Way
Redmond, Washington 98052-6399
Attention: Greg Maffei
Telecopy: (205) 936-2625
with a copy to:
Microsoft Corporation
One Microsoft Way
Redmond, Washington 98052-6933
Attention: Law and Corporate Affairs
Telecopy: (206) 869-1327
5.4 WAIVERS. The failure at any time of any party hereto to require
-------
performance by any other party hereto of any responsibility or obligation
required by this Agreement shall in no way affect a party's right to require
such performance at any time thereafter, nor shall the waiver by the party of a
breach of any
18
<PAGE>
provision of this Agreement by any other party constitute a waiver of any other
breach of the same or any other provision of this Agreement nor constitute a
waiver of the responsibility or obligation itself.
5.5 THIRD PARTY RIGHTS. Nothing in this Agreement, whether express
------------------
or implied, is intended or shall be construed to confer, directly or indirectly,
upon or give to any other than Mtel, Microsoft and its respective Affiliates,
any legal or equitable right, remedy or claim under or in respect of this
Agreement or any covenant, condition or other provision contained herein.
5.6 CHOICE OF LAW. This Agreement shall be construed and enforced in
-------------
accordance with and governed by the laws of the State of Delaware without giving
effect to the principles of conflict of laws thereof.
5.7 SEVERABILITY. Should any provision of this Agreement be deemed
------------
in contradiction with the laws of any jurisdiction in which it is to be
performed or unenforceable for any reason, such provision shall be deemed null
and void, but this Agreement shall remain in force in all other respects.
Should any provision of this Agreement be or become ineffective because of
changes in applicable laws or interpretations thereof or should this Agreement
fail to include a provision that is required as a matter of law, the validity of
the other provisions of this Agreement shall not be affected thereby. If such
circumstances arise, the parties hereto shall negotiate in good faith
appropriate
19
<PAGE>
modifications to this Agreement to reflect those changes that are required by
law.
5.8 ENFORCEMENT OF AGREEMENT. Any action or proceeding brought by
------------------------
any party to this Agreement on its own behalf, or on behalf of Mtel, in
connection with or relating to this Agreement or any provision hereof shall be
brought only in a federal or state court of competent jurisdiction in the United
States. Each of the parties hereto, solely in connection with any such action
or proceeding, does hereby (a) submit to the jurisdiction of any such court, (b)
waive any defense of or relating to lack of jurisdiction with respect to any
such action or proceeding in any such court and (c) waive any defense of or
relating to service of process in any such action or proceeding in any such
court.
5.9 REFERENCES TO AGREEMENT. Any reference herein to this Agreement
-----------------------
shall be deemed to be a reference to such Agreement as the same may be modified,
varied, amended or supplemented from time to time by the parties hereto in
accordance with the provisions hereof. Unless the context otherwise expressly
requires, the words "herein," "hereof" and "hereunder" and other words of
similar importance refer to this Agreement as a whole and not to any particular
Article, Section or other subdivision or Appendix.
5.10 ENTIRE AGREEMENT. This Agreement and the other agreements and
----------------
documents contemplated herein and therein, constitute the entire agreement
between the parties hereto and supersede any prior agreement or understanding
between the parties
20
<PAGE>
hereto whether oral or written, with respect to the matters contemplated hereby.
5.11 HEADINGS, ETC. The Article and Section headings in this
--------------
Agreement are inserted for convenience of reference only and shall not affect
the interpretation of this Agreement. Whenever the context shall require, each
term stated in either the singular or plural shall include the singular and the
plural. References herein to masculine, feminine or neuter pronouns shall be
construed to refer to another gender when the context may require.
5.12 COUNTERPARTS. This Agreement maybe executed in one or more
------------
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same instrument.
5.13 SURVIVAL. All representations and warranties made herein shall
--------
survive the execution and delivery of this Agreement and any termination of this
Agreement.
5.14 AMENDMENT. No amendment, modification or waiver in respect of
---------
this Agreement shall be effective against any party unless it shall be in
writing and signed by such party.
[BALANCE OF PAGE INTENTIONALLY LEFT BLANK]
21
<PAGE>
IN WITNESS WHEREOF, Mtel and Microsoft have caused this Agreement to be
duly executed and delivered on the day and year first above written.
MOBILE TELECOMMUNICATION
TECHNOLOGIES CORP.
By: /s/ John E. Welsh III
-------------------------------
Name: John E. Welsh III
Title: Vice Chairman
MICROSOFT CORPORATION
By: /s/ William H. Neukom
-------------------------------
Name: William H. Neukom
Title: Senior V. P. Law and
Corporate Affairs
22
<PAGE>
EXHIBIT 10.33
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
--------------------
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT ("Agreement") is made
and entered into as of the 1st day of January 1996, by and between Mobile
Telecommunication Technologies Corp., a Delaware corporation (hereinafter
referred to as the "Company"), and Bernard Puckett (hereinafter referred to as
"Employee").
WHEREAS, the Company and the Employee are parties to an Employment
Agreement dated as of January 11, 1994 (the "Prior Agreement");
WHEREAS, the Company and the Employee wish to amend and restate the
Prior Agreement; and
WHEREAS, Employee is willing to continue to render services to the
Company and such subsidiaries on the terms and subject to the conditions set
forth in this Agreement.
ARTICLE I
---------
EMPLOYMENT
----------
1.1 Term of Employment. The period during which this Agreement shall
------------------
be in effect (the "Term") shall commence as of January 1, 1996 (the "Effective
Date"), and shall expire on December 31, 1996.
1.2 Duties of Employee. Effective as of the Effective Date, Employee
------------------
shall have the following responsibilities: (a) to assist the Company in
developing and maintaining its relationship with MCI Corporation; (b) to assist
the Company in developing and maintaining its relationship with Sony
Corporation; (c) to assist the Company in supporting the Skytel sales and
marketing organization; and (d) to support the Company in its communications
with analysts and the investment community. During the first two months of the
Term, Employee shall be expected to devote no more than three weeks a month in
the performance of his responsibilities, and no more than two weeks a month
during the third through the sixth month of the Term. Thereafter, Employee
shall be expected to devote no more than one week each month in the performance
of his responsibilities. In the event that the Company desires that the
Employee assume additional responsibilities, the Company and the Employee shall
separately negotiate the terms thereof (including additional compensation),
provided, however, that nothing herein shall obligate Employee to agree to
assume additional responsibilities. The Company agrees that Employee may
perform his responsibilities from his office in Connecticut. The Company agrees
that it will not reduce in any way Employee's remuneration (including benefits
and perquisites), status, and responsibilities during the Term without
Employee's consent. Employee hereby accepts such employment and undertakes to
use his good faith efforts to discharge his duties and responsibilities.
1.3 Compensation. During the Term, Employee shall be entitled to a
------------
salary equal to $500,000 per year payable twice monthly.
<PAGE>
1.4 Expense Reimbursement. The Company shall reimburse Employee for
---------------------
business expenses reasonably incurred in connection with his employment in
accordance with the Company's reimbursement practice for executive officers upon
presentation of adequate documentation.
1.5 Benefits.
--------
(a) Employee shall be entitled to an annual paid vacation as is
common in the industry in which the Company participates and as determined in
accordance with the Company's vacation policy as in effect from time to time.
(b) Employee shall be entitled to receive all employee benefits and
to participate in any employee benefit plans or programs as are generally
offered to or provided to employees of the Company from time to time during the
Term, including, without limitation, the Section 401(k) Plan, and shall be
entitled to continuation of the following additional benefits during the Term:
(i) automobile; (ii) cellular telephone; (iii) monthly dues for one country
club; (iv) monthly dues for one luncheon or dinner club; (v) continuation of
life insurance policy; and (vi) medical insurance for Employee and dependents
and disability insurance for Employee.
(c) Employee shall not be eligible for bonuses in respect of 1996
under the Company's Short-Term Management Incentive Plant (the "Short-Term
Plan") and Long-Term Management Incentive Plan (the "Long-Term Plan") (or any
successor plans). However, Employee shall be entitled to receive awards under
such plans in respect of 1995 which are payable in 1996. The Employee's 1995
award under the Short-Term Plan shall be payable in cash and the 1995 award
under the Long-Term Plan shall be payable in restricted shares of Common Stock
of the Company ("Common Stock") the restrictions on which shall lapse on January
1, 1997 (provided the Employee shall not have theretofore voluntarily terminated
his employment with the Company or been terminated for "Cause" (as hereinafter
defined) or otherwise breached any of his obligations hereunder) or on such
earlier date on which the Employee's employment shall have been terminated (1)
by the Company other than for Cause or (2) by reason of the Employee's death or
disability.
1.6 Disability of Employee. The Company has secured (or will secure,
----------------------
as soon as practicable after the date hereof) disability income insurance for
the benefit of Employee such that, should Employee become totally disabled
during the Term and by reason of such total disability is unable to perform the
duties of his employment under this Agreement for a period of three consecutive
months, Employee will receive monthly disability income payments through such
disability income of sixty percent of Employee's monthly base compensation at
the time such total disability is incurred (up to a maximum of $6,000 per
month), commencing at the end of said three month period and continuing until
the termination or discontinuance of such disability or the period provided for
in the insurance program, whichever is longer, but in no event beyond the
expiration of the Term. Employee's compensation provided for in Section 1.3
shall continue until the first to occur of the commencement of disability
payments provided in this Section 1.6 or the expiration of the Term. If and to
the extent disability income payments are not payable to Employee through such
disability income insurance program by reason of the
-2-
<PAGE>
amendment or termination thereof, then the Company shall itself pay such
disability income payments to Employee.
1.7 Treatment of Stock Option. Notwithstanding anything to the
-------------------------
contrary contained in the Non-Qualified Stock Option Agreement between the
Company and the Employee, dated as of January 11, 1994 (the "Option Agreement"):
(A) to the extent not previously exercised or otherwise terminated or expired,
the Option (as defined in the Option Agreement) shall terminate and cease to be
exercisable as of the later of (1) January 2, 1997 or (2) in the event of the
Employee's death or total disability (within the meaning of Section 1.6 hereof)
prior to January 3, 1997, the date which is six months following the date of
such death or disability; (B) Section 7(A) of the Option Agreement shall no
longer apply; and (C) notwithstanding clauses (A) and (B) above, the Option
shall immediately terminate and cease to be exercisable if the Employee's
employment is terminated for Cause or if the Employee breaches any of his
obligations under Article II hereof during his employment with the Company.
This Section 1.7 shall constitute an amendment to the Option Agreement, as
contemplated by Section 18 thereof.
1.8 Special Payment. Provided the Employee shall not have
---------------
voluntarily terminated his employment with the Company during the Term or been
terminated for "Cause" (as hereinafter defined) or otherwise breached any of his
obligations under Article II hereof during the Term, on the first business day
of January 1997, the Company shall pay to the Employee, in consideration of his
services during 1996, an amount (not to be less than zero) equal to (a) $1
million, less (b) fifty percent of the excess (if any) of (1) the aggregate
value realized by Employee upon exercise of the Option referred to in Section
1.7 hereof (such aggregate value being equal to the sum of the values on the
respective dates of exercise, based upon the excess of the fair market value per
share of Common Stock on the date of exercise, as determined in accordance with
the Company's 1990 Employee Incentive Plan, over the per share exercise price of
the Option, multiplied by the number of shares received upon exercise) over (2)
$2 million. The Company's payment obligation under this Section 1.8 shall
survive the expiration of the Term of this Agreement or the Employee's
termination of employment during the Term; provided, however, that if Employee
breaches the provisions of Section 2.2 hereof following expiration of the Term,
Employee shall promptly repay to the Company any amounts previously paid by the
Company pursuant to this Section 1.8.
ARTICLE II
----------
COVENANTS OF EMPLOYEE
---------------------
2.1 Confidentiality. Employee recognizes the interest of the Company
---------------
and its subsidiaries in maintaining the confidential nature of their proprietary
and other business and commercial information. In consideration thereof, during
Employee's employment with the Company and following termination thereof for any
reason, Employee shall not (except as authorized in writing by the Board of
Directors of the Company) publish, disclose or use for his own benefit or for
the benefit of a business or entity other than the Company or otherwise, any
material secret, confidential, or proprietary information which was acquired by
Employee during
-3-
<PAGE>
his employment relating to the Company's or any of its subsidiaries' businesses,
operations, customers, suppliers, products, employees, financial affairs, trade
or industrial practices, trade secrets, technology, know-how or intellectual
property. All records, files, data, documents and the like relating to
suppliers, customers, costs, prices, systems, methods, personnel, technology and
other materials relating to the Company or its subsidiaries shall be and remain
the sole property of the Company and such subsidiaries. Upon termination of
Employee's employment hereunder, Employee shall not remove from the Company's
premises or retain any of the materials described in this Section 2.1 except
with the prior written consent of the Board of Directors of the Company, and all
such materials in Employee's possession shall be returned promptly to the
Company. Nothing in this Section 2.1 shall preclude Employee from publishing,
disclosing or using the information which is generally known to the public
(other than as a result of publication, disclosure or use by Employee not
permitted hereunder) or which is required to be disclosed by applicable law,
rules, regulations or court or governmental or regulatory authority, order or
decree.
2.2 Non-Competition. During Employee's employment with the Company,
---------------
and for the one-year period following the termination of Employee's employment
with the Company for any reason, Employee shall not, without the prior written
consent of the Board of Directors of the Company, which consent may be withheld
at the sole discretion of such Board of Directors, engage or participate in,
assist or have an interest in, directly or indirectly, whether as an officer,
director, partner, owner, employee, consultant, agent or otherwise, the
operation, management or conduct of any business or enterprise that directly
competes in the same geographical area with any line of business in which the
Company or any of its subsidiaries is now engaged or, to the Employee's
knowledge, currently plans to engage; provided, however, that nothing in this
Section 2.2 shall prohibit Employee from acquiring or holding, for investment
purposes, securities of any corporation which may compete directly or indirectly
with the Company.
ARTICLE III
-----------
TERMINATION OF EMPLOYMENT
-------------------------
3.1 Termination by Company. Employee's employment may be terminated
----------------------
by the Company during the Term only upon the occurrence of one or more of the
following events:
(a) Employee's death;
(b) If Employee shall become totally disabled within the meaning
of Section 1.6 hereof and begins actually to receive disability income payments
as provided in Section 1.6 hereof; or
(c) For "Cause," which for purposes of this Agreement shall mean
that Employee shall have committed:
-4-
<PAGE>
(i) an intentional act of fraud, embezzlement or theft in
connection with his duties or in the course of his
employment with the Company;
(ii) intentional wrongful damage to property of the Company or
any of its subsidiaries; or
(iii) intentional wrongful disclosure of secret processes or
confidential information of the Company or any of its
subsidiaries,
and any such act shall have been materially harmful to the Company. For
purposes of this Agreement, no act, or failure to act, on the part of Employee
shall be deemed "intentional" if it was due primarily to an error in judgment or
negligence, but shall be deemed "intentional" only if done, or omitted to be
done, by Employee in bad faith and without reasonable belief that his action or
omission was in the best interest of the Company.
If Employee's employment is terminated upon the occurrence of one or
more of the events specified in clauses (a), (b) or (c) of this Section 3.1,
then Employee shall only be entitled to receive Employee's then unpaid base
salary prorated to the date of termination and, in case of termination upon the
occurrence of one or more of the events specified in clauses (a) or (b) of this
Section 3.1, the payment described in Section 1.8 hereof at the time provided
for in said Section 1.8, and shall not be entitled to any other compensation or
employment benefits for any period after the date of termination, except as
provided in Section 1.6 of this Agreement.
3.2 Duty to Mitigate. In the event the Company terminates Employee's
----------------
employment during the Term for reasons other than those set forth in clauses
(a), (b) or (c) of Section 3.1, then Employee shall be entitled to base salary
and benefits specified in Section 1.5 hereof for the remainder of the Term, to
the payment described in Section 1.8 hereof at the time provided for in said
Section 1.8 and in continued medical coverage as required by the Consolidated
Omnibus Budget Reconciliation Act of 1989, and may pursue all other rights,
remedies and damages available to Employee at law or in equity. Employee shall
have no obligation to mitigate damage by seeking other employment.
ARTICLE IV
----------
GENERAL PROVISIONS
------------------
4.1 Withholding of Taxes. The Company may withhold from any amounts
--------------------
payable under this Agreement all federal, state, city or other taxes as shall be
required pursuant to any law or government regulation or ruling.
4.2 Notice. For purposes of this Agreement, all communications,
------
including, without limitation, notices, consents, requests or approvals provided
for herein shall be in writing and shall be deemed to have been duly given when
delivered or five business days after having been
-5-
<PAGE>
mailed by United States registered or certified mail, return receipt requested,
postage prepaid, addressed to the Company (to the attention of the Secretary of
the Company) at its principal executive office and to Employee at his principal
residence, or to such other address as any party may have furnished to the other
in writing and in accordance herewith, except that notices of change of address
shall be effective only upon receipt.
4.3 Governing Law. The validity, interpretation, construction and
-------------
performance of this Agreement shall be governed by the laws of the State of
Delaware, without giving effect to the principle of conflict of laws of such
State.
4.4 Validity. If any provisions of this Agreement or the application
--------
of any provision hereof to any person or circumstances is held invalid,
unenforceable or otherwise illegal, the remainder of this Agreement and the
application of such provision to any other person or circumstances shall not be
affected, and the provision so held to be invalid, unenforceable or otherwise
illegal shall be reformed to the extent (and only to the extent) necessary to
make it enforceable, valid and legal.
4.5 Entire Agreement. This Agreement supersedes any other agreement,
----------------
oral or written, between the parties with respect to the employment of the
Employee by the Company (including, but not limited to, the Prior Agreement),
and contains all of the agreements and understandings between the parties with
respect to such employment. Any waiver or modification of any term of this
Agreement shall be effective only if it is signed in writing by both parties.
4.6 Successors and Binding Agreements.
---------------------------------
(a) This Agreement shall be binding upon and inure to the
benefit of the Company and any Successor of or to the Company, but shall not
otherwise be assignable or delegable by the Company. "Successor" shall mean any
successor in interest, including, without limitation, any entity, individual or
group of persons acquiring directly or indirectly all or substantially all of
the business or assets of the Company whether by sale, merger, consolidation,
reorganization or otherwise.
(b) This Agreement shall inure to the benefit of and be
enforceable by Employee's personal or legal representatives, executors,
administrators, successors, heirs, distributees and legatees.
(c) The Company shall require any Successor to agree (by
agreement in form and substance satisfactory to Employee) within thirty (30)
days after becoming a Successor to perform this Agreement to the same extent as
the original parties would be required if no succession had occurred.
(d) This Agreement is personal in nature and neither of the
parties shall, without the consent of the other, assign, transfer or delegate
this Agreement or any rights or obligations hereunder except as expressly
provided in this Section 4.6.
-6-
<PAGE>
4.7 Captions. The captions in this Agreement are solely for
--------
convenience of reference and shall not be given any effect in the construction
or interpretation of the Agreement.
4.8 Miscellaneous. No provisions of this Agreement may be modified,
-------------
waived or discharged unless such waiver, modification or discharge is agreed to
in writing signed by Employee and the discharge is agreed to in writing signed
by Employee and the Company. No waiver by either party hereto at any time of
any breach by the other party hereto or compliance with any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time. No agreements or representations, oral or otherwise,
expressed or implied with respect to the subject matter hereof have been made by
either party which are not set forth expressly in this Agreement.
4.9 Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered as of the date first above written.
MOBILE TELECOMMUNICATION
TECHNOLOGIES CORP.
By: /s/ John N. Palmer
---------------------------
John N. Palmer
/s/ Bernard Puckett
------------------------------
Bernard Puckett
-7-
<PAGE>
EXHIBIT 11.1
MOBILE TELECOMMUNICATION TECHNOLOGIES CORP.
STATEMENT OF COMPUTATION OF PER SHARE EARNINGS
<TABLE>
<CAPTION>
For the Twelve Months For the Three Months
Ended December 31 Ended December 31
Primary 1995 1994 1995 1994
- ------------------------------------------------------------------ --------------------------------
<S> <C> <C> <C> <C>
Common and common equivalent
shares outstanding 50,812,475 36,831,880 54,081,808 39,028,450
Net Income (Loss) (52,027,411) (19,846,485) (40,386,412) (14,502,679)
Preferred Stock dividend requirement (8,437,500) (8,437,500) (2,109,375) (2,109,375)
---------------------------- --------------------------------
Adjusted net income (loss) (60,464,011) (28,283,985) (42,495,787) (16,612,054)
============================ ================================
Primary earnings per share ($1.19) ($0.77) ($0.79) ($0.43)
============================ ================================
<CAPTION>
Fully Diluted
- ------------------------------------
Common and common equivalent
shares outstanding 50,812,475 36,831,880 54,081,808 39,028,450
Net Income (Loss) (52,027,411) (19,846,485) (40,386,412) (14,502,679)
Preferred stock dividend requirement ($,437,400) (8,437,500) (2,109,375) (2,109,375)
Adjusted net income (loss) (60,464,911) (28,283,985) (42,493,787) (16,612,054)
============================ ================================
Primary earnings per share ($1.19) ($0.77) ($0.79) ($0.43)
============================ ================================
</TABLE>
<PAGE>
Exhibit 21.1
MOBILE TELECOMMUNICATION TECHNOLOGIES CORP.
LIST OF SUBSIDIARIES
COM/NAV Realty Corp. Delaware
Destineer Corporation Delaware
MobileComm Europe, Inc. Delaware
Mtel International, Inc. Delaware
Mtel Latin America, Inc. Delaware
Mtel Main, Inc. Delaware
Mtel Paging, Inc. Delaware
Mtel Puerto Rico, Inc. Delaware
Mtel Space Technologies Corporation Delaware
Mtel Technologies, Inc. Delaware
Mtel American Radiodetermination Corporation Delaware
Mtel Cellular, Inc. Delaware
Mtel Digital Services, Inc. Delaware
Mtel Microwave, Inc. Delaware
Mtel Service Corporation New York
United States Paging Corporation Delaware
SkyTel Corp. Delaware
Mtel (U.K.) Limited England and Wales
Mercury Paging, Ltd. England and Wales
SkyTel (Malaysia) Sdn Bhd Malaysia
PT SkyTelindo Srvs Sdn Bhd Indonesia
SkyTel Telecom Service Limited Hong Kong
TelePage Limited Malta
Mtel China, Inc. British Virgin Islands
<PAGE>
Mtel Argentina, S.A. Argentina
Mtel do Brazil, S.A. Brazil
Mtel Chile, S.A. Chile
Mtel Costa Rica, S.A. Costa Rica
Mtel del Ecuador, S.A. Ecuador
Victori Comunicaciones, S.A. Brazil
Telecomunicaciones SkyTel, S.A. Venezuala
Mtel Columbia, S.A. Columbia
Radio Aviso, S.A. Uruguay
Nubal, S.A. Uruguay
Buscapersona CIA, Ltd. Ecuador
SkyTel del Peru, S.A. Peru
Communicaciones Mtel S.A. de C.V. Mexico
SkyTel Panama Panama
Mtel Guatemala, S.A. Guatemala
BEPSA Communicaciones, S.A. Paraguay
Mtel Puerto Rico, Inc. USA
Shanghai Guoma SkyTel Co., Ltd. China
<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of our
report included in this Annual Report on Form 10-K for the year ended
December 31, 1995 into Mobile Telecommunication Technologies Corp.'s previously
filed Registration Statements on Form S-8, File Nos. 33-31617, 33-42494, 33-
55722, 33-62032 and 33-64853.
Jackson, Mississippi
April 1, 1996
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM MOBILE
TELECOMMUNICATION TECHNOLOGIES CORP. CONSOLIDATED BALANCE SHEET AS OF DECEMBER
31, 1995 AND CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER
31, 1995.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 9,612,734
<SECURITIES> 0
<RECEIVABLES> 51,909,422
<ALLOWANCES> 5,596,391
<INVENTORY> 0
<CURRENT-ASSETS> 65,114,176
<PP&E> 371,838,361
<DEPRECIATION> 77,211,919
<TOTAL-ASSETS> 851,413,531
<CURRENT-LIABILITIES> 94,560,061
<BONDS> 333,258,730
0
37,500
<COMMON> 541,347
<OTHER-SE> 422,961,402
<TOTAL-LIABILITY-AND-EQUITY> 851,413,531
<SALES> 245,990,993
<TOTAL-REVENUES> 245,990,993
<CGS> 0
<TOTAL-COSTS> 304,412,734
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 6,880,223
<INTEREST-EXPENSE> 11,754,931
<INCOME-PRETAX> (52,283,905)
<INCOME-TAX> (256,494)
<INCOME-CONTINUING> (52,027,411)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (52,027,411)
<EPS-PRIMARY> (1.19)
<EPS-DILUTED> (1.19)
</TABLE>
