<PAGE> 1
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
<TABLE>
<C> <S>
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1998
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER: 0-21924
</TABLE>
METROCALL, INC.
(Exact Name of Registrant as Specified in its Charter)
<TABLE>
<S> <C>
DELAWARE 54-1215634
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
6677 RICHMOND HIGHWAY, ALEXANDRIA, VIRGINIA 22306
(Address of Principal Executive Offices) (Zip Code)
</TABLE>
Registrant's Telephone Number, including area code: (703) 660-6677
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 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 [ ]
Indicate the number of shares outstanding of each of the issuer's classes
of common stock as of the latest practicable date:
<TABLE>
<CAPTION>
CLASS OUTSTANDING AT NOVEMBER 13, 1998
----- --------------------------------
<S> <C>
Common Stock, $.01 par value 40,953,403
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
METROCALL, INC. AND SUBSIDIARIES
INDEX TO FORM 10-Q
<TABLE>
<CAPTION>
PAGE
NUMBER
------
<S> <C> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets, December 31, 1997 and
September 30, 1998........................................ 3
Condensed Consolidated Statements of Operations for the
three and nine month periods ended September 30, 1997 and
1998...................................................... 4
Condensed Consolidated Statement of Stockholders' Equity for
the nine month period ended September 30, 1998............ 5
Condensed Consolidated Statements of Cash Flows for the nine
month periods ended September 30, 1997 and 1998........... 6
Notes to Condensed Consolidated Financial Statements........ 7
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations................................. 12
PART II. OTHER INFORMATION
Item 1. Legal Proceedings........................................... 25
Item 2. Changes in Securities....................................... 25
Item 3. Defaults Upon Senior Securities............................. 25
Item 4. Submission of Matters to a Vote of Security Holders......... 26
Item 5. Other Information........................................... 26
Item 6. Exhibits and Reports on Form 8-K............................ 26
SIGNATURES.............................................................. 31
</TABLE>
2
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
METROCALL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE INFORMATION)
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1997 1998
------------ -------------
(UNAUDITED)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents................................. $ 24,896 $ 5,105
Accounts receivable, less allowance for doubtful accounts
of $6,843 as of December 31, 1997 and $7,175 as of
September 30, 1998...................................... 30,208 28,853
Prepaid expenses and other current assets................. 18,372 21,883
---------- ----------
Total current assets............................... 73,476 55,841
---------- ----------
PROPERTY AND EQUIPMENT:
Land, buildings and leasehold improvements................ 16,364 16,861
Furniture, office equipment and vehicles.................. 46,588 56,433
Paging and plant equipment................................ 276,993 297,716
Less -- Accumulated depreciation and amortization......... (115,357) (151,713)
---------- ----------
224,588 219,297
---------- ----------
INTANGIBLE ASSETS, net of accumulated amortization of
approximately $58,352 as of December 31, 1997 and $167,176
as of September 30, 1998.................................. 787,003 709,048
OTHER ASSETS................................................ 1,947 2,512
---------- ----------
TOTAL ASSETS................................................ $1,087,014 $ 986,698
========== ==========
CURRENT LIABILITIES:
Current maturities of long-term debt...................... $ 952 $ 864
Accounts payable.......................................... 35,160 13,423
Accrued expenses and other current liabilities............ 46,141 39,871
Deferred revenues and subscriber deposits................. 15,854 14,355
---------- ----------
Total current liabilities.......................... 98,107 68,513
---------- ----------
CAPITAL LEASE OBLIGATIONS, net of current portion........... 4,282 3,710
CREDIT FACILITY AND OTHER LONG-TERM DEBT, less current
maturities................................................ 142,173 160,222
SENIOR SUBORDINATED NOTES, due 2005 and 2007................ 452,534 452,534
DEFERRED INCOME TAX LIABILITY............................... 155,930 152,027
MINORITY INTEREST IN PARTNERSHIP............................ 510 510
---------- ----------
Total liabilities.................................. 853,536 837,516
---------- ----------
COMMITMENTS AND CONTINGENCIES (Notes 5, 6 and 8)
SERIES A CONVERTIBLE PREFERRED STOCK, 14% cumulative; par
value $.01 per share; 810,000 shares authorized; 182,726
and 195,517 shares issued and outstanding as of December
31, 1997 and September 30, 1998, and a liquidation
preference of $46,481 and $51,445 at December 31, 1997 and
September 30, 1998, respectively.......................... 37,918 43,474
SERIES B JUNIOR CONVERTIBLE PREFERRED STOCK, 14% cumulative,
par value $.01 per share; 9,000 shares authorized; 1,579
and 1,689 shares issued and outstanding as of December 31,
1997 and September 30, 1998 and a liquidation preference
of $16,064 and $17,780 at December 31, 1997 and September
30, 1998, respectively.................................... 16,064 17,780
STOCKHOLDERS' EQUITY:
Common stock, par value $.01 per share; authorized
100,000,000 shares; 40,548,414 and 40,953,403 shares
issued and outstanding as of December 31, 1997 and
September 30, 1998, respectively........................ 405 410
Additional paid-in capital................................ 336,076 337,861
Accumulated deficit....................................... (156,985) (250,343)
---------- ----------
Total stockholders' equity......................... 179,496 87,928
---------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY.................. $1,087,014 $ 986,698
========== ==========
</TABLE>
See notes to condensed consolidated financial statements.
3
<PAGE> 4
METROCALL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE INFORMATION)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
----------------------- -----------------------
1997 1998 1997 1998
---------- ---------- ---------- ----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
REVENUES:
Service, rent and maintenance revenues...... $ 64,701 $ 93,810 $ 183,237 $ 278,945
Product sales............................... 10,318 12,080 28,832 33,529
---------- ---------- ---------- ----------
Total revenues...................... 75,019 105,890 212,069 312,474
Net book value of products sold............. (7,642) (6,482) (21,324) (20,941)
---------- ---------- ---------- ----------
67,377 99,408 190,745 291,533
---------- ---------- ---------- ----------
OPERATING EXPENSES:
Service, rent and maintenance expenses...... 16,670 24,033 45,341 69,068
Selling and marketing....................... 14,151 17,487 40,319 50,130
General and administrative.................. 18,292 28,185 53,642 85,872
Depreciation................................ 13,643 16,966 40,550 50,505
Amortization................................ 9,825 36,484 26,467 107,497
---------- ---------- ---------- ----------
72,581 123,155 206,319 363,072
---------- ---------- ---------- ----------
Loss from operations................ (5,204) (23,747) (15,574) (71,539)
INTEREST EXPENSE.............................. (9,856) (16,011) (25,763) (47,035)
INTEREST AND OTHER (EXPENSE) INCOME........... (121) 13 (61) 626
---------- ---------- ---------- ----------
LOSS BEFORE INCOME TAX BENEFIT................ (15,181) (39,745) (41,398) (117,948)
INCOME TAX BENEFIT............................ 1,345 10,591 3,510 31,861
---------- ---------- ---------- ----------
Net loss............................ (13,836) (29,154) (37,888) (86,087)
PREFERRED DIVIDENDS........................... (2,184) (2,499) (5,353) (7,271)
---------- ---------- ---------- ----------
Loss attributable to common
stockholders...................... $ (16,020) $ (31,653) $ (43,241) $ (93,358)
========== ========== ========== ==========
BASIC AND DILUTED LOSS PER SHARE ATTRIBUTABLE
TO COMMON STOCKHOLDERS...................... $ (0.55) $ (0.77) $ (1.64) $ (2.28)
========== ========== ========== ==========
Weighted-average common shares outstanding.... 29,076,710 40,931,215 26,358,780 40,891,277
========== ========== ========== ==========
</TABLE>
See notes to condensed consolidated financial statements.
4
<PAGE> 5
METROCALL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998
(IN THOUSANDS, EXCEPT SHARE INFORMATION)
<TABLE>
<CAPTION>
COMMON STOCK
------------------- ADDITIONAL
SHARES PAR PAID-IN ACCUMULATED
OUTSTANDING VALUE CAPITAL DEFICIT TOTAL
----------- ----- ---------- ----------- --------
<S> <C> <C> <C> <C> <C>
BALANCE, December 31, 1997................. 40,548,414 $405 $336,076 $(156,985) $179,496
Issuance of shares in employee stock
purchase plan (unaudited)................ 136,885 2 576 -- 578
Shares issued in settlement of litigation
related to the ProNet Merger (unaudited). 270,000 3 1,212 -- 1,215
Other (unaudited).......................... (1,896) -- (3) -- (3)
Preferred dividends (unaudited)............ -- -- -- (7,271) (7,271)
Net loss (unaudited)....................... -- -- -- (86,087) (86,087)
---------- ---- -------- --------- --------
BALANCE, September 30, 1998 (unaudited).... 40,953,403 $410 $337,861 $(250,343) $ 87,928
========== ==== ======== ========= ========
</TABLE>
See notes to condensed consolidated financial statements.
5
<PAGE> 6
METROCALL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
-------------------
1997 1998
-------- --------
(UNAUDITED)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss.................................................. $(37,888) $(86,087)
Adjustments to reconcile net loss to net cash provided by
operating activities--
Depreciation and amortization.......................... 67,017 158,002
Amortization of debt financing costs................... 776 1,326
Change in deferred income taxes........................ (4,047) (31,902)
Cash provided by (used in) changes in assets and
liabilities:
Accounts receivable.................................... (5,315) (855)
Prepaid expenses and other current assets.............. (1,946) (3,510)
Accounts payable....................................... 888 (19,507)
Accrued expenses and other current liabilities......... 2,025 (5,709)
Deferred revenues and subscriber deposits.............. (1,486) (1,402)
-------- --------
Net cash provided by operating activities......... 20,024 10,356
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment, net.................. (54,400) (45,213)
Cash paid for acquisitions, net of cash acquired.......... (25,255) --
Proceeds from sale of telemessaging operations............ 10,650 --
Additions to intangibles.................................. (1,042) (1,503)
Other..................................................... 798 (1,394)
-------- --------
Net cash used in investing activities............. (69,249) (48,110)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term debt.............................. 56,000 23,000
Deferred debt financing costs............................. (1,339) --
Principal payments on long-term debt...................... (945) (5,612)
Net proceeds from issuance of common stock................ 432 577
Other..................................................... 11 (2)
-------- --------
Net cash provided by financing activities......... 54,159 17,963
-------- --------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS........ 4,934 (19,791)
CASH AND CASH EQUIVALENTS, beginning of period.............. 10,917 24,896
-------- --------
CASH AND CASH EQUIVALENTS, end of period.................... $ 15,851 $ 5,105
======== ========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash payments for interest................................ $ 18,105 $ 38,001
Cash payments for income taxes............................ $ 537 $ --
</TABLE>
See notes to condensed consolidated financial statements.
6
<PAGE> 7
METROCALL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1998
1. ORGANIZATION AND RISK FACTORS
Metrocall, Inc. and subsidiaries ("Metrocall" or the "Company"), is a
provider of local, regional and nationwide paging and other wireless messaging
services in the United States. The Company's selling efforts are concentrated in
six operating regions: (i) the Northeast (Massachusetts through Western
Pennsylvania), (ii) the Mid-Atlantic (Eastern Pennsylvania, Delaware, Maryland,
Virginia and the Washington, D.C. metropolitan area), (iii) the Southeast
(including the Carolinas, Georgia, Florida, Alabama, Mississippi and Tennessee),
(iv) the Southwest (primarily Louisiana and Texas), (v) the Mid-West (including
Illinois, Indiana and Wisconsin) and (vi) the West (primarily California, Nevada
and Arizona). Through the Metrocall Nationwide Wireless Network, the Company
provides coverage to over 1,000 cities including the top 100 Standard
Metropolitan Statistical Areas.
Risks and Other Important Factors
The Company sustained net losses of $20.1 million, $49.1 million, $52.5
million and $86.1 million for each of the years ended December 31, 1995, 1996,
1997 and for the nine month period ended September 30, 1998, respectively. The
Company's loss from operations for the nine month period ended September 30,
1998 was $71.5 million. In addition, at September 30, 1998, the Company had an
accumulated deficit of $250.3 million and a deficit in working capital of $12.7
million. The Company's losses from operations and its net losses are expected to
continue for additional periods in the future. There can be no assurance that
the Company's operations will become profitable.
The Company's operations require the availability of substantial funds to
finance the maintenance and growth of its existing paging operations and
customer base, development and construction of future wireless communications
networks, expansion into new markets, and the acquisition of other wireless
communications companies. At September 30, 1998, the Company had incurred
approximately $617.3 million in debt and capital leases. Amounts available under
the Company's credit facility are subject to certain financial covenants and
other restrictions such that as of September 30, 1998, approximately $95.5
million of additional borrowings were available to the Company under its credit
facility. The Company's ability to borrow additional amounts in the future is
dependent on its ability to comply with the provisions of its credit facility,
as well as the availability of financing in the capital markets.
The Company is also subject to certain additional risks and uncertainties
including, but not limited to, changes in technology, business integration,
competition, regulation, litigation and subscriber turnover.
2. BASIS OF PRESENTATION
The condensed consolidated financial statements included herein have been
prepared by the Company, without audit, pursuant to the rules and regulations of
the Securities and Exchange Commission ("SEC") and include, in the opinion of
management, all adjustments, consisting of normal recurring adjustments,
necessary for a fair presentation of interim period results. Certain information
and footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted pursuant to such rules and regulations. The Company believes, however,
that its disclosures are adequate to make the information presented not
misleading. These condensed consolidated financial statements should be read in
conjunction with the consolidated financial statements and notes thereto
included in the Company's 1997 Annual Report on Form 10-K. The results of
operations for the nine-month period ended September 30, 1998, are not
necessarily indicative of the results to be expected for the full year.
7
<PAGE> 8
METROCALL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
3. SIGNIFICANT ACCOUNTING POLICIES
Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Revenue Recognition
The Company recognizes revenue under service, rental and maintenance
agreements with customers as the related services are performed. Sales of
equipment are recognized upon delivery.
Cash and Cash Equivalents
Cash and cash equivalents include short-term, highly liquid investments
purchased with original maturities of three months or less.
Property and Equipment
Property and equipment are carried at cost. Depreciation is computed using
the straight-line method over the following estimated useful lives.
<TABLE>
<CAPTION>
YEARS
-----
<S> <C>
Buildings and leasehold improvements........................ 10-31
Furniture and office equipment.............................. 5-10
Vehicles.................................................... 3-5
Subscriber paging equipment................................. 3-5
Transmission and plant equipment............................ 5-12
</TABLE>
The net book value of lost pagers is charged to depreciation expense. New
pagers are depreciated using the half-year convention upon acquisition.
Betterments to acquired pagers are charged to depreciation expense.
Long-Lived Assets
Long-lived assets and identifiable intangibles to be held and used are
reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount should be addressed. Impairment is measured by
comparing the book value to the estimated undiscounted future cash flows
expected to result from use of the assets and their eventual disposition. The
Company has determined that there has been no permanent impairment in the
carrying value of long-lived assets reflected in the accompanying balance sheet.
Effective January 1, 1998, the Company reduced the estimated useful lives
of certain intangibles, including goodwill, regulatory licenses issued by the
Federal Communications Commission ("FCC") and subscriber bases recorded in
conjunction with acquisitions from 15 years to 10 years for goodwill, from 25
years to 10 years for FCC licenses and from 5-6 years for subscriber bases to 3
years. The impact of these changes was to increase amortization expense for the
nine-month period ended September 30, 1998 by approximately $18.0 million.
8
<PAGE> 9
METROCALL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
New Accounting Pronouncements
In June 1997, the Financial Accounting Standards Board issued SFAS No. 130,
"Reporting Comprehensive Income" and No. 131, "Disclosures about Segments of an
Enterprise and Related Information." The adoption of SFAS No. 130 in March 1998
did not have a material impact on the Company's results of operations, financial
position or cash flows. The Company will be required to adopt SFAS No. 131 with
the issuance of its financial statements for the year ending December 31, 1998
and is presently evaluating its potential impact on the results of operations,
financial position and cash flows.
4. LOSS PER SHARE ATTRIBUTABLE TO COMMON STOCKHOLDERS
The Company has adopted Statement of Financial Accounting Standard No. 128,
"Earnings Per Share" which requires dual presentation of basic and diluted
earnings per share on the face of the statement of operations for all periods
presented. Basic earnings per share excludes dilution and is computed by
dividing income available to common stockholders by the weighted-average number
of common shares outstanding for the period. Diluted earnings per share reflects
the potential dilution that could occur if securities or other contracts to
issue common stock were exercised or converted into common stock or resulted in
the issuance of common stock that then shared in the earnings of the Company.
Options and warrants to purchase shares of common stock were not included in the
computation of loss per share as the effect would be antidilutive. As a result,
the basic and diluted earnings per share amounts are identical.
Reclassifications
Certain amounts in the prior periods' consolidated financial statements
have been reclassified to conform with the current periods' presentation.
5. PREPAID EXPENSES AND OTHER CURRENT ASSETS
Pursuant to the Telecommunications Act of 1996 (the "Telecom Act") and
consistent with the FCC's local transport rules, the Company has ceased paying
local exchange carriers ("LECs"), including a number of the Regional Bell
Operating Companies ("RBOCs"), in the Company's various service areas for any
facilities used by those LECs to transport local calls to the Company's local
paging networks. The Company has also notified the LECs that it expects to
receive credit from each LEC for any such local transport charges assessed
against the Company by that LEC since November 1, 1996, the effective date for
the FCC's rules governing local transport. As of December 31, 1997 and September
30, 1998, the Company has recorded credits receivable from the LECs related to
such local transport charges of approximately $12.1 million and $15.5 million,
respectively. These LEC receivables represent management's estimate, subject to
significant revision, of amounts management believes are fully realizable. These
LEC credit receivables have been classified as Prepaid Expenses and Other
Current Assets in the accompanying balance sheets as of December 31, 1997 and
September 30, 1998 (see Note 8).
6. PRIOR YEAR ACQUISITIONS
ProNet Inc.
On December 30, 1997, the Company completed the merger of ProNet with and
into Metrocall (the "ProNet Merger"), pursuant to the terms of the Agreement and
Plan of Merger dated August 8, 1997. Under the terms of the ProNet Merger,
Metrocall issued 0.90 shares of Metrocall common stock for each share of ProNet
common stock, or approximately 12.3 million shares of Metrocall common stock
(including 630,000 shares remaining to be issued in 1998 as settlement of
certain ProNet litigation). In connection with the ProNet Merger, the Company
assumed ProNet's $100.0 million in 11 7/8% senior subordinated notes, due in
2005 and refinanced indebtedness outstanding, including accrued interest and
bank fees, under ProNet's credit
9
<PAGE> 10
METROCALL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
6. ACQUISITION -- (CONTINUED)
facility with borrowings under the Company's credit facility. The ProNet Merger
has been accounted for as a purchase for financial reporting purposes.
On March 31, 1998, the Company revised its estimate of the deferred tax
liability associated with the ProNet Merger and accordingly, increased the
goodwill and the deferred income tax liability recorded in the ProNet Merger by
$28.0 million.
7. STOCK AND STOCK RIGHTS
Stock Option Plans
At December 31, 1997, 3,470,655 options were issued and outstanding with a
weighted-average exercise price of approximately $6.84 per share, expiring on
various dates ranging from 2003 through 2007.
On February 4, 1998, the Board of Directors approved an amendment to the
Company's 1996 Stock Option Plan, as amended, to increase the number of options
issuable under the plan to approximately 6.0 million. During the nine months
ended September 30, 1998, the Board of Directors approved grants of options to
purchase 1,678,000 shares of Metrocall common stock to current officers,
employees and directors with exercise prices ranging from $5.13 to $6.75 per
share, a price equal to or greater than the fair market value on the date of
grant.
Employee Stock Purchase Plan
The Metrocall, Inc. Employee Stock Purchase Plan (the "Stock Purchase
Plan"), offers eligible employees the opportunity to purchase an aggregate of
1,000,000 shares of Metrocall common stock through payroll deductions. Each
eligible employee may elect to purchase shares of Metrocall common stock at the
lesser of 85% of the fair market value of Metrocall common stock on either the
first or last trading day for each payroll deduction period. The Company issued
48,134 and 88,751 shares of Company common stock on January 1 and July 1, 1998,
respectively, under the Stock Purchase Plan, with a purchase price of
approximately $4.09 and $4.20 per share, respectively.
8. COMMITMENTS AND CONTINGENCIES
Legal and Regulatory Matters
The Company is subject to certain legal and regulatory matters in the
normal course of business. In the opinion of management, the outcome of such
matters will not have a material adverse effect on the financial position or
results of operations of the Company.
Interconnect Complaints
Metrocall has filed complaints with the FCC against a number of RBOCs and
the largest independent telephone company for violations of the FCC's
interconnection and local transport rules and the Telecom Act. The complaints
allege that these local telephone companies are unlawfully charging Metrocall
for local transport of the telephone companies' local traffic. Metrocall has
petitioned the FCC to rule that these local transport charges are unlawful and
to award Metrocall a reimbursement for any past charges assessed. Metrocall has
requested that the FCC resolve these complaints. The deadline for filing briefs
and motions in these proceedings was September 1998, the Company is awaiting a
ruling.
9. SUBSEQUENT EVENT
AT&T Wireless Messaging Division
On October 2, 1998, the Company closed on a stock purchase agreement with
AT&T Wireless Services, Inc. ("Wireless"), McCaw Communications Companies, Inc.
and AT&T Two Way Messaging Communica-
10
<PAGE> 11
METROCALL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
9. SUBSEQUENT EVENT -- (CONTINUED)
tions, Inc. to acquire the stock of certain subsidiaries of Wireless that
operated the paging and messaging services business of AT&T Corp. and a
50KHz/50KHz narrowband personal communications services license. The purchase
price for this acquisition was $110.0 million in cash and $95.0 million in
stated value of a new Series C Convertible Preferred Stock (the "Series C
Preferred"), subject to adjustment, based on the performance of the acquired
business prior to the closing. The acquisition will be accounted for as a
purchase for financial reporting purposes.
The issuance of the Series C Preferred was approved by the shareholders on
September 29, 1998. The Series C Preferred ranks junior to the Company's
existing Series A and B Preferred Stock and will be convertible into common
stock beginning five years after issuance. Dividends accrue at a rate of 8% of
the stated value, payable semi-annually, and may be paid either in cash or in
additional shares of Series C Preferred at the Company's option.
In order to fund the cash portion of the purchase price, the Company and
its bank lenders amended and restated the Company's credit agreement (as
amended, the "Credit Agreement") on October 2, 1998. Under the Credit Agreement,
the Company may, subject to certain conditions, increase its borrowings from
$300.0 million to $400.0 million. At closing, the Company drew down the new
6 1/2 year term loan, which matures on March 31, 2005 and bears interest at
LIBOR plus 3%.
The Credit Facility contains various covenants that, among other
restrictions, require the Company to maintain certain financial ratios,
including total debt to annualized operating cash flow (not to exceed 6.0 to 1.0
through December 31, 1998 and declining thereafter), senior debt to annualized
operating cash flow, annualized operating cash flow to pro forma debt service,
total sources of cash to total uses of cash and operating cash flow to interest
expense (in each case, as such terms are defined in the Agreement. The covenants
also limit additional indebtedness and future mergers and acquisitions without
the approval of the lenders and restrict the payment of cash dividends and other
stockholder distributions by the Company during the term of the credit facility.
The Credit Facility also prohibits certain changes in ownership control of the
Company, as defined, during the term of the Credit Facility.
11
<PAGE> 12
The following unaudited pro forma condensed combined balance sheet gives
effect to the acquisition of the paging and messaging operations of the Advanced
Messaging Division ("AMD") of AT&T Wireless Services, Inc. for consideration of
(i) cash of $110.0 million and (ii) Series C Preferred having a stated value of
$95.0 million, as if the transaction had occurred at September 30, 1998.
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
AS OF SEPTEMBER 30, 1998
(IN THOUSANDS)
<TABLE>
<CAPTION>
PRO FORMA
METROCALL AMD ADJUSTMENTS TOTAL
--------- ------- ----------- ----------
<S> <C> <C> <C> <C>
Cash and cash equivalents...................... $ 5,105 $ -- $ 5,105
Accounts receivable............................ 28,853 18,616 47,469
Prepaid expenses and other assets.............. 21,883 93 21,976
-------- ------- -------- ----------
Total current assets................. 55,841 18,709 74,550
-------- ------- -------- ----------
Property and equipment......................... 219,297 73,789 (7,996)(A) 285,090
Intangible assets (B).......................... 709,048 -- 227,093 936,141
Other assets................................... 2,512 64 2,576
-------- ------- -------- ----------
Total assets......................... $986,698 $92,562 $219,097 $1,298,357
======== ======= ======== ==========
Current liabilities............................ $ 68,513 $31,234 $ 2,952 (C) $ 102,699
Capital lease obligations...................... 3,710 -- 3,710
Credit facility and other long-term debt....... 160,222 -- 110,000 (D) 270,222
Senior subordinated notes...................... 452,534 -- 452,534
Deferred income taxes.......................... 152,027 -- 72,473 (E) 224,500
Minority interest.............................. 510 -- 510
-------- ------- -------- ----------
Total liabilities.................... 837,516 31,234 185,425 1,054,175
======== ======= ======== ==========
Series A convertible preferred stock........... 43,474 -- 43,474
Series B junior convertible preferred stock.... 17,780 -- 17,780
Series C convertible preferred stock........... -- -- 95,000 (F) 95,000
Total stockholders' equity/net assets.......... 87,928 61,328 (61,328)(G) 87,928
-------- ------- -------- ----------
Total liabilities and stockholders'
equity............................. $986,698 $92,562 $219,097 $1,298,357
======== ======= ======== ==========
</TABLE>
- ---------------
(A) Reflects a reduction of noncurrent assets due to the allocation of fair
value in excess of acquisition cost.
(B) Intangible assets consists of the following:
<TABLE>
<CAPTION>
METROCALL AMD TOTAL
--------- -------- --------
<S> <C> <C> <C>
FCC Licenses.................................. $288,705 $ 18,636 $307,341
PCS Licenses.................................. -- 26,749 26,749
Subscriber Lists.............................. 197,976 163,001 360,977
Goodwill...................................... 205,536 -- 205,536
Noncompete Convenants......................... 999 17,832 18,831
Deferred Debt Issuance Costs.................. 13,874 875 14,749
Other Intangibles............................. 1,958 -- 1,958
-------- -------- --------
$709,048 $227,093 $936,141
======== ======== ========
</TABLE>
(C) Represents accrued transaction fees.
(D) Reflects cash consideration for the AMD acquisition financed with
borrowings under the Metrocall Credit Facility.
(E) Represents the tax effect of the difference between the amounts allocated
to assets and their tax basis.
(F) Reflects the issuance of the Series C Preferred Stock.
(G) Elimination of the net assets of AMD.
12
<PAGE> 13
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of the financial condition and
results of operations of the Company should be read in conjunction with the
financial statements and the notes thereto which appear elsewhere in this
quarterly report and its annual report on Form 10-K for the year ended December
31, 1997.
All statements contained herein that are not historical facts, including
but not limited to, statements regarding anticipated future capital
requirements, the Company's future development plans, the Company's ability to
obtain additional debt, equity or other financing, and the Company's ability to
generate cash from operations, further savings from existing operations
(synergies), and Year 2000 compliance are based on current expectations. These
statements are forward looking in nature and involve a number of risks and
uncertainties. Actual results may differ materially. Among the factors that
could cause actual results to differ materially are the following: the
availability of sufficient capital to finance the Company's business plan on
terms satisfactory to the Company; competitive factors, such as the introduction
of new technologies and competitors into the paging and wireless communications
industry; pricing pressures which could affect demand for the Company's
services; changes in labor, equipment and capital costs; future acquisitions and
strategic partnerships; general business and economic conditions; and the other
risk factors described from time to time in the Company's reports filed with the
Securities and Exchange Commission. The Company wishes to caution readers not to
place undue reliance on any such forward looking statements, which statements
are made pursuant to the Private Securities Litigation Reform Act of 1995 and,
as such, speak only as of the date made.
OVERVIEW
Metrocall is currently the second largest paging company in the United
States based on number of subscribers, with approximately 4,332,200 pagers in
service at September 30, 1998. The Company added 108,220 and 301,364 subscribers
to its base of pagers in service for the three and nine-month periods ended
September 30, 1998, respectively. The definitions below relate to management's
discussion of the Company's results of operations that follows.
- Service, rent and maintenance revenues: include primarily monthly,
quarterly, semi-annually and annually billed recurring revenue, not
generally dependent on usage, charged to subscribers for paging and
related services such as voice mail and pager repair and replacement.
Service, rent and maintenance revenues also include revenues derived from
telemessaging, tracking, cellular and long distance services.
- Net revenues: include service, rent and maintenance revenues and sales
of customer owned and maintained ("COAM") pagers less net book value of
products sold.
- Service, rent and maintenance expenses: include costs related to the
management, operation and maintenance of the Company's network systems.
- Selling and marketing expenses: include salaries, commissions and
administrative costs for the Company's sales force and related marketing
and advertising expenses.
- General and administrative expenses: include costs related to executive
management, accounting, office telephone, repairs and maintenance,
management information systems, employee benefits and customer support
centers.
The Company derives the majority of its revenues from fixed, periodic
(usually monthly) fees, generally not dependent on usage, charged to subscribers
for paging services. While a subscriber continues to use the Company's service,
operating results benefit from this recurring revenue stream with minimal
requirements for incremental selling expenses or other fixed costs. The
Company's total revenues have increased approximately 41% and 47% to $105.9
million and $312.5 million for the three and the nine-month periods ended
September 30, 1998, respectively, from $75.0 million and $212.1 million for the
three and the nine-month periods ended September 30, 1997, respectively.
Overall, subscribers have increased by approximately 65% to
13
<PAGE> 14
more than 4.3 million at September 30, 1998 from approximately 2.6 million at
September 30, 1997. The increase in subscribers is largely due to the
acquisition of ProNet in December 1997, adding approximately 1.3 million
subscribers.
The Company's average monthly paging service, rent and maintenance revenues
per unit ("ARPU") for the three and nine-month periods ended September 30, 1998
was $7.11 and $7.30, respectively. This was a decrease from $8.17 and $8.30,
respectively, for the three and nine-month periods ended September 30, 1997. The
decrease in ARPU from 1997 to 1998 is primarily attributable to the ProNet
Merger and, to a lesser extent, the changing overall distribution mix. In order
to offset declines in ARPU and to capitalize on growth of paging and wireless
messaging services, the Company has expanded its channels of distribution to
include Company-owned and operated retail stores, strategic partnerships and
alliances and internet sales, among others; with each distribution channel
focusing on the sale rather than lease of pagers. Some of these channels tend to
have higher ARPU's than the Company's strategic partners and typical resellers,
who purchase service in quantity at wholesale rates. Furthermore, the Company
has been successful in marketing enhanced services, such as nationwide paging
services, voice mail and other ancillary services which tend to increase ARPU.
The Company's growth, whether internal or through acquisitions, requires
significant capital investments for paging equipment and technical
infrastructure. The Company also purchases pagers for that portion of its
subscriber base that leases pagers from the Company. During the three and
nine-month periods ended September 30, 1998 the Company's capital expenditures
totaled $13.6 million and $45.2 million, respectively. This includes
approximately $7.7 million and $28.8 million for the three and nine-month
periods ended September 30, 1998, respectively, for pagers, representing an
increase in pagers on hand and net increases to and maintenance of the rental
pager base.
The Company's focus is now on increasing ARPU's, lowering operating costs,
increasing utilization of its nationwide network, expanding its geographic
presence and emphasizing distribution channels through which pagers are sold
rather than leased in order to reduce future capital expenditures. In addition,
on October 2, 1998, the Company acquired the paging and messaging operations of
AT&T Wireless Services, Inc. This acquisition expands the Company's geographic
presence to include the northwest portion of the United States while adding to
the subscriber bases of several of its existing operating regions. As part of
the acquisition, the Company also acquired a 50KHz/50KHz narrowband personal
communications services ("NPCS") license which, when constructed, will allow the
Company to expand its capacity to offer value-added enhanced services including
two-way paging and messaging services. The Company may continue to evaluate
strategic merger or acquisition targets in the future but only if such targets
satisfy certain minimum criteria such as geographic coverage, regulatory
licenses and other factors including overall valuation, form of consideration
and availability of financing.
The Company's long-term strategy is to continue to expand its business by
providing paging and other wireless messaging services to an increasingly broad
base of subscribers throughout the United States, while increasing total
revenues and EBITDA and de-emphasizing that portion of the business which has
historically leased pagers. The Company believes that increases in revenues from
the sale of pagers and service revenue from providing paging service to such
pagers will more than make up for the losses of rental revenues derived from
leasing pagers, which has increasingly involved high volume, lower margin
transactions. The Company is seeking to increase its base of subscribers by
expanding its operations in existing, contiguous and other markets, through
start-up operations and internal growth.
14
<PAGE> 15
RESULTS OF OPERATIONS
The following table sets forth for the periods indicated the percentage of
net revenues represented by certain items in the Company's Condensed
Consolidated Statements of Operations.
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------------ ------------------------
1997 1998 1997 1998
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
REVENUES:
Service, rent and maintenance............ 96.0% 94.4% 96.1% 95.7%
Product sales............................ 15.3 12.2 15.1 11.5
--------- --------- --------- ---------
Total revenues...................... 111.3 106.6 111.2 107.2
Net book value of products sold.......... (11.3) (6.6) (11.2) (7.2)
--------- --------- --------- ---------
100.0 100.0 100.0 100.0
OPERATING EXPENSES:
Service, rent and maintenance expenses... 24.7 24.2 23.8 23.7
Selling and marketing.................... 21.0 17.6 21.1 17.2
General and administrative............... 27.2 28.4 28.1 29.5
Depreciation............................. 20.2 17.1 21.3 17.3
Amortization............................. 14.6 36.7 13.9 36.9
--------- --------- --------- ---------
Total operating expenses............ 107.7 124.0 108.2 124.6
--------- --------- --------- ---------
Loss from operations................ (7.7) (24.0) (8.2) (24.6)
Interest and other income (expense)........ (0.3) 0.0 0.0 0.2
Interest expense........................... (14.6) (16.1) (13.5) (16.1)
--------- --------- --------- ---------
Loss before income tax benefit............. (22.6) (40.1) (21.7) (40.5)
Income tax benefit......................... 2.0 10.7 1.8 10.9
--------- --------- --------- ---------
Net loss............................ (20.6) (29.4) (19.9) (29.6)
Preferred dividends........................ (3.2) (2.5) (2.8) (2.5)
--------- --------- --------- ---------
Loss attributable to common
stockholders..................... (23.8)% (31.9)% (22.7)% (32.1)%
========= ========= ========= =========
Units in service (end of period)........... 2,633,544 4,332,200 2,633,544 4,332,200
EBITDA (in thousands)(1)................... $ 18,264 $ 29,703 $ 51,443 $ 86,463
Ratio of EBITDA to net revenues(1)......... 27.1% 29.9% 27.0% 29.7%
ARPU(2).................................... $ 8.17 $ 7.11 $ 8.30 $ 7.30
Average monthly operating cost per unit(3). $ 6.34 $ 5.43 $ 6.45 $ 5.53
</TABLE>
- ---------------
(1) EBITDA (earnings before interest, taxes, depreciation and amortization),
while not a measure under generally accepted accounting principles ("GAAP"),
is a standard measure of financial performance in the paging industry;
EBITDA should not be considered in isolation or as an alternative to net
income (loss), income (loss) from operations, cash flows from operating
activities or any other measure of performance under GAAP. EBITDA is,
however, an approximation of the primary financial measure by which the
Company's covenants are calculated under its indenture relating to its
senior subordinated notes and its credit facility. See "-- Liquidity and
Capital Resources" for a discussion of significant capital requirements and
commitments.
(2) ARPU (average monthly paging revenue per unit) is calculated by dividing (a)
paging service, rent and maintenance revenues for the period by (b) the
average number of units in service for the period. The calculation of ARPU
excludes revenues derived from non-paging services such as telemessaging,
tracking, long distance and cellular telephone.
(3) Average monthly operating expense per unit is calculated by dividing (a)
total recurring paging operating expenses before depreciation and
amortization for the period by (b) the average number of units in service
for the period. The calculation of average monthly operating expense per
unit for the three and nine-month periods ended September 30, 1997 excludes
costs associated with telemessaging operations.
15
<PAGE> 16
THREE-MONTH PERIOD ENDED SEPTEMBER 30, 1998 COMPARED WITH 1997
Total revenues increased approximately $30.9 million, or approximately
41.2%, from $75.0 million for the three-month period ended September 30, 1997
("1997 Quarter") to $105.9 million for the three-month period ended September
30, 1998 ("1998 Quarter"). Net revenues increased approximately $32.0 million,
or 47.5%, from $67.4 million in the 1997 Quarter to $99.4 million in the 1998
Quarter. The increase is attributable to greater service revenues due to the
growth of pagers in service from 2,633,544 at September 30, 1997 to 4,332,200 at
September 30, 1998. The change in total subscribers from September 30, 1997 to
September 30, 1998 resulted, in part, from the ProNet Merger on December 30,
1997 which added approximately 1.3 million subscribers. ARPU for paging services
decreased from $8.17 per unit in the 1997 Quarter to $7.11 per unit in the 1998
Quarter due to the ProNet Merger and the changing subscriber distribution mix.
Factors affecting ARPU in future periods include distribution mix of new
subscribers, competition and new technologies, among others. There can be no
assurance that ARPU will not decline in future periods.
Product sales increased $1.8 million from $10.3 million in the 1997 Quarter
to $12.1 million in the 1998 Quarter and decreased as a percentage of net
revenues from 15.3% in the 1997 Quarter to 12.2% in the 1998 Quarter. Net book
value of products sold decreased approximately $1.1 million from $7.6 million in
the 1997 Quarter to $6.5 million in the 1998 Quarter due to increased
depreciation taken on units sold which yields a lower net book value at the sale
date. Pagers are classified as property and depreciated from the date of
acquisition. The gross margin on products sold increased from 25.9% in the 1997
Quarter to 46.3% in the 1998 Quarter.
Overall, the Company experienced a decrease in average monthly operating
costs per unit in service (operating costs per unit before depreciation and
amortization) from the 1997 Quarter to the 1998 Quarter. Average monthly
operating cost per unit decreased from $6.34 per unit for the 1997 Quarter
(excluding operating costs associated with the telemessaging operations) to
$5.43 per unit for the 1998 Quarter. Each operating expense is discussed
separately below.
Service, rent and maintenance expenses increased approximately $7.3 million
from $16.7 million in the 1997 Quarter to $24.0 million in the 1998 Quarter and
decreased as a percentage of net revenues from 24.7% in the 1997 Quarter to
24.2% in the 1998 Quarter. The overall increase in service, rent and maintenance
expense is primarily attributable to the ProNet Merger in December 1997 ($7.9
million). The Company has ceased paying local exchange carriers in the Company's
various service areas for any facilities used by those local exchange carriers
to transport local calls to the Company's local paging networks pursuant to the
Telecommunications Act of 1996 (the "Telecom Act") and the FCC's rules regarding
local transport which reduced third-party carrier costs by approximately $0.3
million in the 1998 Quarter. The Company has filed complaints with the FCC
against a number of Regional Bell Operating Companies ("RBOCs") and the largest
independent telephone company for violations of the FCC's interconnection and
local transport rules and the Telecom Act. Metrocall has petitioned the FCC to
rule that these local transport charges are unlawful and to award Metrocall a
reimbursement or credit for any past charges assessed. The total value of
credits receivable from these local exchange carriers at December 31, 1997 and
September 30, 1998 was $12.1 million and $15.5 million, respectively. These LEC
receivables represent management's estimate, subject to significant revision, of
amounts management believes are fully realizable. The LEC credit receivables
have been classified as Prepaid Expenses and Other Current Assets in the
Company's balance sheets as of December 31, 1997 and September 30, 1998.
Service, rent and maintenance expense per unit decreased from $2.15 per unit in
the 1997 Quarter to $1.87 per unit in the 1998 Quarter.
Selling and marketing expenses increased approximately $3.3 million from
$14.2 million in the 1997 Quarter to $17.5 million in the 1998 Quarter and
decreased as a percentage of net revenues from 21.0% in the 1997 Quarter to
17.6% in the 1998 Quarter. The increase in selling and marketing expenses is
primarily associated with the ProNet Merger ($3.9 million). Monthly selling and
marketing expense per unit decreased from $1.83 per unit in the 1997 Quarter to
$1.36 per unit in the 1998 Quarter. Selling and marketing expenses may increase
as a percentage of net revenues as the Company continues to increase its
presence in existing markets and expand geographic coverage.
16
<PAGE> 17
General and administrative expenses increased $9.9 million from $18.3
million in the 1997 Quarter compared to $28.2 million in the 1998 Quarter, and
increased as a percentage of net revenues from 27.2% in the 1997 Quarter to
28.4% in the 1998 Quarter. Increases in general and administrative expenses were
attributable to the ProNet Merger ($6.7 million) and increased expenses for a
variety of professional services and additional operational personnel. Monthly
general and administrative expense per unit decreased from $2.36 per unit in the
1997 Quarter to $2.20 per unit in the 1998 Quarter.
Depreciation increased approximately $3.4 million from $13.6 million in the
1997 Quarter to $17.0 million in the 1998 Quarter, and decreased as a percentage
of net revenues from 20.2% to 17.1% in the 1997 Quarter and the 1998 Quarter,
respectively. The increase in depreciation expense resulted primarily from
depreciation on equipment attributable to the ProNet Merger.
Amortization increased significantly in the 1998 Quarter, up $26.7 million
from $9.8 million in the 1997 Quarter to $36.5 million in the 1998 Quarter and
increased as a percentage of net revenues from 14.6% in the 1997 Quarter to
36.7% in the 1998 Quarter. The amortization of intangibles recorded in
conjunction with the ProNet Merger increased amortization by approximately $20.4
million. Additionally, effective January 1, 1998, the Company reduced the
estimated useful lives of certain intangibles from 15 to 10 years for goodwill,
25 to 10 years for FCC licenses and from 5 to 6 years for subscriber bases to 3
years. The impact of these changes was to increase amortization expense in the
1998 Quarter by approximately $6.0 million.
Interest expense increased approximately $6.1 million, from $9.9 million in
the 1997 Quarter to $16.0 million in the 1998 Quarter. Interest expense
increased due to higher average level of debt, including debt assumed in the
ProNet Merger, during the 1998 Quarter primarily associated with the financing
of the 1997 acquisitions and working capital requirements.
Net loss increased $15.4 million from approximately $13.8 million in the
1997 Quarter to $29.2 million in the 1998 Quarter primarily due to the increase
in interest expense and amortization of intangible assets, offset partially by
the benefit for income taxes. Net losses are expected to continue in future
periods.
Loss attributable to common stockholders increased $15.7 million from $16.0
million in the 1997 Quarter to $31.7 million in the 1998 Quarter primarily due
to increased amortization of intangible assets ($26.7 million) and increased
interest expense ($6.1 million) partially offset by an increase in the benefit
for income taxes ($9.2 million).
EBITDA increased approximately $11.4 million to $29.7 million in the 1998
Quarter from $18.3 million in the 1997 Quarter. As a percentage of net revenues,
EBITDA increased from 27.1% in the 1997 Quarter to 29.9% in the 1998 Quarter.
NINE-MONTH PERIOD ENDED SEPTEMBER 30, 1998 COMPARED WITH 1997
Total revenues increased approximately $100.4 million from $212.1 million
for the nine months ended September 30, 1997 ("1997") to $312.5 million for the
nine months ended September 30, 1998 ("1998"). Service, rent and maintenance
revenues increased approximately $95.7 million in 1998 from $183.2 million in
1997 to $278.9 million in 1998. The increase in revenues is attributed to
greater service revenues due to the growth of pagers from 2,633,544 at September
30, 1997 to 4,332,200 at September 30, 1998. Monthly ARPU for paging services
decreased from $8.30 per unit in 1997 to $7.30 per unit in 1998 primarily due to
the ProNet Merger in December 1997 and the changing subscriber distribution mix.
Product sales increased $4.7 million from $28.8 million in 1997 to $33.5
million in 1998 and decreased as a percentage of total revenues from 15.1% in
1997 to 11.5% in 1998. Net book value of products sold decreased approximately
$0.4 million from $21.3 million in 1997 to $20.9 million in 1998 principally due
to the increase in product sales, offset by increased depreciation taken on
units sold which yields a lower net book value at the sale date. Pagers are
classified as property and depreciated from the date of acquisition. The gross
margin on products sold increased from 26.0% in 1997 to 37.5% in 1998.
Overall, the Company experienced a decrease in average monthly operating
costs per unit in service (operating costs per unit before depreciation and
amortization) from 1997 to 1998. Average monthly
17
<PAGE> 18
operating costs per unit decreased from $6.45 in 1997 to $5.53 in 1998. Each
operating expense is discussed separately below.
Service, rent and maintenance expenses increased approximately $23.8
million from $45.3 million in 1997 to $69.1 million in 1998 and was relatively
unchanged as a percentage of net revenues; 23.8% in 1997 as compared to 23.7% in
1998. The increase in service, rent and maintenance expense is primarily
attributable to the acquisition of Page America in July 1997 ($6.1 million) and
the ProNet Merger in December 1997 ($23.7 million). The Company has ceased
paying local exchange carriers in the Company's various service areas for any
facilities used by those local exchange carriers to transport local calls to the
Company's local paging networks pursuant to the Telecom Act and the FCC's rules
regarding local transport. Metrocall has petitioned the FCC to rule that these
local transport charges are unlawful and to award Metrocall a reimbursement or
credit for any past due charges assessed. The impact of these interconnect
credits was to reduce third-party carrier costs by approximately $6.6 million in
1998. Service, rent and maintenance expense per unit decreased from $2.10 per
unit in 1997 to $1.86 per unit in 1998.
Selling and marketing expenses increased approximately $9.8 million, from
$40.3 million in 1997 to $50.1 million in 1998 and decreased as a percentage of
net revenues from 21.1% in 1997 to 17.2% in 1998. The increase in selling and
marketing expenses is primarily associated with the acquisition of Page America
($2.7 million) and the ProNet Merger ($11.1 million) offset by reductions in
personnel costs ($3.3 million). Monthly selling and marketing expense per unit
decreased from $1.87 per unit in 1997 to $1.35 per unit in 1998. Selling and
marketing expense may increase as a percentage of net revenues as the Company
continues to increase its presence in existing markets and expand geographic
coverage.
General and administrative expenses increased approximately $32.3 million,
from $53.6 million in 1997 to $85.9 million in 1998 and increased as a
percentage of net revenues from 28.1% in 1997 to 29.5% in 1998. The increase in
general and administrative expenses is primarily associated with the Page
America acquisition ($3.7 million) and the ProNet Merger ($20.1 million).
General and administrative expenses also increased due to increased expenses for
a variety of professional services, additional operational personnel, and
various facility and administrative costs. Monthly general and administrative
expense per unit decreased from $2.48 per unit in 1997 to $2.31 per unit in
1998. On a per unit basis general and administrative expenses are expected to
continue to decline as additional synergies are gained from the Company's
acquisitions.
Depreciation increased approximately $9.9 million from $40.6 million in
1997 to $50.5 million in 1998, and decreased as a percentage of net revenues
from 21.3% in 1997 to 17.3% in 1998. The increase in depreciation expense
resulted primarily from the depreciation on equipment attributable to the Page
America acquisition and the ProNet Merger.
Amortization increased approximately $81.0 million from $26.5 million in
1997 to $107.5 million in 1998, and increased as a percentage of net revenues
from 13.9% in 1997 to 36.9% in 1998. The amortization of intangibles recorded in
conjunction with the Page America acquisition and the ProNet Merger increased
amortization by approximately $12.5 million and $60.2 million, respectively.
Additionally, effective January 1, 1998, the Company reduced the estimated
useful lives of certain intangibles from 15 to 10 years for goodwill, 25 to 10
years for FCC licenses and from 5 to 6 years for subscriber bases to 3 years.
The impact of these changes was an increase in amortization expense in 1998 by
approximately $18.0 million.
Interest expense increased approximately $21.2 million from $25.8 million
in 1997 to $47.0 million in 1998. Interest expense increased due to higher
average level of debt during 1998 primarily associated with the financing of the
1997 acquisitions and general working capital requirements.
Net loss increased from approximately $37.9 million in 1997 to $86.1
million in 1998 primarily due to the increase in interest expense and the
amortization of intangible assets, offset partially by a benefit for income
taxes. Net losses are expected to continue in future periods.
Loss attributable to common shareholders increased $50.2 million from $43.2
million in 1997 to $93.4 million in 1998 primarily due to the increase in
interest expense and the amortization of intangible assets, offset partially by
the benefit for income taxes.
18
<PAGE> 19
EBITDA increased approximately $35.1 million to $86.5 million in 1998 from
$51.4 million in 1997. As a percentage of revenues, EBITDA increased from 27.0%
in 1997 to 29.7% in 1998.
NEW ACCOUNTING PRONOUNCEMENTS
In June 1997, the Financial Accounting Standards Board issued SFAS No. 130,
"Reporting Comprehensive Income" and No. 131, "Disclosures about Segments of an
Enterprise and Related Information." The adoption of SFAS No. 130 in March 1998
did not have a material impact on the Company's results of operations, financial
position or cash flows. The Company will be required to adopt SFAS No. 131 with
the issuance of its financial statements for the year ending December 31, 1998
and is presently evaluating its potential impact on the results of operations,
financial position and cash flows.
YEAR 2000 COMPLIANCE
Many computer systems in use today were designed and developed using two
digits, rather than four, to specify the year. As a result, such systems will
recognize the year 2000 as "00". This could cause many computer applications to
fail completely or to create erroneous results unless corrective measures are
taken. The Company utilizes software and related computer technologies essential
to its operations that will be affected by the Year 2000 issue. The Company
recognizes the critical role that our products and services play in the day to
day operations of our direct and indirect customers, business partners and
potential related parties. We also understand the serious issues and impact on
our customers which could arise with the dawn of the new millennium. As part of
Company's continuing commitment to provide quality and reliable services, the
Company has and is currently addressing the issue of Y2K compliance. This effort
has been divided into four phases.
Assessment. The first phase is the assessment of the Company's hardware
and software systems, and its embedded systems contained in the Company's
buildings, plant, equipment and other infrastructure. Efforts are underway to
identify and prioritize those areas of the business operations effected by the
Y2K issue. We are also developing a comprehensive program and timetable for
resolution of the Y2K issue. The program will outline, among other things, 1)
kind and amount of necessary resources, such as money and labor, 2) validation
strategies and testing plans on a system-wide basis, and 3) contingency plans,
particularly for core business processes. The Company anticipates completion of
this phase by December 31, 1998.
Renovation. The second phase involves making software and hardware
changes, developing replacement systems, and eliminating non-functional
applications or system components. For example, the Company has upgraded it's
financial and billing systems to vendor certified Y2K compliant versions. For
all other applications, the Company is currently at various stages of completion
with respect to this phase.
Validation. As the Company makes changes to applications and components of
it's systems, our intention is to validate and test those changes for Y2K
compliance. The Company plans to perform validation and testing on a system-wide
basis to ensure that the changes are compatible with other aspects of our
systems. The Company may also conduct acceptance testing, where it deems
necessary. The Company is currently undertaking this phase on certain
applications.
Implementation. This phase involves integrating the changes made to the
Company's system. As the Company implements and integrates the changes, we may
discover that our systems may include both Y2K compliant and non-compliant
applications and components. The Company does not expect this combination to
have any significant adverse effect upon it's operations but will develop
appropriate contingency and disaster recovery plans to reduce the risk of such
effects. The Company has begun this phase and we anticipate completion of the
entire project by the fourth quarter of 1999.
While costs incurred to date to address the Y2K issue have not been
material, the Company expects to incur incremental expense of approximately
$15.0 million through the end of 1999 to resolve any Y2K issues that relate to
mission critical systems.
In addition to implementing a comprehensive Y2K program for the Company's
systems, the Company has been in discussions with AMD and other significant
third parties, such as Motorola, to gain reasonable
19
<PAGE> 20
assurance that those parties have also assessed the Y2K issues impact on their
own systems and have taken necessary steps towards compliance. There can be no
assurance that the Company's initiatives will eliminate the adverse effects of
the Y2K issue on it's operations, such as delays in inventory, accurate billing,
failure to respond to customer calls, and impairment of it's indirect
distribution channels. The extent of such impact cannot be predicted.
LIQUIDITY AND CAPITAL RESOURCES
The Company's operations require the availability of substantial funds to
finance the growth of its existing operations and customer base, development and
construction of future wireless communications networks, expansion into new
markets, and the acquisition of other wireless communications companies. Further
cash requirements include debt service, working capital and general corporate
requirements.
The Company has financed its internal growth in 1998 through its operating
cash flow, available cash on hand and borrowings under the Company's credit
facility. Net cash provided by operating activities decreased from $20.0 million
to $10.4 million for the nine-month periods ended September 30, 1997 and 1998,
respectively, primarily due to the increase in interest expense for 1998 and a
decrease in accounts payable funded through borrowings under the Company's
credit facility.
At September 30, 1998, the Company had a working capital deficit of
approximately $12.7 million compared to $24.6 million at December 31, 1997. The
Company has experienced such deficits in prior periods and such deficits are
likely to continue. The Company attempts, whenever possible, to finance its
growth through operating cash flow and available cash balances rather than
incurring additional indebtedness. As a result, purchases of noncurrent assets,
including pagers and other network and transmission equipment, may be financed
with current liabilities (e.g. accounts payable), causing a deficit in working
capital. The Company currently has sufficient borrowing capacity available under
its credit facility to fund the working capital deficit at September 30, 1998.
Cash flows used in investing activities were primarily to fund purchases of
property and equipment. Capital expenditures were approximately $54.4 million
and $45.2 million for the nine-month periods ended September 30, 1997 and 1998,
respectively. Capital expenditures for the nine-month period ended September 30,
1998 included approximately $28.8 million for pagers, representing increases in
pagers on hand and net increases and maintenance to the rental subscriber base.
The balance of capital expenditures included $8.7 million for information
systems and computer related equipment, $6.7 million for network construction
and development and $1.0 million for general purchases including leasehold
improvements and office equipment. Total capital expenditures for the year
ending December 31, 1998 are estimated to be approximately $80.0 million,
including the impact of the acquisition of AT&T Wireless' Messaging Division but
excluding the build-out of 50KHz/50KHz narrowband personal communications
services license, primarily for the acquisition of pagers, paging and
transmission equipment and information systems enhancement. The Company
estimates capital expenditures to meet the minimum build-out requirements to
maintain the narrowband personal communications license to be approximately $8.1
million. The Company expects that its capital expenditures for the year ending
December 31, 1998, will be financed through a combination of operating cash flow
and borrowings. Projected capital expenditures are subject to change based on
the Company's internal growth, general business and economic conditions and
competitive pressures.
Cash flows provided by financing activities for the nine-month period ended
September 30, 1998, included borrowings under the Company's credit facility of
$23.0 million primarily to fund working capital requirements and capital
expenditures.
There are no significant principal payments required under the Company's
debt agreements through the year ended 2002. Additionally, dividends on the
Company's Series A Preferred and Series B Junior Convertible Preferred Stock
accrue at a rate of 14% of the stated value per year. Dividends may be paid in
either cash or additional shares of Series A and Series B Preferred Stock at the
Company's option. Through September 30, 1998, the Company has opted to pay all
dividends on the Series A and B Preferred Stock in additional shares. Under
certain circumstances, as defined in the certificate of designation, the
dividend rate on the Series A Preferred may increase to 16% per year. Further,
Metrocall is required to redeem all
20
<PAGE> 21
outstanding shares of Series A and Series B Preferred (including dividend
shares) in November 2008 and July 2009 respectively, unless the holders have
previously converted such shares to common stock. Accrued but unpaid dividends
at September 30, 1998, were approximately $2.6 million and $0.9 million on the
Series A and B Preferred, respectively.
At September 30, 1998, approximately $159.3 million was outstanding under
the Company's $300.0 million credit facility and approximately $95.5 million of
additional borrowings were available under this facility. Subsequently, the
Company executed an amended and restated credit agreement (the "Credit
Agreement") which allows the Company to increase its borrowings from $300.0
million to $400.0 million, subject to certain conditions. On October 2, 1998,
the Company increased its borrowings by $125.0 million to fund the cash portion
of the AT&T Wireless Messaging Division acquisition and meet working capital
requirements.
As a result of recent communications with the Nasdaq, the Company has
included in this filing a pro forma balance sheet (see Note 9 to the
Consolidated Financial Statements at September 30, 1998), demonstrating that, as
of October 2, 1998, the Company had sufficient net tangible assets to comply
with the Nasdaq's continued listing standards. The Company currently is in
compliance with the Nasdaq's standards for continued listing on the National
Market System. In order to maintain compliance with the National Market System's
continued listing standards, the Company is required, among other things, either
to maintain net tangible assets (defined as total assets, less goodwill and
total liabilities) of $4.0 million or not to incur a minimum bid price below $5
for 30 consecutive trading days. If, in the future, the Company fails to meet
these standards, it could take a number of actions to maintain listing on a
national exchange including, among others, a reverse stock split or a transfer
of its listing to either the Nasdaq SmallCap Market or the American Stock
Exchange.
RECENT ACQUISITION
AT&T Wireless Messaging Division
On October 2, 1998, the Company closed on a stock purchase agreement with
AT&T Wireless Services, Inc. ("Wireless"), McCaw Communications Companies, Inc.
and AT&T Two Way Messaging Communications, Inc. to acquire the stock of certain
subsidiaries of wireless that operated the paging and messaging services
business of AT&T Corp. and a 50KHz/50KHz narrowband personal communications
services license. The purchase price for this acquisition was $110.0 million in
cash and $95.0 million in stated value of a new Series C Convertible Preferred
Stock (the "Series C Preferred"), subject to adjustment, based on the
performance of the acquired business prior to the closing. The acquisition will
be accounted for as a purchase for financial reporting purposes.
The issuance of the Series C Preferred was approved by the shareholders on
September 29, 1998. The Series C Preferred ranks junior to the Company's
existing Series A and B Preferred Stock and will be convertible into common
stock beginning five years after issuance. Dividends accrue at a rate of 8% of
the stated value, payable semi-annually, and may be paid either in cash or in
additional shares of Series C Preferred at the Company's option.
In order to fund the cash portion of the purchase price, the Company and
its bank lenders executed the Credit Agreement on October 2, 1998. Under the
Credit Agreement, the Company may, subject to certain conditions, increase its
borrowings from $300.0 million to $400.0 million. At closing, the Company drew
the new $100.0 million, 6 1/2 year term loan, which matures on March 31, 2005
and bears interest at LIBOR plus 3%.
The Credit Agreement contains various covenants that, among other
restrictions, require the Company to maintain certain financial ratios,
including total debt to annualized operating cash flow (not to exceed 6.0 to 1.0
through December 31, 1998 and declining thereafter), senior debt to annualized
operating cash flow, annualized operating cash flow to pro forma debt service,
total sources of cash to total uses of cash and operating cash flow to interest
expense (in each cash, as such terms are defined in the Agreement). The
covenants also limit additional indebtedness and future mergers and acquisitions
without the approval of the lenders and restrict the payment of cash dividends
and other stockholder distributions by the Company during
21
<PAGE> 22
the term of the Credit Agreement. The Credit Agreement also prohibits certain
changes in ownership control of the Company, as defined, during the term of the
Credit Agreement.
ADDITIONAL FACTORS AFFECTING FUTURE OPERATING RESULTS AND FINANCIAL CONDITION
The ability of the Company to meet its debt service and other obligations
will depend upon the future performance of the Company and its cash flows from
operations, which will be subject to financial, business and other factors,
certain of which are beyond its control, such as prevailing economic conditions.
Management believes that funds generated from the Company's operations and funds
available under its credit facility will be sufficient to meet projected capital
expenditures and debt service requirements and to fund the Company's operations
for the foreseeable future. Management plans to continue to expand its
geographic service areas through internal growth and will continue to evaluate
potential strategic acquisition targets in the future which may result in
substantial capital requirements for which additional financing may be required.
No assurance can be given that such additional financing would be available on
terms satisfactory to the Company. Additionally, the following important
factors, among others, could cause the Company's operating results and financial
condition to differ materially from those indicated or suggested by forward
looking statements made in this quarterly report.
Substantial Indebtedness
At September 30, 1998, the Company had outstanding approximately $617.3
million of debt, consisting of bank loans, senior subordinated notes, mortgage
indebtedness and capital leases. The Company increased its borrowings
outstanding under its credit facility by $125.0 million in October 1998 to fund
the cash portion of the AT&T Wireless Messaging Division acquisition and fees
associated with the transaction, and also to meet working capital requirements.
This substantial indebtedness, along with the net losses and working capital
deficits sustained by the Company in recent periods, may have consequences for
the Company, including the following: (i) the ability of the Company to obtain
additional financing for working capital, capital expenditures, debt service
requirements or other purposes may be impaired; (ii) a substantial portion of
the Company's cash flow from operations will be required to be dedicated to the
payment of interest expense; (iii) indebtedness under the credit facility bears
interest at floating rates, which will cause the Company to be vulnerable to
increases in interest rates; (iv) the Company may be more highly leveraged than
companies with which it competes, which may place it at a competitive
disadvantage; and (v) the Company may be more vulnerable in the event of a
downturn in its business or in general economic conditions. In addition, the
ability of the Company to access borrowings under its credit facility and to
meet its debt service and other obligations (including compliance with financial
covenants) will depend upon the future performance of the Company and its cash
flows from operations, which will be subject to financial, business and other
factors, certain of which are beyond its control, such as prevailing economic
conditions. No assurance can be given that, in the event the Company were to
require additional financing, such additional financing would be available on
terms permitted by agreements relating to existing indebtedness or otherwise
satisfactory to Metrocall.
Growth Strategy
Historically, Metrocall has grown substantially through acquisitions. The
Company intends to pursue internal growth through expansion of its paging
operations. The Company's internal growth will depend, in part, upon its ability
to attract and retain skilled employees, its increasing reliance on strategic
alliances and the ability of the Company's officers and key employees to
maintain effective quality controls, manage rapid growth successfully and
implement appropriate management information systems and controls. If the
Company were unable to attract and retain skilled employees, rely upon its
strategic alliances, maintain effective quality controls, manage rapid growth
successfully and/or implement appropriate systems and controls, the Company's
operations could be adversely affected.
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<PAGE> 23
Possible Impact of Competition and Technological Change
The Company faces competition from other paging companies in all markets in
which it operates. The wireless communications industry is a highly competitive
industry, with price being one of the primary means of differentiation among
providers of numeric messaging services which account for the substantial
majority of the Company's current revenues. Some of the Company's competitors
and potential competitors, which include regional and national paging companies,
possess greater financial, personnel, technical, marketing and other resources
than those of the Company, as well as other competitive advantages. Companies in
the industry also compete on the basis of coverage area, enhanced services,
transmission quality, system reliability and customer service. Certain of
Metrocall's competitors possess greater financial, technical, marketing and
other resources than Metrocall. In addition, other entities offering wireless
two-way communications technology, including cellular telephone, specialized
mobile radio services and personal communications services, compete with the
paging services provided by Metrocall. There can be no assurance that additional
competitors will not enter markets served by Metrocall or that Metrocall will be
able to compete successfully. In this regard, certain long distance carriers and
RBOCs have begun marketing, or have announced their intention to begin marketing
paging services jointly with other telecommunications services.
The wireless communications industry is characterized by rapid
technological change. Future technological advances in the wireless
communications industry could create new services or products competitive with
the paging and wireless messaging services provided or to be developed by
Metrocall. Recent and proposed regulatory changes by the FCC are aimed at
encouraging such services and products.
Moreover, changes in technology could lower the cost of competitive
services and products to a level where Metrocall's services and products would
become less competitive or Metrocall would be required to reduce the prices of
its services and products. There can be no assurance that Metrocall will be able
to develop or introduce new services and products on a timely basis and at
competitive prices, if at all, or that Metrocall's margins, inventory costs and
cash flows will not be adversely affected in the event of such technological
developments.
Technological changes also may affect the value of the pagers owned by
Metrocall and leased to its subscribers. If Metrocall's subscribers requested
more technologically advanced pagers, Metrocall could incur additional capital
expenditures if it were required to replace its subscribers' pagers.
History of Net Losses
Metrocall has sustained net losses of $20.1 million, $49.1 million and
$52.5 million for each of the years ended December 31, 1995, 1996 and 1997 and
$86.1 million for the nine-month period ended September 30, 1998. No assurance
can be given that losses can be reversed in the future. In addition, at
September 30, 1998, Metrocall's accumulated deficit was $250.3 million and
Metrocall had a deficit in net working capital of $12.7 million. Metrocall's
business has historically required substantial funds for capital expenditures
and acquisitions that result in significant depreciation and amortization
charges in future periods. Additionally, substantial levels of borrowing, which
will result in significant interest expense, are expected to be outstanding in
the foreseeable future. Accordingly, net losses are expected to continue to be
incurred in the future. There can be no assurance that Metrocall will be able to
operate profitably at any time in the future.
Challenges of Systems Integration
The Company's acquisitions require integration of each company's
administrative, finance, sales and marketing organizations, as well as the
integration of each company's communication networks and the coordination of its
sales efforts. Specifically, this will involve, among other things, integration
of computer operating hardware and software systems, including each company's
billing and subscriber maintenance processes, some of which are incompatible
with the Company's existing systems. These integration efforts will require
substantial management attention and Company resources.
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<PAGE> 24
Satellite Transmission Interruption
The Company relies on satellite facilities operated by other carriers to
control many of the Company's transmitters on its nationwide and wide-area
networks. The Company has no control over the operation and maintenance of those
satellite facilities. The Company also uses terrestrial communications
facilities (e.g., microwave stations and landline telephone facilities) to
connect and control the paging base station transmitters in its networks. The
failure or disruption of transmissions by the satellite facilities used in the
Company's paging operations may cause disruptions of the Company's paging
services over the networks whose transmitters are controlled via satellite. The
Company has taken certain measures to mitigate the adverse effects of satellite
transmission disruptions to the Company and its subscribers, such as
implementation of a contingency plan, which is activated in periods of
interruption of service and involves reallocating transmissions to other
satellites. Such measures, however, cannot fully protect against the disruption
of paging service due to unexpected satellite transmission failure or
interruption. Recently, the Company initiated paging service through its "Global
Messaging Gateway," a satellite uplink facility located in California. The
Company expects to transmit a majority of its paging traffic via this facility
by the end of 1998. Any unmitigated interruptions of satellite service and the
Company's uplink facilities could adversely affect the Company's business and
results of operations.
Litigation
Metrocall has filed complaints with the FCC against a number of RBOCS and
the largest independent telephone company for violations of the FCC's
interconnection and local transport rules and the Telecom Act. The complaints
allege that these local telephone companies are unlawfully charging Metrocall
for local transport of the telephone companies' local traffic. Metrocall has
petitioned the FCC to rule that these local transport charges are unlawful and
to award Metrocall a reimbursement or credit for any past charges assessed.
Metrocall has requested that the FCC resolve these complaints. The deadline for
filing briefs and motions in these proceedings was September 1998, the Company
is awaiting a ruling.
Subscriber Turnover
The results of operations of paging service providers, such as Metrocall,
can be significantly affected by subscriber cancellations and by subscribers who
switch their service to other carriers. In order to realize net growth in
subscribers, disconnected subscribers must be replaced and new subscribers must
be added. The sales and marketing costs associated with attracting new
subscribers are substantial relative to the costs of providing service to
existing customers. Because Metrocall's business is characterized by high fixed
costs, disconnections directly and adversely affect Metrocall's results of
operations. An increase in its subscriber cancellation rate may adversely affect
Metrocall's results of operations.
Potential for Change in Regulatory Environment
Metrocall's paging operations are subject to regulation by the FCC and, to
a lesser extent, by various state regulatory agencies. There can be no assurance
that those agencies will not adopt regulations or take actions that would have a
material adverse effect on the business of Metrocall. Changes in regulation of
the Company's paging business or the allocation of radio spectrum for services
that compete with the Company's business could adversely affect the Company's
results of operations. For example, the FCC has adopted rules under which it
will issue paging licenses on a wide-area basis by competitive bidding (i.e.
auctions). Although Metrocall believes that these rule changes may simplify the
Company's regulatory compliance burdens, particularly regarding adding or
relocating transmitter sites, those rule changes may also increase the Company's
cost of obtaining or renewing paging licenses.
Dependence on Key Suppliers
The Company does not manufacture any of the subscriber units or
infrastructure equipment used in its operations. The Company buys paging units
primarily from Motorola as well as some other manufacturers and is therefore
dependent on such manufacturers to obtain sufficient inventory for new
subscriber and replacement needs. The Company purchases terminals, transmitters,
receivers and other infrastructure equipment primarily from Motorola and
Glenayre Electronics, Incorporated and thus is dependent on such
24
<PAGE> 25
manufacturers for sufficient infrastructure equipment to meet its expansion and
replacement requirements. There can be no assurance that the Company will not
experience significant delays in obtaining paging units and infrastructure
equipment in the future. Such delays could have an adverse effect on the
Company's operations and network development plans.
Reliance on Key Personnel
Metrocall is dependent on the efforts and abilities of a number of its
current key management, sales, support and technical personnel, including
William L. Collins, III, Steven D. Jacoby and Vincent D. Kelly. The success of
the Company will depend to a large extent on its ability to retain and continue
to attract key employees. The loss of certain of these employees or the
Company's inability to retain or attract key employees in the future could have
an adverse effect on the Company's operations. Metrocall has employment
contracts with each of the individuals named above.
Intangible Assets
At September 30, 1998, the Company's total assets of approximately $986.7
million included net intangible assets of approximately $709.0 million.
Intangible assets include FCC licenses and certificates, customer lists, debt
financing costs, goodwill and certain other intangibles. Long-lived assets and
identifiable intangibles to be held and used are reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount
should be addressed. Impairment is measured by comparing the book value to the
estimated undiscounted future cash flows expected to result from use of the
assets and their eventual disposition The Company's estimates of anticipated
gross revenues, the remaining estimated lives of tangible and intangible assets,
or both could be reduced significantly in the future due to changes in
technology, regulation, available financing and competitive pressures in any of
the Company's individual markets. As a result, the carrying amount of long-lived
assets and intangible assets including goodwill could be reduced materially in
the future. Because a majority of the Company's assets are intangible, the
assets of the Company would not be sufficient to repay all of the Company's
indebtedness in the event secured creditors foreclose on the assets pledged to
them.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is subject to certain legal and regulatory matters in the
normal course of business. In the opinion of management, the outcome of such
assertions will not have a material adverse effect on the financial position or
the results of operations of the Company.
Interconnect Complaints
Metrocall has filed complaints with the FCC against a number of RBOCs and
the largest independent telephone company for violations of the FCC's
interconnection and local transport rules and the Telecom Act. The complaints
allege that these local telephone companies are unlawfully charging Metrocall
for local transport of the telephone companies' local traffic. Metrocall has
petitioned the FCC to rule that these local transport charges are unlawful and
to award Metrocall a reimbursement for any past charges assessed. Metrocall has
requested that the FCC resolve these complaints. The deadline for filing briefs
and motions in these proceedings was September 1998, the Company is awaiting a
ruling.
ITEM 2. CHANGES IN SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At a Special Meeting of Stockholders held on September 29, 1998 the
following proposals were adopted by the vote specified below:
<TABLE>
<CAPTION>
WITHHELD/ BROKER
PROPOSAL FOR AGAINST ABSTAIN NONVOTES
-------- ---------- --------- ------- --------
<S> <C> <C> <C> <C>
1. Ratification of proposal to issue Series C Preferred
Stock................................................ 28,561,891 518,560 95,930 N/A
2. Ratification of Amendment to Metrocall's Amended and
Restated Certificate of Incorporation increasing the
number of authorized shares of Common Stock from
80.0 million to 100.0 million....................... 28,445,836 627,161 103,384 N/A
</TABLE>
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits Required by Item 601 of Regulation S-K.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
- ------- -------------------
<C> <S> <C>
3.1 Amended and Restated Certificate of Incorporation of
Metrocall, as amended.+
3.3 Seventh Amended and Restated Bylaws of Metrocall.(ac)
4.1 Indenture for Metrocall 10 3/8% Senior Subordinated Notes
due 2007 dated September 27, 1995 including form of
Notes.(h)
4.2 Indenture for A+ Network, Inc. 11 7/8% Senior Subordinated
Notes due 2005 ("A+ Notes") dated October 24, 1995.(i)
4.3 First Supplemental Indenture dated November 14, 1996, for A+
Notes.(j)
4.4 Second Supplemental Indenture dated November 15, 1996, for
A+ Notes.(j)
4.5 Indenture for 9 3/4% Senior Subordinated Notes due 2007
dated October 21, 1997, including form of Notes.(k)
4.6 Indenture for ProNet Inc. 11 7/8% Senior Subordinated Notes
due 2005 ("ProNet Notes") dated June 15, 1995.(t)
4.7 Second Supplemental Indenture dated December 30, 1997, for
ProNet Notes.(aa)
10.1 Amended and Restated Asset Purchase Agreement by and among
Page America Group, Inc., Page America of New York, Inc.,
Page America of Illinois, Inc., Page America Communications
of Indiana, Inc., Page America of Pennsylvania, Inc.
(collectively "Page America") and Metrocall, Inc.
("Metrocall") dated as of January 30, 1997.(a)
10.2 Amendment to Asset Purchase Agreement by and among Page
America and Metrocall dated as of March 28, 1997.(a)
10.3 Form of Certificate of Designation, Number, Powers,
Preferences and Relative, Participating, Optional and Other
Rights of Series A Convertible Preferred Stock of
Metrocall(b)
10.4 Form of Certificate of Designation, Number, Powers,
Preferences and Relative, Participating, Optional and Other
Rights of Series B Junior Convertible Preferred Stock of
Metrocall(c)
10.5 Registration Rights Agreement dated July 1, 1997 by and
between Page America Group, Inc. and Metrocall.(d)
10.6 Registration Rights Agreement dated July 1, 1997 by and
among Page America and Metrocall.(d)
</TABLE>
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<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
- ------- -------------------
<C> <S>
10.7 Indemnity Escrow Agreement dated July 1, 1997 by and among Page America, Metrocall and First Union National Bank of
Virginia.(d)
10.8 Agreement and Plan of Merger dated as of August 8, 1997, between Metrocall and ProNet Inc. ("ProNet")(e)
10.9 Stockholders Voting Agreement dated as of August 8, 1997, among ProNet Inc. and certain stockholders of Metrocall
listed therein.(e)
10.10 Option Agreement dated as of August 8, 1997, between Metrocall and ProNet(e)
10.11 Amendment to Option Agreement dated as of August 29, 1997, between Metrocall and ProNet(f)
10.12 Stock Purchase Agreement by and among Metrocall and AT&T Wireless Services, Inc., McCaw Communications Companies,
Inc. and AT&T Two Way Messaging Communications, Inc. dated June 26, 1998.(ab)
10.13 Form of Certificate of Designation, Number, Powers, Preferences and Relative Participating, Optional and Other
Rights of Series C Convertible Preferred Stock of Metrocall.(ab)
10.14 Stockholders Voting Agreement and Proxy between AT&T Wireless Services, Inc., and certain stockholders of
Metrocall dated June 26, 1998.(ab)
10.15 Voting Agreement between AT&T Wireless Services, Inc., and Page America Group, Inc. dated June 26, 1998.(ab)
10.16 Agreement and Plan of Merger dated as of May 16, 1996, between Metrocall and A+ Network, Inc.(u)
10.17 Amendment to Agreement and Plan of Merger between Metrocall and A+ Network, Inc.(l)
10.18 Shareholders' Option Sale Agreement dated as of May 16, 1996 between Metrocall and certain shareholders of A+ Network,
Inc. listed therein.(u)
10.19 Metrocall Stockholders Voting Agreement dated as of May 16, 1996 between A+ Network, Inc. and certain stockholders of
Metrocall listed therein.(u)
10.20 Agreement and Plan of Merger entered into effective May 16, 1996 between A+ Network, Inc. ("ACOM"), a Louisiana
corporation to be formed as a wholly-owned subsidiary of ACOM, Radio and Communications Consultants, Inc., Advanced
Cellular Telephone, Inc., Leroy Faith, Sr. and Eddie Ray Faith, DeWayne Faith and Leroy Faith Jr.(l)
10.21 Agreement of Merger by and among Metrocall, PPI Acquisition Corp., Parkway Paging, Inc., certain shareholders of Parkway
Paging, Inc., and George W. Bush, dated February 26, 1996.(v)
10.22 Asset Purchase Agreement by and among O.R. Estman, Inc. d/b/a Satellite Paging, Dana Paging, Inc., d/b/a Message
Network, Bertram M. Wachtel, Edward R. Davalos, Kevan D. Bloomgren and Metrocall, dated February 28, 1996. (A portion
of this Exhibit has been omitted pursuant to a request for confidential treatment. The omitted material has been filed
separately with the Commission.)(v)
10.23 Amendment to Asset Purchase Agreement dated as of August 30, 1996 by and among O.R. Estman, Inc. d/b/a Satellite Paging,
Dana Paging, Inc. d/b/a Message Network, Bertman M. Wachtel, Edward R. Davalos and Kevan D. Bloomgren, and Metrocall.(w)
10.24 Employment Agreement between Metrocall and William L. Collins, III.(l)
10.25 Employment Agreement between Metrocall and Steven D. Jacoby.(l)
10.26 Employment Agreement between Metrocall and Vincent D. Kelly.(l)
10.27 Change of Control Agreement between Metrocall and William L. Collins, III.(l)
10.28 Change of Control Agreement between Metrocall and Steven D. Jacoby.(l)
</TABLE>
27
<PAGE> 28
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
- ------- -------------------
<C> <S>
10.29 Change of Control Agreement between Metrocall and Vincent D. Kelly.(l)
10.30 Noncompetition Agreement dated as of August 8, 1997, between Metrocall and Jackie R. Kimzey.(m)
10.31 Noncompetition Agreement dated as of August 8, 1997, between Metrocall and David J. Vucina.(m)
10.32 Letter Agreement dated August 8, 1997, between Metrocall and Jackie R. Kimzey.(m)
10.33 Letter Agreement dated August 8, 1997, between Metrocall and David J. Vucina.(m)
10.34 Letter Agreement dated August 8, 1997, between Metrocall and Jan E. Gaulding.(m)
10.35 Letter Agreement dated August 8, 1997, between Metrocall and Mark A. Solls.(m)
10.36 Letter Agreement dated August 8, 1997, between Metrocall and Jeffery A. Owens.(m)
10.37 Amendment to Employment Agreement between Metrocall and William L. Collins, III.(s)
10.38 Second Amendment to Employment Agreement between Metrocall and William L. Collins, III.(ac)
10.39 Amendment to Employment Agreement between Metrocall and Steven D. Jacoby.(s)
10.40 Second Amendment to Employment Agreement between Metrocall and Steven D. Jacoby.(ac)
10.41 Amendment to Employment Agreement between Metrocall and Vincent D. Kelly.(s)
10.42 Second Amendment to Employment Agreement between Metrocall and Vincent D. Kelly.(ac)
10.43 Directors' Stock Option Plan, as amended.(n)
10.44 Metrocall 1996 Stock Option Plan.(z)
10.45 Metrocall 1996 Stock Option Plan, as amended.(n)
10.46 Metrocall Amended Employee Stock Purchase Plan.(r)
10.47 Variable Common Rights Agreement between Metrocall and First Union National Bank of Virginia, Rights Agent, dated as of
November 15, 1996, including Form of Certificate representing Variable Common Rights.(o)
10.48 Unit Purchase Agreement dated as of November 15, 1996, among Metrocall and Certain Purchasers.(p)
10.49 Warrant Agreement dated as of November 15, 1996, between Metrocall and the First National Bank of Boston, Warrant
Agent.(p)
10.50 Second Amended and Restated Loan Agreement dated as of October 21, 1997, among Metrocall, the financial institutions
signatory thereto, and Toronto-Dominion (Texas), Inc., as Administrative Agent.(q)
10.51 Third Amended: Restated Loan Agreement dated as of October 2, 1998, among Metrocall, the financial institutions
signatory thereto, and Toronto-Dominion (Texas), Inc. as Administrative Agent.+
10.52 Registration Rights Agreement, dated October 21, 1997 between Metrocall and Morgan Stanley & Co. Incorporated, TD
Securities (USA), Inc., First Union Capital Markets Corp. and Nationsbank Montgomery Securities, Inc.(g)
10.53 Deed of Lease between Douglas and Joyce Jemal, as landlord, and Metrocall, as tenant, dated April 14, 1994.(x)
10.54 Lease Agreement dated December 20, 1983 between Beacon Communications Associates, Ltd. and a predecessor of Metrocall.(y)
</TABLE>
28
<PAGE> 29
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
- ------- -------------------
<C> <S>
10.55 Agreement dated May 16, 1996 among Metrocall and Ray D. Russenberger and Elliott H. Singer regarding voting for
director.(u)
10.56 Non-disclosure/No Conflict Agreement dated May 16, 1996 between Metrocall and Ray D. Russenberger.(u)
10.57 Non-disclosure/No Conflict Agreement dated May 16, 1996 between Metrocall and Elliott H. Singer.(u)
10.58 Employment Agreement dated May 16, 1996 between Metrocall and Charles A. Emling III.(u)
11.1 Statement re computation of per share earnings.+
27.1 Financial Data Schedule.+
</TABLE>
- ---------------
+ Filed herewith.
(a) Incorporated by reference to Metrocall's Registration Statement on Form
S-4, as amended (File No. 333-21231), initially filed with the Commission
on February 5, 1997.
(b) Incorporated by reference to Metrocall's Current Report on Form 8-K filed
with the Commission on November 21, 1996.
(c) Incorporated by reference to Metrocall's Registration Statement, Amendment
No. 1, on Form S-4 (File No. 333-21231) filed with the Commission on April
15, 1997.
(d) Incorporated by reference to Metrocall's Current Report on Form 8-K filed
with the Commission on July 14, 1997.
(e) Incorporated by reference to Metrocall's Current Report on Form 8-K filed
with the Commission on August 12, 1997.
(f) Incorporated by reference to Metrocall's Current Report on Form 8-K, as
amended, filed with the Commission on September 8, 1997.
(g) Incorporated by reference to Metrocall's Registration Statement on Form
S-4, as amended (File No. 333-44329), filed with the Commission on January
15, 1998.
(h) Incorporated by reference to Metrocall's Registration Statement on Form
S-1, as amended (File No. 33-96042), filed with the Commission on September
27, 1995.
(i) Incorporated by reference to the Registration Statement on Form S-1 of A+
Communications, Inc., as amended (File No. 33-95208), filed with the
Commission on September 18, 1995.
(j) Incorporated by reference to Metrocall's Annual Report on Form 10-K for the
year ended December 31, 1996, filed with the Commission on March 31, 1997.
(k) Incorporated by reference to Metrocall's Current Report on Form 8-K filed
with the Commission on October 23, 1997.
(l) Incorporated by reference to Metrocall's Registration Statement on Form
S-4, as amended (File No. 333-06919), filed with the Commission on June 27,
1996.
(m) Incorporated by reference to Metrocall's Registration Statement on Form
S-4, as amended (File No. 333-36079), filed with the Commission on
September 22, 1997.
(n) Incorporated by reference to Metrocall's Proxy Statement filed for the
Annual Meeting of Stockholders held on May 7, 1997.
(o) Incorporated by reference to Metrocall's Annual Report on Form 10-K/A for
the year ended December 31, 1996, filed with the Commission on May 9, 1997.
(p) Incorporated by reference to Metrocall's Current Report on Form 8-K filed
with the Commission on November 21, 1996.
29
<PAGE> 30
(q) Incorporated by reference to Metrocall's Registration Statement, Amendment
No. 2, on Form S-4 (File No. 333-36079) filed with the Commission on
November 5, 1997.
(r) Incorporated by reference to Metrocall's Registration Statement, Amendment
No. 1, on Form S-4 (File No. 333-36079) filed with the Commission on
October 27, 1997.
(s) Incorporated by reference to Metrocall's Quarterly Report on Form 10-Q for
the quarter ended September 30, 1997, filed with the Commission on November
14, 1997.
(t) Incorporated by reference to ProNet's Current Report on Form 8-K filed with
the Commission on July 5, 1995.
(u) Incorporated by reference to Metrocall's Tender Offer Statement on Schedule
14D-1, filed with the Commission on May 22, 1996.
(v) Incorporated by reference to Metrocall's Quarterly Report on Form 10-Q for
the quarter ended March 31, 1996 filed with the Commission on May 15, 1996.
(w) Incorporated by reference to Metrocall's Current Report on Form 8-K filed
with the Commission on September 13, 1996, as amended on October 1, 1996.
(x) Incorporated by reference to Metrocall's Quarterly Report on Form 10-Q for
the quarter ended September 30, 1994, filed with the Commission on November
14, 1994.
(y) Incorporated by reference to Metrocall's Registration Statement on Form
S-1, as amended (File No. 33-63886), filed with the Commission on July 12,
1993.
(z) Incorporated by reference to Metrocall's Proxy Statement filed for the
Annual Meeting of Stockholders held on May 1, 1996.
(aa) Incorporated by reference to Metrocall's Quarterly Report on Form 10-Q for
the quarter ended March 31, 1998 filed with the Commission on May 15, 1998.
(ab) Incorporated by reference to Metrocall's Current Report on Form 8-K filed
July 7, 1998.
(ac) Incorporated by reference to Metrocall's Quarterly Report on Form 10-Q for
the quarter ended June 30, 1998 filed with the Commission on August 14,
1998.
(b) Reports on Form 8-K
On October 2, 1998 the Company completed the transactions contemplated by
the Stock Purchase Agreement dated as of June 26, 1998 between Metrocall, AT&T
Wireless Services, Inc., McCaw Communications Companies, Inc. and AT&T Two Way
Messaging Communications, Inc.
30
<PAGE> 31
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: November 16, 1998 METROCALL, INC.
/s/ VINCENT D. KELLY
--------------------------------------
Vincent D. Kelly
Chief Financial Officer,
Treasurer and Executive Vice President
31
<PAGE> 32
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
- ------- -------------------
<C> <S>
3.1 Amended and Restated Certificate of Incorporation of Metrocall, as amended.+
3.3 Seventh Amended and Restated Bylaws of Metrocall.(ac)
4.1 Indenture for Metrocall 10 3/8% Senior Subordinated Notes due 2007 dated September 27, 1995 including form of Notes.(h)
4.2 Indenture for A+ Network, Inc. 11 7/8% Senior Subordinated Notes due 2005 ("A+ Notes") dated October 24, 1995.(i)
4.3 First Supplemental Indenture dated November 14, 1996, for A+ Notes.(j)
4.4 Second Supplemental Indenture dated November 15, 1996, for A+ Notes.(j)
4.5 Indenture for 9 3/4% Senior Subordinated Notes due 2007 dated October 21, 1997, including form of Notes.(k)
4.6 Indenture for ProNet Inc. 11 7/8% Senior Subordinated Notes due 2005 ("ProNet Notes") dated June 15, 1995.(t)
4.7 Second Supplemental Indenture dated December 30, 1997, for ProNet Notes.(aa)
10.1 Amended and Restated Asset Purchase Agreement by and among Page America Group, Inc., Page America of New York, Inc.,
Page America of Illinois, Inc., Page America Communications of Indiana, Inc., Page America of Pennsylvania, Inc.
(collectively "Page America") and Metrocall, Inc. ("Metrocall") dated as of January 30, 1997.(a)
10.2 Amendment to Asset Purchase Agreement by and among Page America and Metrocall dated as of March 28, 1997.(a)
10.3 Form of Certificate of Designation, Number, Powers, Preferences and Relative, Participating, Optional and Other
Rights of Series A Convertible Preferred Stock of Metrocall(b)
10.4 Form of Certificate of Designation, Number, Powers, Preferences and Relative, Participating, Optional and Other
Rights of Series B Junior Convertible Preferred Stock of Metrocall(c)
10.5 Registration Rights Agreement dated July 1, 1997 by and between Page America Group, Inc. and Metrocall.(d)
10.6 Registration Rights Agreement dated July 1, 1997 by and among Page America and Metrocall.(d)
10.7 Indemnity Escrow Agreement dated July 1, 1997 by and among Page America, Metrocall and First Union National Bank of
Virginia.(d)
10.8 Agreement and Plan of Merger dated as of August 8, 1997, between Metrocall and ProNet Inc. ("ProNet")(e)
10.9 Stockholders Voting Agreement dated as of August 8, 1997, among ProNet Inc. and certain stockholders of Metrocall
listed therein.(e)
10.10 Option Agreement dated as of August 8, 1997, between Metrocall and ProNet(e)
10.11 Amendment to Option Agreement dated as of August 29, 1997, between Metrocall and ProNet(f)
10.12 Stock Purchase Agreement by and among Metrocall and AT&T Wireless Services, Inc., McCaw Communications Companies, Inc.
and AT&T Two Way Messaging Communications, Inc. dated June 26, 1998.(ab)
10.13 Form of Certificate of Designation, Number, Powers, Preferences and Relative Participating, Optional and Other Rights of
Series C Convertible Preferred Stock of Metrocall.(ab)
10.14 Stockholders Voting Agreement and Proxy between AT&T Wireless Services, Inc., and certain stockholders of Metrocall
dated June 26, 1998.(ab)
10.15 Voting Agreement between AT&T Wireless Services, Inc., and Page America Group, Inc. dated June 26, 1998.(ab)
10.16 Agreement and Plan of Merger dated as of May 16, 1996, between Metrocall and A+ Network, Inc.(u)
</TABLE>
<PAGE> 33
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
- ------- -------------------
<C> <S>
10.17 Amendment to Agreement and Plan of Merger between Metrocall and A+ Network, Inc.(l)
10.18 Shareholders' Option Sale Agreement dated as of May 16, 1996 between Metrocall and certain shareholders of A+ Network,
Inc. listed therein.(u)
10.19 Metrocall Stockholders Voting Agreement dated as of May 16, 1996 between A+ Network, Inc. and certain stockholders of
Metrocall listed therein.(u)
10.20 Agreement and Plan of Merger entered into effective May 16, 1996 between A+ Network, Inc. ("ACOM"), a Louisiana
corporation to be formed as a wholly-owned subsidiary of ACOM, Radio and Communications Consultants, Inc., Advanced
Cellular Telephone, Inc., Leroy Faith, Sr. and Eddie Ray Faith, DeWayne Faith and Leroy Faith Jr.(l)
10.21 Agreement of Merger by and among Metrocall, PPI Acquisition Corp., Parkway Paging, Inc., certain shareholders of Parkway
Paging, Inc., and George W. Bush, dated February 26, 1996.(v)
10.22 Asset Purchase Agreement by and among O.R. Estman, Inc. d/b/a Satellite Paging, Dana Paging, Inc., d/b/a Message
Network, Bertram M. Wachtel, Edward R. Davalos, Kevan D. Bloomgren and Metrocall, dated February 28, 1996. (A portion
of this Exhibit has been omitted pursuant to a request for confidential treatment. The omitted material has been filed
separately with the Commission.)(v)
10.23 Amendment to Asset Purchase Agreement dated as of August 30, 1996 by and among O.R. Estman, Inc. d/b/a Satellite Paging,
Dana Paging, Inc. d/b/a Message Network, Bertman M. Wachtel, Edward R. Davalos and Kevan D. Bloomgren, and Metrocall.(w)
10.24 Employment Agreement between Metrocall and William L. Collins, III.(l)
10.25 Employment Agreement between Metrocall and Steven D. Jacoby.(l)
10.26 Employment Agreement between Metrocall and Vincent D. Kelly.(l)
10.27 Change of Control Agreement between Metrocall and William L. Collins, III.(l)
10.28 Change of Control Agreement between Metrocall and Steven D. Jacoby.(l)
10.29 Change of Control Agreement between Metrocall and Vincent D. Kelly.(l)
10.30 Noncompetition Agreement dated as of August 8, 1997, between Metrocall and Jackie R. Kimzey.(m)
10.31 Noncompetition Agreement dated as of August 8, 1997, between Metrocall and David J. Vucina.(m)
10.32 Letter Agreement dated August 8, 1997, between Metrocall and Jackie R. Kimzey.(m)
10.33 Letter Agreement dated August 8, 1997, between Metrocall and David J. Vucina.(m)
10.34 Letter Agreement dated August 8, 1997, between Metrocall and Jan E. Gaulding.(m)
10.35 Letter Agreement dated August 8, 1997, between Metrocall and Mark A. Solls.(m)
10.36 Letter Agreement dated August 8, 1997, between Metrocall and Jeffery A. Owens.(m)
10.37 Amendment to Employment Agreement between Metrocall and William L. Collins, III.(s)
10.38 Second Amendment to Employment Agreement between Metrocall and William L. Collins, III.(ac)
10.39 Amendment to Employment Agreement between Metrocall and Steven D. Jacoby.(s)
10.40 Second Amendment to Employment Agreement between Metrocall and Steven D. Jacoby.(ac)
10.41 Amendment to Employment Agreement between Metrocall and Vincent D. Kelly.(s)
10.42 Second Amendment to Employment Agreement between Metrocall and Vincent D. Kelly.(ac)
10.43 Directors' Stock Option Plan, as amended.(n)
10.44 Metrocall 1996 Stock Option Plan.(z)
10.45 Metrocall 1996 Stock Option Plan, as amended.(n)
10.46 Metrocall Amended Employee Stock Purchase Plan.(r)
</TABLE>
<PAGE> 34
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
- ------- -------------------
<C> <S>
10.47 Variable Common Rights Agreement between Metrocall and First Union National Bank of Virginia, Rights Agent, dated as of
November 15, 1996, including Form of Certificate representing Variable Common Rights.(o)
10.48 Unit Purchase Agreement dated as of November 15, 1996, among Metrocall and Certain Purchasers.(p)
10.49 Warrant Agreement dated as of November 15, 1996, between Metrocall and the First National Bank of Boston, Warrant
Agent.(p)
10.50 Second Amended and Restated Loan Agreement dated as of October 21, 1997, among Metrocall, the financial institutions
signatory thereto, and Toronto-Dominion (Texas), Inc., as Administrative Agent.(q)
10.51 Third Amended: Restated Loan Agreement dated as of October 2, 1998, among Metrocall, the financial institutions
signatory thereto, and Toronto-Dominion (Texas), Inc. as Administrative Agent.+
10.52 Registration Rights Agreement, dated October 21, 1997 between Metrocall and Morgan Stanley & Co. Incorporated, TD
Securities (USA), Inc., First Union Capital Markets Corp. and Nationsbank Montgomery Securities, Inc.(g)
10.53 Deed of Lease between Douglas and Joyce Jemal, as landlord, and Metrocall, as tenant, dated April 14, 1994.(x)
10.54 Lease Agreement dated December 20, 1983 between Beacon Communications Associates, Ltd. and a predecessor of
Metrocall.(y)
10.55 Agreement dated May 16, 1996 among Metrocall and Ray D. Russenberger and Elliott H. Singer regarding voting for
director.(u)
10.56 Non-disclosure/No Conflict Agreement dated May 16, 1996 between Metrocall and Ray D. Russenberger.(u)
10.57 Non-disclosure/No Conflict Agreement dated May 16, 1996 between Metrocall and Elliott H. Singer.(u)
10.58 Employment Agreement dated May 16, 1996 between Metrocall and Charles A. Emling III.(u)
11.1 Statement re computation of per share earnings.+
27.1 Financial Data Schedule.+
</TABLE>
- ---------------
+ Filed herewith.
(a) Incorporated by reference to Metrocall's Registration Statement on Form
S-4, as amended (File No. 333-21231), initially filed with the Commission
on February 5, 1997.
(b) Incorporated by reference to Metrocall's Current Report on Form 8-K filed
with the Commission on November 21, 1996.
(c) Incorporated by reference to Metrocall's Registration Statement, Amendment
No. 1, on Form S-4 (File No. 333-21231) filed with the Commission on April
15, 1997.
(d) Incorporated by reference to Metrocall's Current Report on Form 8-K filed
with the Commission on July 14, 1997.
(e) Incorporated by reference to Metrocall's Current Report on Form 8-K filed
with the Commission on August 12, 1997.
(f) Incorporated by reference to Metrocall's Current Report on Form 8-K, as
amended, filed with the Commission on September 8, 1997.
(g) Incorporated by reference to Metrocall's Registration Statement on Form
S-4, as amended (File No. 333-44329), filed with the Commission on January
15, 1998.
(h) Incorporated by reference to Metrocall's Registration Statement on Form
S-1, as amended (File No. 33-96042), filed with the Commission on September
27, 1995.
<PAGE> 35
(i) Incorporated by reference to the Registration Statement on Form S-1 of A+
Communications, Inc., as amended (File No. 33-95208), filed with the
Commission on September 18, 1995.
(j) Incorporated by reference to Metrocall's Annual Report on Form 10-K for the
year ended December 31, 1996, filed with the Commission on March 31, 1997.
(k) Incorporated by reference to Metrocall's Current Report on Form 8-K filed
with the Commission on October 23, 1997.
(l) Incorporated by reference to Metrocall's Registration Statement on Form
S-4, as amended (File No. 333-06919), filed with the Commission on June 27,
1996.
(m) Incorporated by reference to Metrocall's Registration Statement on Form
S-4, as amended (File No. 333-36079), filed with the Commission on
September 22, 1997.
(n) Incorporated by reference to Metrocall's Proxy Statement filed for the
Annual Meeting of Stockholders held on May 7, 1997.
(o) Incorporated by reference to Metrocall's Annual Report on Form 10-K/A for
the year ended December 31, 1996, filed with the Commission on May 9, 1997.
(p) Incorporated by reference to Metrocall's Current Report on Form 8-K filed
with the Commission on November 21, 1996.
(q) Incorporated by reference to Metrocall's Registration Statement, Amendment
No. 2, on Form S-4 (File No. 333-36079) filed with the Commission on
November 5, 1997.
(r) Incorporated by reference to Metrocall's Registration Statement, Amendment
No. 1, on Form S-4 (File No. 333-36079) filed with the Commission on
October 27, 1997.
(s) Incorporated by reference to Metrocall's Quarterly Report on Form 10-Q for
the quarter ended September 30, 1997, filed with the Commission on November
14, 1997.
(t) Incorporated by reference to ProNet's Current Report on Form 8-K filed with
the Commission on July 5, 1995.
(u) Incorporated by reference to Metrocall's Tender Offer Statement on Schedule
14D-1, filed with the Commission on May 22, 1996.
(v) Incorporated by reference to Metrocall's Quarterly Report on Form 10-Q for
the quarter ended March 31, 1996 filed with the Commission on May 15, 1996.
(w) Incorporated by reference to Metrocall's Current Report on Form 8-K filed
with the Commission on September 13, 1996, as amended on October 1, 1996.
(x) Incorporated by reference to Metrocall's Quarterly Report on Form 10-Q for
the quarter ended September 30, 1994, filed with the Commission on November
14, 1994.
(y) Incorporated by reference to Metrocall's Registration Statement on Form
S-1, as amended (File No. 33-63886), filed with the Commission on July 12,
1993.
(z) Incorporated by reference to Metrocall's Proxy Statement filed for the
Annual Meeting of Stockholders held on May 1, 1996.
(aa) Incorporated by reference to Metrocall's Quarterly Report on Form 10-Q for
the quarter ended March 31, 1998 filed with the Commission on May 15, 1998.
(ab) Incorporated by reference to Metrocall's Current Report on Form 8-K filed
July 7, 1998.
(ac) Incorporated by reference to Metrocall's Quarterly Report on Form 10-Q for
the quarter ended June 30, 1998 filed with the Commission on August 14,
1998.
(b) Reports on Form 8-K
On October 2, 1998 the Company completed the transactions contemplated by
the Stock Purchase Agreement dated as of June 26, 1998 between Metrocall, AT&T
Wireless Services, Inc., McCaw Communications Companies, Inc. and AT&T Two Way
Messaging Communications, Inc.
<PAGE> 1
EXHIBIT 3.1
CERTIFICATE OF AMENDMENT OF CERTIFICATE OF INCORPORATION
OF
METROCALL, INC.
It is hereby certified that:
1. The name of the corporation (hereinafter called the
"Corporation") is
Metrocall, Inc.
2. The certificate of incorporation of the Corporation is hereby
amended by striking out Article 4.1 thereof and by substituting in lieu of
said Article 4.1 the following new Article 4.1:
4.1 Authorized Shares
The total number of shares of all classes of stock that the
Corporation shall have the authority to issue is 101,000,000
shares, of which 1,000,000 shares shall be Preferred Stock,
having a par value of $0.01 per share (the "Preferred Stock"),
and 100,000,000 shall be classified as shares of Common Stock par
value $0.01 per share ("Common Stock"). The Board of Directors
is expressly authorized to provide for the classification and
reclassification of any unissued shares of Preferred Stock or
Common Stock and the issuance thereof in one or more classes or
series without the approval of the stockholders of the
Corporation.
3. The amendment of the certificate of incorporation herein
certified has been duly adopted in accordance with the provisions of Section
242 of the General Corporation Law of the State of Delaware.
Signed on October 1, 1998.
/s/ William L. Collins, III
---------------------------
William L. Collins, III
President
<PAGE> 1
EXHIBIT 10.51
EXECUTION COPY
10/02/98
THIRD
AMENDED AND RESTATED LOAN AGREEMENT
among
METROCALL, INC.,
the "Borrower";
The Financial Institutions Signatory Hereto;
with
NATIONSBANK, N.A. and FIRST UNION NATIONAL BANK,
as "Documentation Agents";
TORONTO DOMINION (TEXAS), INC., BANKBOSTON, N.A.,
NATIONSBANK, N.A. and FIRST UNION NATIONAL BANK,
as "Managing Agents";
and
TORONTO DOMINION (TEXAS), INC.,
as "Administrative Agent" for the Banks
dated as of October 2, 1998
with TD SECURITIES (USA) INC., as "Lead Arranger" and "Book Manager"
and
BANCBOSTON ROBERTSON STEPHENS INC., as Syndication Agent
<PAGE> 2
INDEX
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE 1 Definitions
ARTICLE 2 Credit Facilities
Section 2.1 Commitments
Section 2.2 Manner of Borrowing and Disbursement
Section 2.3 Interest
Section 2.4 Commitment Fees
Section 2.5 Mandatory Commitment Reductions
Section 2.6 Voluntary Commitment Reductions
Section 2.7 Prepayments and Repayments
Section 2.8 Notes; Loan Accounts
Section 2.9 Manner of Payment
Section 2.10 Reimbursement
Section 2.11 Pro Rata Treatment
Section 2.12 Capital Adequacy
Section 2.13 Bank Tax Forms
ARTICLE 3 Conditions Precedent
Section 3.1 Conditions Precedent to Effectiveness of Agreement
Section 3.2 Conditions Precedent to Each Advance
ARTICLE 4 Representations and Warranties
Section 4.1 Representations and Warranties
Section 4.2 Survival of Representations and Warranties, etc.
ARTICLE 5 General Covenants
Section 5.1 Preservation of Existence and Similar Matters
Section 5.2 Business; Compliance with Applicable Law
Section 5.3 Maintenance of Properties
Section 5.4 Accounting Methods and Financial Records
Section 5.5 Insurance
Section 5.6 Payment of Taxes and Claims
Section 5.7 Compliance with ERISA
Section 5.8 Visits and Inspections
Section 5.9 Payment of Indebtedness; Loans
Section 5.10 Use of Proceeds
Section 5.11 Indemnity
Section 5.12 Interest Rate Hedging
Section 5.13 Covenants Regarding Formation of Subsidiaries and Acquisitions
Section 5.14 Payment of Wages
Section 5.15 Further Assurances
Section 5.16 License Subs
ARTICLE 6 Information Covenants
Section 6.1 Quarterly Financial Statements and Information
Section 6.2 Annual Financial Statements and Information
Section 6.3 Performance Certificates
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C>
Section 6.4 Copies of Other Reports
Section 6.5 Notice of Litigation and Other Matters
ARTICLE 7 Negative Covenants
Section 7.1 Indebtedness of the Borrower and its Subsidiaries
Section 7.2 Limitation on Liens
Section 7.3 Amendment and Waiver
Section 7.4 Liquidation, Merger, or Disposition of Assets
Section 7.5 Limitation on Guaranties
Section 7.6 Investments and Acquisitions
Section 7.7 Restricted Payments and Purchases
Section 7.8 Senior Leverage Ratio
Section 7.9 Total Leverage Ratio
Section 7.10 Annualized Operating Cash Flow to Pro Forma Debt Service Ratio
Section 7.11 Total Sources to Total Uses Ratio
Section 7.12 Operating Cash Flow to Net Cash Interest Expense Ratio.
Section 7.13 Affiliate Transactions
Section 7.14 Real Estate
Section 7.15 ERISA Liabilities
Section 7.16 Unrestricted Subsidiaries
Section 7.17 No Limitation on Upstream Dividends by Subsidiaries
ARTICLE 8 Default
Section 8.1 Events of Default
Section 8.2 Remedies
Section 8.3 Payments Subsequent to Declaration of Event of Default
ARTICLE 9 The Agents
Section 9.1 Appointment and Authorization
Section 9.2 Interest Holders
Section 9.3 Consultation with Counsel
Section 9.4 Documents
Section 9.5 Administrative Agent and Affiliates
Section 9.6 Responsibility of the Administrative Agent
Section 9.7 Security Documents
Section 9.8 Action by the Administrative Agent
Section 9.9 Notice of Default or Event of Default
Section 9.10 Responsibility Disclaimed
Section 9.11 Indemnification
Section 9.12 Credit Decision
Section 9.13 Successor Administrative Agent
Section 9.14 Delegation of Duties
Section 9.15 Agents
ARTICLE 10 Change in Circumstances Affecting Eurodollar Advances
Section 10.1 Eurodollar Basis Determination Inadequate or Unfair
Section 10.2 Illegality
Section 10.3 Increased Costs
Section 10.4 Effect On Other Advances
ARTICLE 11 Miscellaneous
</TABLE>
- 4 -
<PAGE> 4
<TABLE>
<S> <C> <C>
Section 11.1 Notices
Section 11.2 Expenses
Section 11.3 Waivers
Section 11.4 Set-Off
Section 11.5 Assignment
Section 11.6 Accounting Principles
Section 11.7 Counterparts
Section 11.8 Governing Law
Section 11.9 Severability
Section 11.10 Interest
Section 11.11 Table of Contents and Headings
Section 11.12 Amendment and Waiver
Section 11.13 Entire Agreement
Section 11.14 Other Relationships
Section 11.15 Directly or Indirectly
Section 11.16 Reliance on and Survival of Various Provisions
Section 11.17 Senior Debt
Section 11.18 Obligations Several
ARTICLE 12 Waiver of Jury Trial
Section 12.1 Waiver of Jury Trial
</TABLE>
- 5 -
<PAGE> 5
<TABLE>
<CAPTION>
EXHIBITS
<S> <C>
Exhibit A - Form of Borrower's Pledge Agreement
Exhibit B - Form of Borrower Security Agreement
Exhibit C - Form of Certificate of Financial Condition
Exhibit D-1 - Form of Facility A Note
Exhibit D-2 - Form of Facility B Note
Exhibit D-3 - Form of Facility C. Note
Exhibit E - Form of Request for Advance
Exhibit F - Form of Trademark Security Agreement
Exhibit G - Form of Use of Proceeds Letter
Exhibit H - Form of Borrower's Loan Certificate
Exhibit I - Form of Subsidiary Loan Certificate
Exhibit J - Form of Subsidiary Security Agreement
Exhibit K - Form of Subsidiary Guaranty
Exhibit L - Form of Subsidiary Pledge Agreement
Exhibit M - Form of Assignment and Assumption Agreement
SCHEDULES
Schedule 1 - Licenses
Schedule 2 - Purchase Money Security Interests as of Agreement Date
Schedule 3 - Lender Notice Addresses
Schedule 4 - Real Estate Partnerships
Schedule 5 - Subsidiaries
Schedule 6 - Exceptions to Representations and Warranties
Schedule 7 - License Subs
Schedule 8 - Litigation
Schedule 9 - Agreements with Affiliates
Schedule 10 - Indebtedness for Money Borrowed Outstanding After Agreement Date
Schedule 11 - Amendments and Waivers to Charter and Subordinated Debt Documents
Schedule 12 - Proposed Real Estate Acquisition
</TABLE>
- 6 -
<PAGE> 6
THIRD AMENDED AND RESTATED LOAN AGREEMENT
THIS THIRD AMENDED AND RESTATED LOAN AGREEMENT made as of the 2nd day of
October, 1998, by and among METROCALL, INC., a Delaware corporation (the
"Borrower"), the financial institutions party hereto as Banks (together with any
financial institution which subsequently becomes a Bank hereunder the "Banks"),
NATIONSBANK, N.A. and FIRST UNION NATIONAL BANK, as Documentation Agents (in
such capacity, the "Documentation Agents"), TORONTO DOMINION (TEXAS), INC.,
BANKBOSTON, N.A., NATIONSBANK, N.A. and FIRST UNION NATIONAL BANK as Managing
Agents (in such capacity, the "Managing Agents") and TORONTO DOMINION (TEXAS),
INC., as Administrative Agent for the Banks (the "Administrative Agent").
W I T N E S S E T H:
WHEREAS, the Borrower, the Administrative Agent, and certain of the Banks
are all parties to that certain Second Amended and Restated Loan Agreement dated
as of October 21, 1997, as amended by that certain First Amendment to Second
Amended and Restated Loan Agreement dated as of July 15, 1998, and that certain
Second Amendment to Second Amended and Restated Loan Agreement dated as of
August 24, 1998 (collectively, the "Prior Loan Agreement"); and
WHEREAS, the Borrower has requested that the Administrative Agent and the
Banks consent to certain amendments to the Prior Loan Agreement, as more fully
set forth in this Third Amended and Restated Loan Agreement; and
WHEREAS, the Administrative Agent and the Banks have agreed to amend and
restate the Prior Loan Agreement in its entirety as set forth herein; and
WHEREAS, the Borrower acknowledges and agrees that the Security Interest
(as defined in the Prior Loan Agreement) granted to the Administrative Agent,
for itself and on behalf of the Banks pursuant to the Prior Loan Agreement and
the Loan Documents (as defined in the Prior Loan Agreement) executed in
connection therewith shall remain outstanding and in full force and effect in
accordance with the Prior Loan Agreement and shall continue to secure the
Obligations (as defined herein); and
WHEREAS, the Borrower acknowledges and agrees that (i) the Obligations (as
defined herein) represent, among other things, the amendment, restatement,
renewal, extension, consolidation and modification of the Obligations (as
defined in the Prior Loan Agreement) arising in connection with the Prior Loan
Agreement and the other Loan Documents (as defined in the Prior Loan Agreement)
executed in connection therewith; (ii) the parties hereto intend that the Prior
Loan Agreement and the other Loan Documents (as defined in the Prior Loan
Agreement) executed in connection therewith and the collateral pledged
thereunder shall secure, without interruption or impairment of any kind, all
existing Indebtedness under the Prior Loan Agreement and the other Loan
Documents
- 7 -
<PAGE> 7
(as defined in the Prior Loan Agreement) executed in connection therewith as so
amended, restated, restructured, renewed, extended, consolidated and modified
hereunder, together with all other Obligations hereunder; (iii) all Liens
evidenced by the Prior Loan Agreement and the other Loan Documents (as defined
in the Prior Loan Agreement) executed in connection therewith are hereby
ratified, confirmed and continued; and (iv) the Loan Documents (as defined
herein) are intended to restructure, restate, renew, extend, consolidate, amend
and modify the Prior Loan Agreement and the other Loan Documents (as defined in
the Prior Loan Agreement) executed in connection therewith; and
WHEREAS, the parties hereto intend that (i) the provisions of the Prior
Loan Agreement and the other Loan Documents (as defined in the Prior Loan
Agreement) executed in connection therewith, to the extent restructured,
restated, renewed, extended, consolidated, amended and modified hereby, are
hereby superseded and replaced by the provisions hereof and of the Loan
Documents (as defined herein): and (ii) the Notes (as hereinafter defined)
amend, renew, extend, modify, replace, are substituted for and supersede in
their entirety, but do not extinguish the indebtedness arising under, the
promissory notes issued pursuant to the Prior Loan Agreement;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by each of the parties hereto, the
parties hereby amend and restate the Prior Loan Agreement as follows:
ARTICLE 1 Definitions
For the purposes of this Agreement:
"A+ Indenture" shall mean that certain Indenture dated as of October 24,
1995 as modified by First Supplemental Indenture dated as of November 14, 1996
and Second Supplemental Indenture dated as of November 15, 1996 between the
Borrower (as successor to A+ Communications, Inc.) and IBJ Schroder Bank & Trust
Company, with respect to the 11-7/8% Senior Subordinated Notes Due 2005 of the
Borrower (as successor to A+ Network, Inc.).
"Acquisition" shall mean (whether by purchase, lease, exchange, issuance
of stock or other equity or debt securities, merger, reorganization or any other
method) (i) any acquisition by the Borrower or any of its Restricted
Subsidiaries of any other Person, which
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<PAGE> 8
Person shall then become consolidated with the Borrower or any such Restricted
Subsidiary in accordance with GAAP, or (ii) any acquisition by the Borrower or
any of its Restricted Subsidiaries of all or any substantial part of the assets
of any other Person.
"Administrative Agent" shall mean Toronto Dominion (Texas), Inc., in its
capacity as Administrative Agent for the Banks or any successor Administrative
Agent appointed pursuant to Section 9.13 of this Agreement.
"Administrative Agent's Office" shall mean the office of the
Administrative Agent located at 909 Fannin, Suite 900, Houston, Texas 77010, or
such other office as may be designated pursuant to the provisions of Section
11.1 of this Agreement.
"Advance" shall mean amounts advanced by the Banks to the Borrower
pursuant to Article 2 hereof on the occasion of any borrowing and having the
same Interest Rate Basis and Interest Period; and "Advances" shall mean more
than one Advance.
"Affiliate" shall mean, with respect to a Person, any other Person
directly or indirectly controlling, controlled by, or under common control with,
such first Person. For purposes of this definition, "control" when used with
respect to any Person includes, without limitation, the direct or indirect
beneficial ownership of more than ten percent (10%) of the voting securities or
voting equity of such Person or the power to direct or cause the direction of
the management and policies of such Person whether by contract or otherwise.
"Agreement" shall mean this Third Amended and Restated Loan Agreement,
together with all Exhibits and Schedules hereto.
"Agreement Date" shall mean the date as of which this Agreement is
dated.
"Annualized Operating Cash Flow" shall mean, as of any date, the product
of (a) Operating Cash Flow for the most recently completed fiscal quarter, times
(b) four (4).
"Applicable Law" shall mean, in respect of any Person, all provisions of
constitutions, statutes, rules, regulations and orders of governmental bodies or
regulatory agencies applicable to such Person, including, without limiting the
foregoing, the Licenses, the Communications Act and all Environmental Laws, and
all orders, decisions, judgments and decrees of all courts and arbitrators in
proceedings or actions to which the Person in question is a party or by which it
is bound.
"Applicable Margin" shall mean the interest rate margin applicable to Base
Rate Advances and Eurodollar Advances, as the case may be, in each case
determined in accordance with Section 2.3(f) hereof.
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<PAGE> 9
"Asset Disposition" shall mean any transfer, conveyance, sale, lease or
other disposition by the Borrower or any of the Restricted Subsidiaries
(including a consolidation or merger or other sale of any such Restricted
Subsidiary with, into or to another Person in a transaction in which such
Subsidiary ceases to be a Subsidiary, but excluding a disposition by a
Restricted Subsidiary to the Borrower or a wholly-owned Restricted Subsidiary of
the Borrower or by the Borrower to a wholly-owned Restricted Subsidiary, and
excluding the creation of a Lien) of (i) shares of Capital Stock or other
ownership interests of a Restricted Subsidiary, (ii) substantially all of the
assets of the Borrower or any of the Restricted Subsidiaries representing a
division or line of business or (iii) other assets or rights of the Borrower or
any of the Restricted Subsidiaries outside of the ordinary course of business,
in any case where the consideration received by the Borrower or a Restricted
Subsidiary or the fair market value of the assets subject to such disposition
exceeds $1,000,000.
"AT&T Acquisition" shall mean the acquisition of all of the stock of
McCaw RCC Communications, Inc. and a 50KHZ/50KHZ Narrowband Personal
Communications Service License from AT&T Two Way Messaging Communications,
Inc. pursuant to the AT&T Acquisition Agreement.
"AT&T Acquisition Agreement" shall mean that certain Stock Purchase
Agreement dated as of June 26, 1998 by and among the Borrower, AT&T Wireless
Services, Inc., McCaw Communications Companies, Inc. and AT&T Two Way
Messaging Communications, Inc.
"Authorized Signatory" shall mean such senior personnel of a Person as may
be duly authorized and designated in writing by such Person to execute
documents, agreements and instruments on behalf of such Person.
"Banks" shall mean those financial institutions whose names appear as
"Banks" on the signature pages to this Agreement, together with any assignees
thereof pursuant to Section 11.5 hereof; and "Bank" shall mean any one of the
foregoing Banks.
"Base Rate" shall mean, at any time, the higher of (a) the rate of
interest adopted by The Toronto-Dominion Bank, New York Branch as its reference
rate for the determination of interest rates for loans of varying maturities in
United States dollars to United States residents of varying degrees of
creditworthiness and being quoted at such time by such bank as its "prime rate"
or "base rate," or (b) the Federal Funds Rate plus one-half of one percent
(1/2%) per annum. The Base Rate is not necessarily the lowest rate of interest
charged to borrowers of The Toronto-Dominion Bank, New York Branch.
"Base Rate Advance" shall mean an Advance which the Borrower requests to
be made as a Base Rate Advance or is reborrowed as a Base Rate Advance, in
accordance with the provisions of Section 2.2 hereof, and which shall be in a
principal amount of at least
- 10 -
<PAGE> 10
$1,000,000, and in an integral multiple of $500,000.
"Base Rate Basis" shall mean a simple interest rate equal to the sum of
(i) the Base Rate and (ii) the Applicable Margin. The Base Rate Basis shall be
adjusted automatically as of the opening of business on the effective date of
each change in the Base Rate to account for such change, and shall also be
changed to reflect changes in the Applicable Margin.
"Board of Directors" when used with reference to the Borrower, shall mean
the Board of Directors of the Borrower, or the Executive Committee of the Board
of Directors of the Borrower.
"Borrower" shall mean Metrocall, Inc., a Delaware corporation.
"Borrower's Pledge Agreements" shall mean, collectively, that certain
Amended and Restated Borrower's Pledge Agreement dated as of September 20, 1996,
that certain First Supplemental Borrower's Pledge Agreement dated as of November
15, 1996, and that certain Third Supplemental Borrower's Pledge Agreement dated
as of December 31, 1997, or any other similar agreement substantially in the
form of Exhibit A attached hereto, pursuant to which the Borrower has pledged to
the Administrative Agent, for itself and on behalf of the Banks, all of the
Borrower's Capital Stock ownership in any Restricted Subsidiaries existing on
the Agreement Date or formed or acquired by the Borrower after the Agreement
Date.
"Borrower Security Agreements" shall mean, collectively, that certain
Amended and Restated Borrower Security Agreement dated as of September 20, 1996
between the Borrower and the Administrative Agent, or any other similar
agreement substantially in the form of Exhibit B attached hereto.
"Business Day" shall mean a day on which banks and foreign exchange
markets are open for the transaction of business required for this Agreement in
Houston, Texas, New York, New York and London, England, as relevant to the
determination to be made or the action to be taken.
"Capital Expenditures" shall mean, in respect of any Person, expenditures
for the purchase of assets of long-term use which would be required to be
capitalized on the balance sheet of such Person in accordance with GAAP.
"Capital Stock" shall mean, as applied to any Person, any capital stock of
such Person, regardless of class or designation, and all warrants, options,
purchase rights, conversion or exchange rights, voting rights, calls or claims
of any character with respect thereto.
"Capitalized Lease Obligation" shall mean that portion of any obligation
of a Person as lessee under a lease which at the time would be required to be
capitalized on the balance
- 11 -
<PAGE> 11
sheet of such lessee in accordance with GAAP.
"Cash Equivalents" shall mean investments in (i) certificates of deposit
and other interest bearing deposits or accounts with U.S. commercial banks
having, or whose parent corporation has, a combined capital and surplus of at
least $300,000,000, which mature within one year from the date of investment,
(ii) obligations issued or unconditionally guaranteed by the U.S. government, or
issued by an agency thereof and backed by the full faith and credit of the U.S.
government, which obligations mature within one year from the date of
investment, (iii) direct obligations issued by any U.S. state or political
subdivision thereof, which mature within one year from the date of investment
and have the highest rating obtainable from Standard & Poor's Corporation or
Moody's Investors Service on the date of investment, or (iv) commercial paper
which has the highest rating obtainable from Standard & Poor's Ratings Group, a
division of McGraw Hill, Inc., or any successor, or Moody's Investors Service,
or any successor, on the date of investment.
"Certificate of Financial Condition" shall mean a certificate,
substantially in the form of Exhibit C attached hereto, signed by the chief
financial officer of the Borrower, together with any schedules, exhibits or
annexes appended thereto.
"Change in Control Event" shall mean the occurrence of any of the
following events or the existence of any of the following conditions: (i) a
person or entity or group (as that term is used in Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended) of persons or entities shall have
become the beneficial owner of a majority (by voting power or otherwise) of the
securities of the Borrower ordinarily having the right to vote in the election
of directors, (ii) during any consecutive three-year period commencing on or
after September 27, 1995, individuals who at the beginning of such period
constituted the Board of Directors of the Borrower (together with any directors
who are members of such Board of Directors of the Borrower on September 27, 1995
and any new directors whose election by such Board of Directors of the Borrower
or whose nomination for election by the stockholders of the Borrower was
approved by a vote of 66-2/3% of the directors then still in office who were
either directors at the beginning of such period or whose election or nomination
for election was previously so approved) cease for any reason to constitute a
majority of the Board of Directors of the Borrower then in office, (iii) any
sale, lease, exchange or other transfer (in one transaction or a series of
related transactions) of all, or substantially all, the assets of the Borrower
to any person or entity or group (as defined above in this definition) of
persons or entities (other than any wholly owned Subsidiary of the Borrower),
(iv) the merger or consolidation of the Borrower with or into another
corporation or the merger of another corporation into the Borrower with the
effect that immediately after such transaction any person or entity or group (as
defined above in this definition) of persons or entities shall have become the
beneficial owner of securities of the surviving corporation of such merger or
consolidation representing a majority of the combined voting power of the
outstanding securities of the surviving corporation ordinarily having the right
to vote in the election of
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<PAGE> 12
directors, (v) the adoption of a plan leading to the liquidation or dissolution
of the Borrower or (vi) or any "change of control" or "change of control event,"
however designated or denominated, shall have been deemed to have occurred under
any agreement of the Borrower or any of its Subsidiaries having an aggregate
economic value to such Person exceeding $5,000,000.
"Co-Agents" shall mean, collectively, Fleet National Bank, Royal Bank
of Canada and PNC Bank, National Association.
"COBRA" shall mean the Consolidated Omnibus Budget Reconciliation Act of
1985 and any amendments thereto.
"Code" shall mean the Internal Revenue Code of 1986, as amended from time
to time.
"Collateral" shall mean any property of any kind constituting collateral
for the Obligations under any of the Loan Documents.
"Commitment Ratio" shall mean, with respect to any Bank for any
Commitment, the percentage equivalent of the ratio which such Bank's portion of
such Commitment bears to the aggregate amount of such Commitment (as each may be
adjusted from time to time as provided herein); and 'Commitment Ratios' shall
mean, with respect to any Commitment, the Commitment Ratios of all of the Banks
with respect to such Commitment. As of the Agreement Date, the Commitment Ratios
of the Banks party to this Agreement are as follows:
<TABLE>
<CAPTION>
Facility A Facility A Facility B Facility B
Banks Commitment Commitment Commitment Commitment
Ratio Ratio
<S> <C> <C> <C> <C>
Toronto Dominion $17,833,041.76 10.1903095686% $12,737,886.97 10.1903095686%
(Texas), Inc.
BankBoston, N.A. $14,916,375.06 8.5236428914% $654,553.64 0.5236429120%
First Union National $17,333,479.13 9.9048452143% $17,381,056.52 5.9048452143%
Bank (formerly known
as First Union
National Bank of North
Carolina)
Fleet National Bank $17,333,479.13 9.9048452143% $2,381,056.52 1.9048452160%
</TABLE>
<TABLE>
<CAPTION>
Facility C Facility C Total Dollar
Banks Commitment Commitment Commitment
Ratio
<S> <C> <C> <C>
Toronto Dominion $20,000,000.00 20.00% $50,570,928.73
(Texas), Inc.
BankBoston, N.A. $20,000,000.00 20.00% $35,570,928.70
First Union National $20,000,000.00 20.00% $44,714,535.65
Bank (formerly known
as First Union
National Bank of North
Carolina)
Fleet National Bank $ 0.00 0% $19,714,535.65
</TABLE>
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<PAGE> 13
<TABLE>
<S> <C> <C> <C> <C>
Royal Bank of Canada $17,333,479.13 9.9048452143% $0.00 0%
PNC Bank, National $12,500,000.00 7.1428571429% $8,928,571.43 7.1428571429%
Association
NationsBank, N.A. $17,333,479.13 9.9048452184% $12,381,056.51 9.9048452080%
Riggs Bank N.A. $10,416,666.68 5.9523809520% $7,440,476.19 5.9538809520%
SunTrust Bank, Central $7,500,000.01 4.2857142889% $5,357,142.86 4.2857142889%
Florida, National
Association
Van Kampen American $17,500,000.00 10.0000000000% $12,500,000.00 10.0000000000%
Prime Rate Income Trust
Finova Capital $17,500,000.00 10.0000000000% $12,500,000.00 10.000000000%
Corporation
Commercial Loan $2,500,000.00 1.4285714311% $24,166,770.80 19.3334166400%
Funding Trust I
Debt Strategies Fund $0.00 0% $10,000,000.00 8.00000000%
II, Inc.
Van Kampen American $5,000,000.00 2.8571428570% $ 3,571,428.51 2.85714856%
Capital Senior Income
Trust
KZH-CNC LLC $ 0.00 0% $ 5,000,000.00 4.00%
Morgan Stanley Senior $ 0.00 0% $ 0.0% 0%
Funding, Inc.
TOTALS: $175,000,000.00 100% $125,000,000.00 100%
</TABLE>
<TABLE>
<S> <C> <C> <C>
Royal Bank of Canada $ 0.00 0% $17,333,479.13
PNC Bank, National $ 0.00 0% $21,428,571.43
Association
NationsBank, N.A. $20,000,000.00 20.00% $49,714,535.64
Riggs Bank N.A. $ 0.00 0% $17,857,142.87
SunTrust Bank, Central $ 0.00 0% $12,857,142.87
Florida, National
Association
Van Kampen American $ 0.00 0% $30,000,000.00
Prime Rate Income Trust
Finova Capital $ 5,000,000.00 5.00% $35,000,000.00
Corporation
Commercial Loan $ 0.00 0% $26,666,770.80
Funding Trust I
Debt Strategies Fund $ 0.00 0% $10,000,000.00
II, Inc.
Van Kampen American $ 0.00 0% $ 8,571,428.51
Capital Senior Income
Trust
KZH-CNC LLC $ 0.00 0% $ 5,000,000.00
Morgan Stanley Senior $15,000,000.00 15.00% $15,000,000.00
Funding, Inc.
TOTALS: $100,000,000.00 100% $400,000,000.00
</TABLE>
"Commitments" shall mean, collectively, the Facility A Commitment, the
Facility B Commitment, and the Facility C Commitment.
- 14 -
<PAGE> 14
"Common Stock" shall mean, in respect of any Person, Capital Stock of such
Person that does not rank prior, as to the payment of dividends or as to the
distribution of assets upon any voluntary or involuntary liquidation,
dissolution or winding up of such Person, to shares of Capital Stock of any
other class of such Person.
"Communications Act" shall mean the Communications Act of 1934, and any
similar or successor federal statute, and the rules and regulations of the FCC
thereunder, all as the same may be in effect from time to time.
"Default" shall mean any Event of Default, and any of the events specified
in Section 8.1, regardless of whether there shall have occurred any passage of
time or giving of notice, or both, that would be necessary in order to
constitute such event an Event of Default.
"Default Rate" shall mean a simple per annum interest rate equal to the
sum of (a) the Base Rate, plus (b) the Applicable Margin for Base Rate Advances,
plus (c) two percent (2%).
"Documentation Agents" shall mean, collectively, NationsBank, N.A. and
First Union National Bank.
"Employee Pension Plan" shall mean any Plan which (a) is maintained by the
Borrower, any of its Subsidiaries or any ERISA Affiliate and (b) is subject to
Part 3 of Title I of ERISA.
"Environmental Laws" shall mean all applicable federal, state or local
laws, statutes, rules, regulations or ordinances, codes, common law, consent
agreements, orders, decrees, judgments or injunctions issued, promulgated,
approved or entered thereunder relating to public health, safety or the
pollution or protection of the environment, including, without limitation, those
relating to releases, discharges, emissions, spills, leaching, or disposals to
air, water, land or ground water, to the withdrawal or use of ground water, to
the use, handling or disposal of polychlorinated biphenyls, asbestos or urea
formaldehyde, to the treatment, storage, disposal or management of hazardous
substances (including, without limitation, petroleum, crude oil or any fraction
thereof, or other hydrocarbons), pollutants or contaminants, to exposure to
toxic, hazardous or other controlled, prohibited, or regulated substances,
including, without limitation, any such provisions under the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended (42
U.S.C. Section 9601 et seq.), or the Resource Conservation and Recovery Act of
1976, as amended (42 U.S.C. Section 6901 et seq.).
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
in effect from time to time.
- 15 -
<PAGE> 15
"ERISA Affiliate" shall mean any Person, including a Subsidiary or an
Affiliate of the Borrower, that is a member of any group of organizations
(within the meaning of Code Sections 414(b), 414(c), 414(m), or 414(o)) of which
the Borrower is a member.
"Eurodollar Advance" shall mean an Advance which the Borrower requests to
be made as a Eurodollar Advance or which is reborrowed as a Eurodollar Advance,
in accordance with the provisions of Section 2.2 hereof, and which shall be in a
principal amount of at least $1,000,000 and in an integral multiple of $500,000.
"Eurodollar Basis" shall mean a simple per annum interest rate (rounded
upward, if necessary, to the nearest one-hundredth (1/100th) of one percent)
equal to the sum of (a) the quotient of (i) the Eurodollar Rate divided by (ii)
one minus the Eurodollar Reserve Percentage, if any, stated as a decimal, plus
(b) the Applicable Margin. The Eurodollar Basis shall apply to Interest Periods
of one (1), two (2), three (3), six (6), and twelve (12) months, and, once
determined, shall remain unchanged during the applicable Interest Period, except
for changes to reflect adjustments in the Eurodollar Reserve Percentage and the
Applicable Margin as adjusted pursuant to Section 2.3(f) hereof. The Eurodollar
Basis for any Eurodollar Advance shall be adjusted as of the effective date of
any change in the Eurodollar Reserve Percentage. The Borrower may not elect an
Interest Period in excess of six (6) months unless the Administrative Agent has
notified the Borrower that each of the Banks has funds available to it for such
Bank's portion of the proposed Advance which are not required for other
purposes, and that such funds are available to each Bank at a rate (exclusive of
reserves and other adjustments) at or below the Eurodollar Rate for such
proposed Advance and Interest Period.
"Eurodollar Rate" shall mean, for any Interest Period, the average of the
interest rates per annum at which deposits in United States Dollars for such
Interest Period are offered to The Toronto-Dominion Bank, New York Branch in the
Eurodollar market at approximately 11:00 a.m. (New York time) two (2) Business
Days before the first day of such Interest Period, in an amount approximately
equal to the principal amount of, and for a length of time approximately equal
to the Interest Period for, the Eurodollar Advance sought by the Borrower.
"Eurodollar Reserve Percentage" shall mean the percentage which is in
effect from time to time under Regulation D of the Board of Governors of the
Federal Reserve System, as such regulation may be amended from time to time, as
the maximum reserve requirement applicable with respect to Eurocurrency
Liabilities (as that term is defined in Regulation D), whether or not any Bank
has any such Eurocurrency Liabilities subject to such reserve requirement at
that time.
"Event of Default" shall mean any of the events specified in Section 8.1,
provided that
- 16 -
<PAGE> 16
any requirement for notice or lapse of time has been satisfied.
"Excess Cash Flow" shall mean, with respect to the Borrower and the
Restricted Subsidiaries on a consolidated basis, as of the end of the second
(2nd) and fourth (4th) fiscal quarters of the Borrower based on the quarterly
financial statements required to be provided under Section 6.1 hereof with
respect to such relevant quarters, the remainder of (a) Operating Cash Flow for
the two (2) most recently completed fiscal quarters, minus (b) the sum of the
following: (i) Capital Expenditures made by such Persons during such fiscal
quarters; (ii) income taxes estimated to be payable in cash by such Persons for
such fiscal quarters; (iii) Net Cash Interest Expense incurred during such
fiscal quarters; (iv) scheduled principal payments made in respect of
Indebtedness for Money Borrowed paid by such Persons during such fiscal quarters
(including imputed principal payments with respect to Capitalized Lease
Obligations); and (v) Restricted Payments and Restricted Purchases made during
such quarters.
"Facility A Commitment" shall mean the several obligations of the Banks to
fund their respective portions of Loans to the Borrower in accordance with their
respective Commitment Ratios in an aggregate amount of up to $175,000,000
pursuant to the terms hereof and as such obligations may be reduced from time to
time pursuant to the terms hereof.
"Facility A Notes" shall mean, collectively, those certain promissory
notes in an aggregate original principal amount of $175,000,000, and issued to
each of the Banks by the Borrower with respect to the Facility A Commitment,
each one substantially in the form of Exhibit D-1 attached hereto, any other
promissory notes issued by the Borrower to evidence the Loans under the Facility
A Commitment, and any extensions, renewals or amendments to, or replacements of,
the foregoing.
"Facility B Commitment" shall mean, collectively, the several obligations
of the Banks which funded an aggregate amount of $125,000,000 pursuant to the
Prior Loan Agreement as such obligations may be reduced from time to time
pursuant to the terms hereof.
"Facility B Notes" shall mean, collectively, those certain promissory
notes in an aggregate original principal amount equal to the Facility B
Commitment, and issued to each of the Banks by the Borrower with respect to the
Facility B Commitment, each one substantially in the form of Exhibit D-2
attached hereto, any other promissory notes issued by the Borrower to evidence
the Loans under the Facility B Commitment, and any extensions, renewals, or
amendments to, or replacement of, the foregoing.
"Facility C Commitment" shall mean the several obligations of the Banks to
fund their respective portions of the Loans to the Borrower in accordance with
the Banks'
- 17 -
<PAGE> 17
respective Commitment Ratios in the aggregate amount of up to $100,000,000
pursuant to the terms hereof and as such obligations may be reduced from time to
time pursuant to the terms hereof.
"Facility C Notes" shall mean, collectively, those certain promissory
notes in an aggregate original principal amount of $100,000,000, issued to the
Banks by the Borrower with respect to the Facility C Commitment, each one
substantially in the form of Exhibit N hereto, any other promissory notes issued
by the Borrower to evidence the Loans under the Facility C Commitment, and any
extensions, renewals or amendments to, or replacements of, the foregoing.
"FCC" shall mean the Federal Communications Commission, or any other
similar or successor agency of the federal government administering the
Communications Act.
"Federal Funds Rate" shall mean, as of any date, the weighted average of
the rates on overnight federal funds transactions with the members of the
Federal Reserve System arranged by federal funds brokers, as published for such
day (or, if such day is not a Business Day, for the next preceding Business Day)
by the Federal Reserve Bank of New York, or, if such rate is not so published
for any day which is a Business Day, the average of the quotations for such day
on such transactions received by the Administrative Agent from three (3) federal
funds brokers of recognized standing selected by the Administrative Agent.
"GAAP" shall mean, as in effect from time to time in the United States,
generally accepted accounting principles, consistently applied.
"Guaranty" or "Guaranteed," as applied to an obligation, shall mean and
include (a) a guaranty, direct or indirect, in any manner, of all or any part of
such obligation, and (b) any agreement, direct or indirect, contingent or
otherwise, the practical effect of which is to assure in any way the payment or
performance (or payment of damages in the event of non-performance) of all or
any part of such obligation, including, without limiting the foregoing, any
reimbursement obligations as to amounts drawn down by beneficiaries of
outstanding letters of credit or capital call requirements.
"Indebtedness" shall mean, with respect to any Person, and without
duplication, (a) all items, except items of shareholders' and partners' equity
or capital stock or surplus or general contingency or deferred tax reserves,
which in accordance with GAAP would be included in determining total liabilities
as shown on the liability side of a balance sheet of such Person, including,
without limitation, to the extent of the higher of the book value or fair market
value of the property or asset securing such obligation (if less than the amount
of such obligation), secured non-recourse obligations of such Person, (b) all
direct or indirect obligations of any other Person secured by any Lien to which
any property or asset owned by such Person is subject, but only to the extent of
the higher of the fair market value or the
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<PAGE> 18
book value of the property or asset subject to such Lien (if less than the
amount of such obligation) if the obligation secured thereby shall not have been
assumed, (c) to the extent not otherwise included, all Capitalized Lease
Obligations of such Person and all obligations of such Person with respect to
leases constituting part of a sale and lease-back arrangement, (d) all
reimbursement obligations with respect to outstanding letters of credit, and (e)
to the extent not otherwise included, all obligations subject to Guaranties of
such Person or its Subsidiaries, and (f) all obligations of such Person under
Interest Rate Hedge Agreements.
"Indebtedness for Money Borrowed" shall mean, with respect to any Person,
Indebtedness for money borrowed and Indebtedness represented by notes payable
and drafts accepted representing extensions of credit, all obligations evidenced
by bonds, debentures, notes or other similar instruments, all Indebtedness upon
which interest charges are customarily paid, all Capitalized Lease Obligations,
all reimbursement obligations with respect to outstanding letters of credit, all
Indebtedness issued or assumed as full or partial payment for property or
services (other than trade payables arising in the ordinary course of business,
but only if and so long as such accounts are payable on customary trade terms),
whether or not any such notes, drafts, obligations or Indebtedness represent
Indebtedness for money borrowed, and, without duplication, Guaranties of any of
the foregoing. For purposes of this definition, interest which is accrued but
not paid on the scheduled due date for such interest shall be deemed
Indebtedness for Money Borrowed.
"Indemnitee" shall have the meaning ascribed thereto in Section 5.11
hereof.
"Interest Expense" shall mean, for any period, all cash interest paid
(including imputed interest with respect to Capitalized Lease Obligations) with
respect to any Indebtedness for Money Borrowed of the Borrower and the
Restricted Subsidiaries on a consolidated basis during such period pursuant to
the terms of such Indebtedness for Money Borrowed, together with all fees paid
in respect of such Indebtedness for Money Borrowed during such period (but
specifically excluding fees paid during previous periods but amortized during
such period in accordance with GAAP), and all cash dividend payments made in
respect of any preferred stock or convertible preferred securities of the
Borrower during such period all as calculated in accordance with GAAP (except as
specifically provided herein).
"Interest Rate Hedge Agreements" shall mean the obligations of any Person
pursuant to any arrangement with any other Person whereby, directly or
indirectly, such Person is entitled to receive from time to time periodic
payments calculated by applying either a floating or a fixed rate of interest on
a stated notional amount in exchange for periodic payments made by such Person
calculated by applying a fixed or a floating rate of interest on the same
notional amount and shall include, without limitation, interest rate swaps,
caps, floors, collars and similar arrangements.
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<PAGE> 19
"Interest Period" shall mean (a) in connection with any Base Rate Advance,
the period beginning on the date such Advance is made and ending on the last day
of the calendar quarter in which such Advance is made, provided, however, that
if a Base Rate Advance is made on the last day of any calendar quarter, it shall
have an Interest Period ending on, and its Payment Date shall be, the last day
of the following calendar quarter, and (b) in connection with any Eurodollar
Advance, the term of such Advance selected by the Borrower or otherwise
determined in accordance with this Agreement, provided, that any Base Rate
Advance or any Eurodollar Advance prepaid pursuant to Section 2.7(a) below shall
have an Interest Period ending on, and its Payment Date shall be, the date of
prepayment.
"Interest Rate Basis" shall mean the Base Rate Basis or the Eurodollar
Basis, as appropriate.
"known to the Borrower" or "to the knowledge of the Borrower" shall mean
known by or reasonably should have been known by the executive officers of the
Borrower (which shall include, without limitation, the chairman/president, the
chief executive officer, the chief financial officer, the chief operating
officer, the treasurer, the secretary and any in-house general counsel).
"Lead Arranger" shall mean TD Securities (USA) Inc.
"License Subs" shall mean the wholly-owned Restricted Subsidiaries of the
Borrower formed to hold the Licenses.
"Licenses" shall mean any radio, telephone, microwave, paging or other
license, authorization, certificate of compliance or convenience, franchise,
approval or permit, granted or issued by the FCC or any other governmental
authority and held by the Borrower or any of the Restricted Subsidiaries, all of
which are listed as of the Agreement Date on Schedule 1 hereto.
"Lien" shall mean, with respect to any property, any mortgage, lien,
pledge, negative pledge or other agreement not to pledge, assignment, charge,
security interest, title retention agreement, levy, execution, seizure,
attachment, garnishment or other encumbrance of any kind in respect of such
property, whether created by statute, contract, the common law or otherwise, and
whether or not choate, vested or perfected.
"Loan Documents" shall mean this Agreement, the Notes, the Security
Documents, all subordination agreements entered into by creditors of the
Borrower or any of the Restricted Subsidiaries with respect to Indebtedness for
Money Borrowed of the Borrower or any of the Restricted Subsidiaries, all legal
opinions or reliance letters issued by counsel to the Borrower or any of the
Restricted Subsidiaries, all fee letters, all Requests for Advance, all Interest
Rate Hedge Agreements between the Borrower or any Restricted Subsidiary, on the
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<PAGE> 20
one hand, and the Administrative Agent and the Banks, or any of them, on the
other hand, and all other documents and agreements executed or delivered in
connection with or contemplated by this Agreement.
"Loans" shall mean, collectively, the amounts advanced by the Banks to the
Borrower under the Commitments, not to exceed the aggregate amount of the
Commitments, and evidenced by the Notes.
"Majority Banks" shall mean Banks the total of whose Commitment Ratios
equals or exceeds fifty-one percent (51%) of the Commitment Ratios of all Banks
entitled to vote hereunder.
"Managing Agents" shall mean, collectively, The Toronto-Dominion Bank,
BankBoston, N.A. and NationsBank, N.A..
"Materially Adverse Effect" shall mean (a) any material adverse effect
upon the business, assets, liabilities, financial condition, results of
operations, properties, or business prospects of the Borrower or any of the
Restricted Subsidiaries, or (b) a material adverse effect upon the binding
nature, validity, or enforceability of this Agreement or any of the Notes, or
upon the ability of the Borrower or any of its Subsidiaries to perform the
payment obligations or other material obligations under this Agreement or any
other Loan Document, or upon the value of the Collateral or upon the rights,
benefits or interests of the Banks in and to the Loans or the rights of the
Administrative Agent and the Banks in the Collateral; in either case, whether
resulting from any single act, omission, situation, status, event or
undertaking, or taken together with other such acts, omissions, situations,
statuses, events or undertakings.
"Maturity Date" shall mean (a) for Loans advanced under the Facility A
Commitment or the Facility B Commitment, December 31, 2004 or as the case may
be, such earlier date as payment of the Obligations shall be due (whether by
acceleration, reduction of the applicable Commitment to zero or otherwise) and
(b) for Loans advanced under the Facility C Commitment, March 31, 2005 or as the
case may be, such earlier date as payment of the obligations shall be due
(whether by acceleration, reduction of the Facility C Commitment to zero or
otherwise).
"Multiemployer Plan" shall mean a multiemployer pension plan as defined in
Section 3(37) of ERISA to which the Borrower, any of its Subsidiaries or any
ERISA Affiliate is or has been required to contribute subsequent to September
25, 1980.
"Necessary Authorizations" shall mean all approvals and licenses from, and
all filings and registrations with, any governmental or other regulatory
authority, including, without limiting the foregoing, the Licenses and all
approvals, licenses, filings and registrations under
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<PAGE> 21
the Communications Act, necessary in order to enable the Borrower and the
Restricted Subsidiaries to own, construct, maintain, and operate paging systems
and to invest in other Persons who own, construct, maintain, and operate paging
systems.
"Net Available Proceeds" from any Asset Disposition by any Person shall
mean cash or Cash Equivalents received (including by way of sale or discounting
of a note, installment receivable or other receivable, but excluding any other
consideration received in the form of assumption by the acquiree of Indebtedness
for Money Borrowed or other obligations relating to such properties or assets or
received in any other noncash form) therefrom by such Person, net of (i) all
legal, title and recording tax expenses, commissions and other fees and expenses
incurred and all federal, state, provincial, foreign and local taxes required to
be accrued as a liability as a consequence of such Asset Disposition, (ii) all
payments made by such Person or its Subsidiaries on any Indebtedness for Money
Borrowed which is secured by the assets subject to such Asset Disposition in
accordance with the terms of any Lien upon or with respect to such assets or
which must by the terms of such Lien, or in order to obtain a necessary consent
to such Asset Disposition or by Applicable Law, be repaid out of the proceeds
from such Asset Disposition, (iii) all distributions and other payments made to
minority interest holders in Subsidiaries of such Person or joint ventures, if
any, as a result of such Asset Disposition and (iv) a reasonable reserve for the
after-tax costs of any indemnification payments (fixed or contingent)
attributable to the seller's indemnities to the purchaser undertaken by the
Borrower or any of its Subsidiaries in connection with such Asset Disposition.
"Net Cash Interest Expense" shall mean for the Borrower and the Restricted
Subsidiaries on a consolidated basis for any period, Interest Expense, minus
interest earned by the Borrower and the Restricted Subsidiaries on investments
as determined in accordance with GAAP.
"Net Income" shall mean, for the Borrower and the Restricted Subsidiaries
on a consolidated basis, for any period, net income determined in accordance
with GAAP.
"Net Purchase Price" shall mean the aggregate fair market value of all
cash or other property, of whatever nature, paid or transferred or to be paid or
transferred by the Borrower or any of the Restricted Subsidiaries, directly or
indirectly, in respect of any Acquisition, including, without limitation, fees
and other transaction costs and all amounts paid in escrow or subject to any
deferral or contingency, but excluding the fair market value of any Capital
Stock of the Borrower issued as part of the purchase price for such Acquisition.
"1995 Indenture" shall mean that certain Indenture dated as of September
27, 1995 between the Borrower and First Union National Bank of Virginia, as
trustee with respect to the Borrower's 10-3/8% Senior Subordinated Notes due
2007.
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<PAGE> 22
"1997 Indenture" shall mean that certain Indenture dated as of October 21,
1997 between the Borrower and First Union National Bank of Virginia, as trustee
with respect to the Borrower's 9-3/4% Senior Subordinated Notes due 2007.
"Notes" shall mean, collectively, the Facility A Notes, the Facility B
Notes, and the Facility C Notes, any other promissory notes issued by the
Borrower to evidence the Loans, and any extensions, renewals or amendments to,
or replacements of, the foregoing.
"Obligations" shall mean all payment and performance obligations of every
kind, nature and description of the Borrower, its Subsidiaries, and any other
obligors to the Banks or the Administrative Agent, or any of them, under this
Agreement and the other Loan Documents (including any interest, fees and other
charges on the Loans or otherwise under the Loan Documents that would accrue but
for the filing of a bankruptcy action with respect to the Borrower or any of its
Subsidiaries, whether or not such claim is allowed in such bankruptcy action and
including Obligations to the Administrative Agent or any of the Banks under any
Interest Rate Hedge Agreements) as they may be amended from time to time, or as
a result of making the Loans, whether such obligations are direct or indirect,
absolute or contingent, due or not due, contractual or tortious, liquidated or
unliquidated, arising by operation of law or otherwise, now existing or
hereafter arising.
"Office Building Acquisition Agreement" shall mean that certain Option and
Purchase Agreement of Sale dated April 14, 1994 between Douglas Jemal and Joyce
Jemal and the Borrower with respect to the acquisition by the Borrower for a
purchase price not to exceed $2,900,000 of a 51% interest in the office complex
located at 6910 Richmond Highway, Alexandria, Virginia 23306, as such agreement
may be amended, modified or supplemented from time to time, together with all
exhibits, schedules and appendices thereto, all of which shall be in form and
substance reasonably satisfactory to the Managing Agents.
"Office Building Acquisition Date" shall mean the date on which the
Borrower acquires the Office Building Assets pursuant to the Office Building
Acquisition Agreement.
"Office Building Assets" shall mean the interest in the office complex
located at 6910 Richmond Highway, Alexandria, Virginia 22306 to be acquired by
the Borrower pursuant to the Office Building Acquisition Agreement.
"Office Building Partnership" shall mean 6910 Richmond Highway Associates,
a Virginia general partnership, or any successor or other entity to which the
Borrower contributes the Office Building Assets in accordance with Section 8(g)
of the Office Building Acquisition Agreement.
"Operating Cash Flow" shall mean, with respect to the Borrower and the
Restricted Subsidiaries on a consolidated basis for any fiscal quarter, the sum
of (a) Net Income for
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<PAGE> 23
such quarter (after eliminating any extraordinary gains and losses, including
gains and losses from the sale of assets, other than sales of pagers and other
products or services in the ordinary course of business, and any deferred tax
benefits), plus (b) to the extent deducted in determining Net Income, the sum of
the following for such period: (i) depreciation and amortization expense, (ii)
Interest Expense plus the amount of fees paid in respect of Indebtedness for
Money Borrowed during prior periods but amortized during such period in
accordance with GAAP, (iii) tax expense, and (iv) other non-cash charges, all as
determined in accordance with GAAP. For purposes of determining the Senior
Leverage Ratio and the Total Leverage Ratio, Operating Cash Flow attributable to
any Acquisition will be included in the foregoing calculation from the first day
of the fiscal quarter during which such Acquisition occurs to the extent that
the calculation of such Operating Cash Flow is based on audited financial
statements of the Person acquired or whose assets are acquired by the Borrower
or any of the Restricted Subsidiaries, as applicable, or other such financial
statements which are satisfactory to the Managing Agents and which are certified
by the chief financial officer of the Borrower to be true, complete and correct
and prepared in accordance with GAAP, provided that for purposes of calculating
Operating Cash Flow attributable to an Acquisition, the Borrower may make pro
forma adjustments acceptable to the Managing Agents to reflect reductions in
costs of the Acquisition effective at or near the time of the Acquisition.
"Payment Date" shall mean the last day of any Interest Period.
"PBGC" shall mean the Pension Benefit Guaranty Corporation, or any
successor thereto.
"Permitted Liens" shall mean, as applied to any Person:
(a) Any Lien in favor of the Administrative Agent or any Bank given
to secure the Obligations;
(b) (i) Liens on real estate or other property for taxes,
assessments, governmental charges or levies not yet delinquent and (ii) Liens
for taxes, assessments, judgments, governmental charges or levies or claims the
non-payment of which is being diligently contested in good faith by appropriate
proceedings and for which adequate reserves have been set aside on such Person's
books, but only so long as no foreclosure, distraint, sale or similar
proceedings have been commenced with respect thereto;
(c) Liens of carriers, warehousemen, mechanics, laborers and
materialmen incurred in the ordinary course of business for sums not yet due or
being diligently contested in good faith, if reserves or appropriate provisions
shall have been made therefor;
(d) Liens incurred in the ordinary course of business in connection
with
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<PAGE> 24
worker's compensation and unemployment insurance;
(e) Restrictions on the transfer of the Licenses or assets of such
Person imposed by any of the Licenses as presently in effect or by the
Communications Act and any regulations thereunder;
(f) Easements, rights-of-way, and other similar encumbrances on the
use of real property which do not materially interfere with the ordinary conduct
of the business of such Person or the use of such property;
(g) Liens reflected by Uniform Commercial Code financing statements
filed in respect of Capitalized Lease Obligations permitted pursuant to Section
7.1(h) hereof and true leases of the Borrower or any of its Subsidiaries;
(h) Purchase money security interests securing Indebtedness
described on Schedule 2 attached hereto and other Indebtedness in an aggregate
principal amount not to exceed $500,000 at any time outstanding; and
(i) Liens securing other Indebtedness in an aggregate principal
amount not to exceed $10,000,000, provided that such Liens do not attach to
assets of such Person which constitute "margin stock," as that term is defined
in Regulation U.
"Person" shall mean an individual, corporation, limited liability company,
association, partnership, joint venture, trust or estate, an unincorporated
organization, a government or any agency or political subdivision thereof, or
any other entity.
"Plan" shall mean an employee benefit plan within the meaning of Section
3(3) of ERISA or any other employee benefit plan maintained for employees of any
Person or any affiliate of such Person.
"Prior Loan Agreement" shall have the meaning ascribed to such term in the
preamble to this Agreement.
"Pro Forma Debt Service" shall mean with respect to the Borrower and the
Restricted Subsidiaries, on a consolidated basis, with respect to the next
succeeding complete twelve (12) month period following the calculation date, and
after giving effect to any Interest Rate Hedge Agreements and Eurodollar
Advances, the amount of all (i) scheduled payments of principal on Indebtedness
for Money Borrowed for such period (including imputed principal payments with
respect to Capitalized Lease Obligations), determined on the basis of the
aggregate amount of Indebtedness for Money Borrowed outstanding as of the date
of calculation and giving effect to any mandatory reductions in the Commitments
and the operation of the other terms of this Agreement (or other instruments or
agreements governing
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<PAGE> 25
Indebtedness for Money Borrowed) during such next succeeding twelve (12) month
period, (ii) cash interest payable (including imputed interest with respect to
Capitalized Lease Obligations) with respect to Indebtedness for Money Borrowed
of such Persons, (iii) fees payable under this Agreement and the other Loan
Documents (but specifically excluding fees paid during previous periods but
amortized during such period in accordance with GAAP), and (iv) other payments
(including fees) payable by such Persons during such period in respect of
Indebtedness for Money Borrowed (other than voluntary prepayments under Section
2.7 hereof). For purposes of this definition, where interest payments for the
twelve (12) month period immediately succeeding the calculation date are not
fixed by way of Interest Rate Hedge Agreements, Eurodollar Advances, or
otherwise for the entire period, interest shall be calculated on such
Indebtedness for Money Borrowed for periods for which interest payments are not
so fixed at the Eurodollar Basis (as determined on the date of calculation and
based on the then current adjustment under Section 2.3(f) hereof) for a
Eurodollar Advance having an Interest Period of twelve (12) months; provided,
however, that if such Eurodollar Basis cannot be determined in the reasonable
opinion of the Administrative Agent, such interest shall be calculated using the
Base Rate Basis as then in effect.
"ProNet Indenture" shall mean that certain Indenture dated as of June 15,
1995 between the Borrower (as successor to ProNet Inc.) and The Bank of New
York, Inc. (as successor to First Interstate Bank of Texas, N.A.), as trustee as
amended prior to the Agreement Date.
"Regulation U" shall mean Regulation U of the Board of Governors of the
Federal Reserve System, as in effect from time to time.
"Reportable Event" shall mean, with respect to any Employee Pension Plan,
an event described in Section 4043(b) of ERISA.
"Request for Advance" shall mean a certificate designated as a "Request
for Advance," signed by an Authorized Signatory of the Borrower requesting an
Advance hereunder, which shall be in substantially the form of Exhibit E
attached hereto, and shall, among other things, (i) specify the Commitment under
which such Advance is to be made, the date of the Advance, which shall be a
Business Day, the amount of the Advance, the type of Advance (Eurodollar or Base
Rate), and, with respect to Eurodollar Advances, the Interest Period selected by
the Borrower, (ii) state that there shall not exist a Default as of the date of
such Advance and after giving effect thereto, and (iii) provide calculations
demonstrating compliance with Sections 7.8, 7.9 and 7.10 hereof, after giving
effect to the proposed Advance, and the Applicable Margin related thereto.
"Restricted Payment" shall mean (a) any direct or indirect distribution,
dividend or other payment to any Person (other than to the Borrower or any
wholly-owned Restricted
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<PAGE> 26
Subsidiary of the Borrower) on account of any general or limited partnership
interest in, or shares of Capital Stock or other securities of, the Borrower or
any of its Subsidiaries (other than dividends payable solely in the Capital
Stock of such Person and stock splits), including, without limitation, any
direct or indirect distribution, dividend or other payment to any Person (other
than to the Borrower or any wholly-owned Restricted Subsidiary of the Borrower)
on account of any warrants or other rights or options to acquire shares of
Capital Stock of the Borrower or any of its Subsidiaries; (b) any payment of
principal of, or interest on, or payment into a sinking fund for the retirement
of, or any defeasance of Subordinated Debt; and (c) any management, consulting
or similar fees, or any interest thereon, payable by the Borrower or any of its
Subsidiaries to any Affiliate.
"Restricted Purchase" shall mean any payment (including, without
limitation, any sinking fund payment, prepayment or installment payment) on
account of the purchase, redemption, defeasance or other acquisition or
retirement of any general or limited partnership interest in, or shares of
Capital Stock of or other securities or Subordinated Debt of the Borrower or any
of the Borrower's Subsidiaries, including, without limitation, any warrants or
other rights or options to acquire shares of Capital Stock of the Borrower or of
any of the Borrower's Subsidiaries or any loan, advance, release or forgiveness
of Indebtedness by the Borrower or any of its Subsidiaries to any partner,
shareholder or Affiliate of any such Person.
"Restricted Subsidiary" shall mean each Subsidiary of the Borrower which
is not an Unrestricted Subsidiary.
"Security Documents" shall mean the Borrower's Pledge Agreements, the
Borrower Security Agreements, the Subsidiary Guaranties, the Subsidiary Pledge
Agreements, the Subsidiary Security Agreements, the Trademark Security
Agreements, any other agreement or instrument providing Collateral for the
Obligations whether now or hereafter in existence, and any filings, instruments,
agreements, and documents related thereto or to this Agreement, and providing
the Administrative Agent, for the benefit of itself and the Banks, with
Collateral for the Obligations.
"Security Interest" shall mean all Liens in favor of the Administrative
Agent, for the benefit of itself and the Banks, created hereunder or under any
of the Security Documents to secure the Obligations.
"Senior Debt" shall mean Total Debt minus Subordinated Debt which is
permitted to be outstanding in accordance with the terms of Section 7.1 hereof.
"Senior Leverage Ratio" shall mean, as of any date, the ratio of (a) the
Senior Debt on such date to (b) Annualized Operating Cash Flow as of the end of
the fiscal quarter being tested or the most recently completed fiscal quarter
for which financial statements are
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<PAGE> 27
required to have been delivered to the Banks pursuant to Section 6.1 or 6.2
hereof, as applicable.
"Series C Preferred Stock" shall mean the Borrower's Series C Preferred
Stock issued to pay a portion of the purchase price of the AT&T Acquisition.
"Subordinated Debt" shall mean the Indebtedness for Money Borrowed of the
Borrower issued pursuant to the 1995 Indenture, the A+ Indenture, the 1997
Indenture, the ProNet Indenture and any other Indebtedness for Money Borrowed of
the Borrower or any of the Restricted Subsidiaries which is expressly
subordinated to the payment of the Obligations.
"Subsidiary" shall mean, as applied to any Person, (a) any corporation of
which more than fifty percent (50%) of the outstanding stock (other than
directors' qualifying shares) having ordinary voting power to elect a majority
of its board of directors, regardless of the existence at the time of a right of
the holders of any class or classes of securities of such corporation to
exercise such voting power by reason of the happening of any contingency, or any
partnership of which more than fifty percent (50%) of the outstanding
partnership interests, is at the time owned directly or indirectly by such
Person, or by one or more Subsidiaries of such Person, or by such Person and one
or more Subsidiaries of such Person, or (b) any other entity which is directly
or indirectly controlled or capable of being controlled by such Person, or by
one or more Subsidiaries of such Person, or by such Person and one or more
Subsidiaries of such Person, except that, other than Beacon Peak Associates and
Beacon Communications Associates, Ltd., the partnerships set forth on Schedule 4
attached hereto shall not constitute Subsidiaries of the Borrower. Beacon Peak
Associates and Beacon Communications Associates, Ltd. shall constitute
Subsidiaries of the Borrower but shall be subject to the provisions set forth in
the first footnote to Schedule 5 attached hereto. The Subsidiaries of the
Borrower as of the Agreement Date are set forth on Schedule 5 attached hereto.
"Subsidiary Guaranties" shall mean, collectively, that certain Amended and
Restated Master Subsidiary Guaranty dated as of September 20, 1996, that certain
First Supplemental Master Subsidiary Guaranty dated as of November 15, 1996, and
that certain Second Supplemental Master Subsidiary Guaranty dated as of December
31, 1997, in favor of the Administrative Agent and the Banks given by each
Restricted Subsidiary of the Borrower, and shall include any similar agreements
substantially in the form of Exhibit K attached hereto.
"Subsidiary Pledge Agreements" shall mean those certain Subsidiary Pledge
Agreements between each Restricted Subsidiary of the Borrower having one or more
of its own Subsidiaries, on the one hand, and the Administrative Agent, on the
other hand, and shall include that certain Master Subsidiary Pledge Agreement
dated as of December 31,
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<PAGE> 28
1997, and any similar agreements substantially in the form of Exhibit L attached
hereto.
"Subsidiary Security Agreements" shall mean, collectively, that certain
Amended and Restated Master Subsidiary Security Agreement dated as of September
20, 1996, that certain First Supplemental Master Subsidiary Security Agreement
dated as of November 15, 1996, and that certain Second Supplemental Master
Subsidiary Security Agreement dated as of December 31, 1997, among each of the
Restricted Subsidiaries and the Administrative Agent, and shall include any
similar agreements substantially in the form of Exhibit J attached hereto.
"Syndication Agent" shall mean BancBoston Robertson Stephens Inc.
"Tracking Asset Disposition" shall mean the Borrower's disposition of all
the assets of the Tracking Subsidiary pursuant to the Tracking Asset Purchase
Agreement
"Tracking Asset Purchase Agreement" shall mean that Asset Purchase
Agreement negotiated to effect the Tracking Asset Disposition.
"Tracking Subsidiary" shall mean Electronic Tracking Systems, Inc., a
wholly-owned Subsidiary of the Borrower.
"Total Debt" shall mean with respect to the Borrower and the Restricted
Subsidiaries on a consolidated basis, as of any date, determined in accordance
with GAAP, the difference between (a) the aggregate amount of Indebtedness for
Money Borrowed, minus (b) the aggregate amount of cash or Cash Equivalents then
held by the Borrower and the Restricted Subsidiaries.
"Total Leverage Ratio" shall mean, as of any date, the ratio of (a) Total
Debt on such date to (b) Annualized Operating Cash Flow as of the end of the
fiscal quarter being tested or the most recently completed fiscal quarter for
which financial statements are required to have been delivered to the Banks
pursuant to Section 6.1 or 6.2 hereof, as applicable.
"Total Sources" shall mean, with respect to the Borrower and the
Restricted Subsidiaries on a consolidated basis for the most recently completed
fiscal quarter, the sum of (a) Operating Cash Flow; (b) the amount of equity
contributed to the Borrower in cash during such period; (c) the amount of any
Net Available Proceeds from any Asset Dispositions during such period; (d) the
amount, if greater than or equal to zero, by which Indebtedness for Money
Borrowed outstanding as at the end of such period exceeds the amount of
Indebtedness for Money Borrowed outstanding as at the end of the preceding such
period; (e) the aggregate amount of additional Advances the Borrower would then
be permitted to borrow under the Commitments and remain in compliance with
Sections 7.8, 7.9 and 7.10 hereof; and (f) cash and Cash Equivalents on hand as
of the beginning of such
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<PAGE> 29
period.
"Total Uses" shall mean, with respect to the Borrower and the Restricted
Subsidiaries on a consolidated basis for the most recently completed fiscal
quarter, the sum of (a) the amount, if greater than or equal to zero, by which
Indebtedness for Money Borrowed outstanding as at the end of the preceding such
period exceeds the amount of Indebtedness for Money Borrowed outstanding as at
the end of such period; (b) the amount of Net Cash Interest Expense for such
period; (c) the amount of Capital Expenditures made during such period; (d) cash
taxes paid during such period; (e) the Net Purchase Price of any Acquisitions
made during such period; and (f) the amount of any Restricted Payments and
Restricted Purchases made during such period.
"Trademark Security Agreements" shall mean, collectively, that certain
Amended and Restated Borrower Trademark Security Agreement dated as of September
20, 1996, and that certain Trademark Agreement dated as of December 31, 1997,
and any other similar agreement substantially in the form of Exhibit F attached
hereto.
"Transponder Lease Agreement" shall mean any agreement by and between the
Borrower or any of the Restricted Subsidiaries and any other Person for the
license, lease or other agreement to use telecommunications satellites in the
operation of the business of the Borrower or such Subsidiaries and any other
agreement related thereto.
"Unrestricted Subsidiary" shall mean such other Subsidiaries of the
Borrower as have been designated as "Unrestricted Subsidiaries" by the Borrower
with the prior written consent of the Majority Banks.
"Use of Proceeds Letters" shall mean those certain Use of Proceeds
Letters, substantially in the form of Exhibit G attached hereto, to be delivered
to the Administrative Agent and the Banks on the date of any Advance hereunder.
Each definition of an agreement in this Article 1 shall include such
agreement as modified, amended or supplemented from time to time in accordance
herewith.
ARTICLE 2 Credit Facilities
Section 2.1 Commitments
(a) Facility A Commitment. The Banks agree, severally, in accordance
with their respective Commitment Ratios, and not jointly, upon the terms and
subject to the
- 30 -
<PAGE> 30
conditions of this Agreement, to lend to the Borrower, prior to
the Maturity Date, an amount not to exceed at any one time outstanding, in the
aggregate, the Facility A Commitment. The Borrower hereby acknowledges that all
"Obligations" in respect of "Advances" outstanding on the Agreement Date under
the "Facility A Commitment" (as such terms are defined in the Prior Loan
Agreement) shall be deemed to have been made to the Borrower as Advances under
the Facility A Commitment hereunder and shall constitute a portion of the
Obligations. Subject to the terms and conditions hereof, Advances under the
Facility A Commitment may be repaid and reborrowed from time to time on a
revolving basis.
(b) Facility B Commitment. The Banks which issued a "Facility B
Commitment" under and as defined in the Prior Loan Agreement have previously
lent to the Borrower the amount in the aggregate of $125,000,000. The Borrower
hereby acknowledges that all "Obligations" in respect of "Advances" outstanding
under the "Facility B Commitment" (as such terms are defined in the Prior Loan
Agreement) shall be deemed to have been made to the Borrower as Advances of the
Facility B Commitment hereunder and shall constitute a portion of the
Obligations. Subject to the terms and conditions hereof, Advances under the
Facility B Commitment may be repaid and reborrowed to effect a change in the
Interest Rate Basis or Interest Periods relating thereto; provided, however,
there shall be no increase in the principal amount outstanding under the
Facility B Commitment.
(c ) Facility C Commitment. The Banks agree, severally, in
accordance with their respective Commitment Ratios, and not jointly, upon the
terms and subject to the conditions of this Agreement, to lend to the Borrower,
on the Agreement Date, an amount not to exceed, in the aggregate, the Facility C
Commitment. Subject to the terms and conditions hereof, Advances under the
Facility C Commitment may be repaid and reborrowed to effect a change in the
Interest Rate Basis or Interest Periods relating thereto; provided, however
there shall be no increase in the principal amount outstanding under the
Facility C Commitment after the Agreement Date.
Section 2.2 Manner of Borrowing and Disbursement.
(a) Choice of Interest Rate, Etc. Any Advance shall, at the option
of the Borrower, be made as a Base Rate Advance or a Eurodollar Advance;
provided, however, that at such time as there shall have occurred and be
continuing a Default hereunder, the Borrower shall not have the right to receive
a Eurodollar Advance. Any notice given to the Administrative Agent in connection
with a requested Advance hereunder shall be given to the Administrative Agent
prior to 11:00 a.m. (New York time) in order for such Business Day to count
toward the minimum number of Business Days required.
(b) Base Rate Advances.
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<PAGE> 31
(i) Advances. The Borrower shall give the Administrative Agent
irrevocable prior written notice prior to 11:00 a.m. (New York time) on
the date of any requested Base Rate Advance in the form of a Request for
Advance, or telephonic notice followed immediately by a Request for
Advance; provided, however, that the Borrower's failure to confirm any
telephonic notice with a Request for Advance shall not invalidate any
notice so given if acted upon by the Administrative Agent. Upon receipt of
such notice from the Borrower, the Administrative Agent shall promptly
notify each Bank by telephone or telecopy of the contents thereof.
(ii) Repayments and Reborrowings. The Borrower may repay or
prepay a Base Rate Advance without regard to its Payment Date and (A) upon
irrevocable prior written notice prior to 11:00 a.m. (New York time) on
the date of any requested repayment and reborrowing, reborrow all or a
portion of the principal amount thereof as a Base Rate Advance, (B) upon
at least three (3) Business Days' irrevocable prior written notice,
reborrow all or a portion of the principal thereof as one or more
Eurodollar Advances, or (C) not reborrow all or any portion of such Base
Rate Advance. On the date indicated by the Borrower, such Base Rate
Advance shall be so repaid and, as applicable, reborrowed. The failure to
give timely notice hereunder with respect to the Payment Date of any Base
Rate Advance shall be deemed a request for a Base Rate Advance.
(c) Eurodollar Advances.
(i) Advances. Upon request, the Administrative Agent, whose
determination shall be conclusive, shall determine the available
Eurodollar Bases and shall notify the Borrower of such Eurodollar Bases.
The Borrower shall give the Administrative Agent in the case of Eurodollar
Advances at least three (3) Business Days' irrevocable prior written
notice in the form of a Request for Advance, or telephonic notice followed
immediately by a Request for Advance; provided, however, that the
Borrower's failure to confirm any telephonic notice with a Request for
Advance shall not invalidate any notice so given if acted upon by the
Administrative Agent. Upon receipt of such notice from the Borrower, the
Administrative Agent shall promptly notify each Bank by telephone or
telecopy of the contents thereof.
(ii) Repayments and Reborrowings. At least three (3) Business
Days prior to the Payment Date for each Eurodollar Advance, the Borrower
shall give the Administrative Agent written notice specifying whether all
or a portion of such Eurodollar Advance (A) is to be repaid and then
reborrowed in whole or in part as one or more Eurodollar Advances, (B) is
to be repaid and then reborrowed in whole or in part as a Base Rate
Advance, or (C) is to be repaid and not reborrowed. The failure to give
such notice shall preclude the Borrower from reborrowing such Advance as a
- 32 -
<PAGE> 32
Eurodollar Advance on its Payment Date and shall be deemed a request for a
Base Rate Advance. Upon such Payment Date such Eurodollar Advance will,
subject to the provisions hereof, be so repaid and, as applicable,
reborrowed.
(d) Notification of Banks. Upon receipt of a Request for Advance, or
a notice from the Borrower with respect to any outstanding Advance prior to the
Payment Date for such Advance, the Administrative Agent shall promptly notify
each Bank by telephone or telecopy of the contents thereof and the amount of
such Bank's portion of the Advance. Each Bank shall, not later than 12:00 noon
(New York time) on the date of borrowing specified in such notice, make
available to the Administrative Agent at the Administrative Agent's Office, or
at such account as the Administrative Agent shall designate, the amount of its
portion of any Advance which represents an additional borrowing hereunder in
immediately available funds.
(e) Disbursement.
(i) Prior to 2:00 p.m. (New York time) on the date of an
Advance hereunder, the Administrative Agent shall, subject to the
satisfaction of the conditions set forth in Article 3 hereof, disburse the
amounts made available to the Administrative Agent by the Banks in like
funds by (a) transferring the amounts so made available by wire transfer
pursuant to the Borrower's instructions, or (b) in the absence of such
instructions, crediting the amounts so made available to the account of
the Borrower maintained with the Administrative Agent.
(ii) Unless the Administrative Agent shall have received
notice from a Bank prior to 12:00 noon (New York time) on the date of any
Advance that such Bank will not make available to the Administrative Agent
such Bank's ratable portion of such Advance, the Administrative Agent may
assume that such Bank has made or will make such portion available to the
Administrative Agent on the date of such Advance and the Administrative
Agent may in its sole discretion and in reliance upon such assumption,
make available to the Borrower on such date a corresponding amount. If and
to the extent the Bank does not make such ratable portion available to the
Administrative Agent, such Bank agrees to repay to the Administrative
Agent on demand such corresponding amount together with interest thereon,
for each day from the date such amount is made available to the Borrower
until the date such amount is repaid to the Administrative Agent, at the
Federal Funds Rate.
(iii) If such Bank shall repay to the Administrative Agent
such corresponding amount, such amount so repaid shall constitute such
Bank's portion of the applicable Advance for purposes of this Agreement.
If such Bank does not repay such corresponding amount immediately upon the
Administrative Agent's demand therefor, the Administrative Agent shall
notify the Borrower and the Borrower shall
- 33 -
<PAGE> 33
immediately pay such corresponding amount to the Administrative Agent,
with interest at the Federal Funds Rate. The failure of any Bank to fund
its portion of any Advance shall not relieve any other Bank of its
obligation, if any, hereunder to fund its respective portion of the
Advance on the date of such borrowing, but no Bank shall be responsible
for any such failure of any other Bank.
(iv) In the event that, at any time when the Borrower is not
in Default and has otherwise satisfied each of the conditions in Section
3.2 hereof, a Bank for any reason fails or refuses to fund its portion of
such Advance, then, until such time as such Bank has funded its portion of
such Advance (which late funding shall not absolve such Bank from any
liability it may have to the Borrower), or all other Banks have received
payment in full from the Borrower (whether by repayment or prepayment) or
otherwise of the principal and interest due in respect of such Advance,
such non-funding Bank shall not have the right (A) to vote regarding any
issue on which voting is required or advisable under this Agreement or any
other Loan Document, and such Bank's portion of the Loans shall not be
counted as outstanding for purposes of determining "Majority Banks"
hereunder, or (B) to receive payments of principal, interest or fees from
the Borrower, the Administrative Agent or the other Banks in respect of
its portion of the Loans.
Section 2.3 Interest.
(a) On Base Rate Advances. Interest on each Base Rate Advance shall
be computed on the basis of a year of 365/366 days for the actual number of days
elapsed and shall be payable at the Base Rate Basis for such Advance, in arrears
on the applicable Payment Date. Interest on Base Rate Advances then outstanding
shall also be due and payable on the Maturity Date.
(b) On Eurodollar Advances. Interest on each Eurodollar Advance
shall be computed on the basis of a 360-day year for the actual number of days
elapsed and shall be payable at the Eurodollar Basis for such Advance, in
arrears on the applicable Payment Date, and, in addition, if the Interest Period
for a Eurodollar Advance exceeds three (3) months, interest on such Eurodollar
Advance shall also be due and payable in arrears on every three-month
anniversary of the beginning of such Interest Period. Interest on Eurodollar
Advances then outstanding shall also be due and payable on the Maturity Date.
(c) Interest if no Notice of Selection of Interest Rate Basis. If
the Borrower fails to give the Administrative Agent timely notice of its
selection of a Eurodollar Basis, or if for any reason a determination of a
Eurodollar Basis for any Advance is not timely concluded, the Base Rate Basis
shall apply to such Advance.
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<PAGE> 34
(d) Interest Upon Default. Immediately upon the occurrence of an
Event of Default hereunder, the outstanding Obligations (to the extent permitted
by Applicable Law) shall bear interest at the Default Rate. Such interest shall
be payable on demand by the Majority Banks and shall accrue until the earlier of
(i) waiver or cure of the applicable Event of Default, (ii) agreement by the
Majority Banks (or, if applicable to the underlying Event of Default, all of the
Banks) to rescind the charging of interest at the Default Rate, or (iii) payment
in full of the Obligations.
(e) Eurodollar Rate Contracts. At no time may the number of
outstanding Eurodollar Advances exceed eight (8).
(f) Applicable Margin. The Applicable Margin shall be determined by
the Administrative Agent with respect to any Advance based upon the Total
Leverage Ratio as of the end of the fiscal quarter most recently ended,
effective as of the fifth (5th) Business Day after the financial statements
referred to in Section 6.1 or 6.2 hereof, as the case may be, are furnished to
the Administrative Agent and each Bank for such fiscal quarter, as follows:
(i) For Loans advanced under the Facility A Commitment or the Facility B
Commitment:
<TABLE>
<CAPTION>
Total Base Rate Advance Eurodollar Advance
Leverage Ratio Applicable Margin Applicable Margin
-------------- ----------------- -----------------
<S> <C> <C> <C>
A. Greater than 5.50:1 1.375% 2.500%
B. Greater than 5.00:1, 1.250% 2.375%
but less than or
equal to 5.50:1
C. Greater than 4.50:1, 1.000% 2.125%
but less than or
equal to 5.00:1
D. Greater than 4.00:1, 0.750% 1.875%
but less than or
equal to 4.50:1
E. Greater than 3.50:1, 0.500% 1.625%
but less than or
equal to 4.00:1
F. Greater than 3.00:1, 0.250% 1.375%
but less than or
equal to 3.50:1
G. Greater than 2.50:1, 0.125% 1.250%
but less than or
equal to 3.00:1
</TABLE>
- 35 -
<PAGE> 35
<TABLE>
<S> <C> <C> <C>
H. Less than or equal to 0.000% 0.875%
2.50:1
</TABLE>
(ii) For Loans advanced under the Facility C Commitment:
<TABLE>
<CAPTION>
Total Base Rate Advance Eurodollar Advance
Leverage Ratio Applicable Margin Applicable Margin
-------------- ----------------- -----------------
<S> <C> <C> <C>
A. Greater than 5.50:1 2.00% 3.00%
B. Greater than 4.50:1, 1.75% 2.75%
but less than or
equal to 5.50:1
C. Less than or equal to 1.50% 2.50%
4.50:1
</TABLE>
Notwithstanding the foregoing, if the Borrower shall fail
timely to deliver the Administrative Agent the financial statements required for
the calculation of the Total Leverage Ratio for any fiscal quarter, then
commencing with the fifth (5th) Business Day after the date such financial
statements were due and continuing through the fifth (5th) Business Day
following the date of delivery thereof, the Total Leverage Ratio for such period
shall be conclusively presumed to be, and the Applicable Margin shall be
calculated based upon, the Total Leverage Ratio which is one level greater than
the Total Leverage Ratio in effect for the immediately preceding fiscal quarter
for which financial statements were delivered or were due to be delivered,
provided that such Total Leverage Ratio for any such period shall be
recalculated upon delivery to the Administrative Agent of the delinquent
financial statements and an appropriate adjustment shall be made by the
Administrative Agent to the Applicable Margin, based upon the Total Leverage
Ratio reflected in the delinquent financial statements, retroactive to the first
day for which the presumed Total Leverage Ratio was applied.
Section 2.4 Commitment Fees.
(a) The Borrower agrees to pay each of the Banks, in accordance with
their respective Commitment Ratios, a commitment fee on the aggregate unborrowed
balance of the Facility A Commitment for each day from the Agreement Date until
the Maturity Date (i) at all times during which the Total Leverage Ratio is
greater than or equal to 4.50:1, at the rate of three-eighths of one percent
(3/8%) per annum, and (ii) at all times during which the Total Leverage Ratio is
less than 4.50:1, at the rate of one-quarter of one percent (1/4%) per annum.
(b) Such commitment fees shall be computed on the basis of a year of
365/366 days for the actual number of days elapsed, shall be payable quarterly
in arrears on
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<PAGE> 36
the last day of each calendar quarter, and shall be fully earned when due and
non-refundable when paid. A final payment of all commitment fees then payable
shall also be due and payable on the Maturity Date.
Section 2.5 Mandatory Commitment Reductions.
(a) Scheduled Reductions in Facility A Commitment. Commencing March
31, 2000 and at the end of each calendar quarter thereafter, the Facility A
Commitment shall be automatically and permanently reduced by an amount equal to
the percentage of the Facility A Commitment as in effect on the Agreement Date,
as set forth below:
<TABLE>
<CAPTION>
Amount of
Dates of Facility A Commitment Reductions Each Reduction
----------------------------------------- --------------
<S> <C>
March 31, 2000, June 30, 2000,
September 30, 2000 and December 31, 2000 2.500%
March 31, 2001, June 30, 2001,
September 30, 2001 and December 31, 2001 3.750%
March 31, 2002, June 30, 2002,
September 30, 2002 and December 31, 2002 5.000%
March 31, 2003, June 30, 2003,
September 30, 2003 and December 31, 2003 6.250%
March 31, 2004, June 30, 2004,
September 30, 2004 and December 31, 2004 7.500%
</TABLE>
(b) Excess Cash Flow Recapture. Commencing on March 31, 2000 and on
each March 31st and September 30th occurring thereafter during the term of this
Agreement, the Facility A Commitment shall be automatically and permanently
reduced by an amount equal to fifty percent (50%) of Excess Cash Flow,
determined for the two (2) consecutive fiscal quarters then ended.
(c) Reductions in Facility B Commitment and Facility C Commitment
from Subordinated Debt Proceeds. The Facility B Commitment and the Facility C
Commitment shall be automatically and permanently reduced, pro rata between the
Facility B Commitment and the Facility C Commitment, in an amount equal to the
aggregate amount of any Subordinated Debt (net of reasonable and customary
transaction costs) issued by the
- 37 -
<PAGE> 37
Borrower or any of its Restricted Subsidiaries on or after the Agreement Date
immediately upon the issuance thereof.
The Borrower shall make a repayment of the Loans outstanding under the
applicable Commitment, together with accrued interest thereon, on or before the
effective date of each reduction in such Commitment under this Section 2.5, such
that the aggregate principal amount of the Loans outstanding under such
Commitment at no time exceeds such Commitment as so reduced. Any remaining
unpaid principal and interest under the Commitments shall be due and payable in
full on the Maturity Date, and the Commitments shall thereupon terminate to the
extent not previously terminated.
Section 2.6 Voluntary Commitment Reductions. The Borrower shall have
the right, at any time and from time to time after the Agreement Date, upon at
least three (3) Business Days' prior written notice to the Administrative Agent,
without premium or penalty, to cancel or reduce permanently all or a portion of
the Facility A Commitment on the basis of the respective Commitment Ratios of
the Banks applicable to the Facility A Commitment; provided, however, that any
such partial reduction shall be made in an amount not less than $5,000,000 and
in integral multiples of $1,000,000. As of the date of cancellation or reduction
set forth in such notice, the Facility A Commitment shall be permanently reduced
to the amount stated in the Borrower's notice for all purposes herein, and the
Borrower shall pay to the Administrative Agent for the Banks the amount
necessary to reduce the principal amount of the Loans then outstanding under
Facility A Commitment to not more than the amount of Facility A Commitment as so
reduced, together with accrued interest on the amount so prepaid and commitment
fees accrued through the date of the reduction with respect to the amount
reduced.
Section 2.7 Prepayments and Repayments.
(a) Prepayment. The principal amount of any Base Rate Advance may be
prepaid in full or ratably in part at any time, without penalty and without
regard to the Payment Date for such Advance. Eurodollar Advances may be prepaid
prior to the applicable Payment Date, upon three (3) Business Days' prior
written notice to the Administrative Agent, provided that the Borrower shall
reimburse the Banks and the Administrative Agent, on the earlier of demand by
the applicable Bank or the Maturity Date, for any loss or out-of-pocket expense
incurred by any Bank or the Administrative Agent in connection with such
prepayment, as set forth in Section 2.10 hereof. Any prepayment hereunder shall
be in amounts of not less than $1,000,000 and in integral multiples thereof.
Amounts prepaid pursuant to this Section may be reborrowed, subject to the terms
and conditions hereof. Prepayments of Advances under the Facility B Commitment
and the Facility C Commitment shall be applied to amounts outstanding thereunder
in inverse order
- 38 -
<PAGE> 38
of maturity. Amounts prepaid under the Facility A Commitment pursuant to this
Section may be reborrowed, subject to the terms and conditions hereof.
(b) Repayments.
(i) Loans in Excess of Commitments. If, at any time, the amount
of the Loans then outstanding under any Commitment shall exceed the
applicable Commitment, the Borrower shall, on such date and subject to
Section 2.10 hereof, make a repayment of the principal amount of the Loans
in an amount equal to such excess, together with any accrued interest and
fees with respect thereto.
(ii) Scheduled Repayments under Facility B Commitment. Commencing
March 31, 2000, the principal balance then outstanding under the Facility
B Commitment shall be amortized in quarterly installments equal to the
percentage of the principal balance outstanding under the Facility B
Commitment on the Facility B Commitment Termination Date set forth below
on the dates set forth below:
<TABLE>
<CAPTION>
Repayment Dates Percentage
--------------- ----------
<S> <C>
March 31, 2000, June 30, 2000,
September 30, 2000 and December 31, 2000 2.500%
March 31, 2001, June 30, 2001,
September 30, 2001 and December 31, 2001 3.750%
March 31, 2002, June 30, 2002,
September 30, 2002 and December 31, 2002 5.000%
March 31, 2003, June 30, 2003,
September 30, 2003 and December 31, 2003 6.250%
March 31, 2004, June 30, 2004,
September 30, 2004 and December 31, 2004 7.500%
</TABLE>
(iii) Scheduled Repayments under Facility C Commitment. Commencing
March 31, 2000, the principal balance then outstanding under the Facility
C Commitment shall be amortized in quarterly installments equal to the
percentage set forth on the dates set forth below:
- 39 -
<PAGE> 39
<TABLE>
<CAPTION>
Repayment Dates Percentage
--------------- ----------
<S> <C>
March 31, 2000, June 30, 2000,
September 30, 2000 and December 31, 2000 0.250%
March 31, 2001, June 30, 2001,
September 30, 2001 and December 31, 2001 0.250%
March 31, 2002, June 30, 2002,
September 30, 2002 and December 31, 2002 0.250%
March 31, 2003, June 30, 2003,
September 30, 2003 and December 31, 2003 0.250%
March 31, 2004, June 30, 2004,
September 30, 2004 and December 31, 2004 0.250%
January 31, 2005 47.500%
March 31, 2005 47.500%
</TABLE>
(iv) Equity Proceeds. The Borrower shall repay Loans outstanding
under the Facility A Commitment, with the proceeds of any equity issued by
the Borrower on or after the Agreement Date, net of reasonable and
customary transaction costs.
(v) Asset Sale Proceeds. The Borrower shall repay the Loans
outstanding under the Facility B Commitment and the Facility C Commitment
as set forth in Section 7.4(a) hereof, pro rata between such Commitments.
Any such payments shall be applied to Loans outstanding thereunder in
inverse order of maturity.
(vi) Maturity Date. In addition to the foregoing, a final payment
of all Obligations then outstanding shall be due and payable on the
Maturity Date.
Section 2.8 Notes; Loan Accounts.
(a) The Loans shall be repayable in accordance with the terms and
provisions set forth herein and shall be evidenced by the Notes. One Facility A
Note, one Facility B Note and one Facility C Note shall be payable to the order
of each Bank for such Commitment, in accordance with such Bank's respective
Commitment Ratio for the applicable Commitment. The Notes shall be issued by the
Borrower to the Banks and shall be duly executed and delivered by one or more
Authorized Signatories.
- 40 -
<PAGE> 40
(b) Each Bank may open and maintain on its books in the name of the
Borrower a loan account with respect to its portion of the Loans and interest
thereon. Each Bank which opens such a loan account shall debit such loan account
for the principal amount of its portion of each Advance made by it and accrued
interest thereon, and shall credit such loan account for each payment on account
of principal of or interest on its Loans. The records of a Bank with respect to
the loan account maintained by it shall be prima facie evidence of its portion
of the Loans and accrued interest thereon absent manifest error, but the failure
of any Bank to make any such notations or any error or mistake in such notations
shall not affect the Borrower's repayment obligations with respect to such
Loans.
Section 2.9 Manner of Payment.
(a) Each payment (including any prepayment) by the Borrower on
account of the principal of or interest on the Loans, commitment fees and any
other amount owed to the Banks or the Administrative Agent or any of them under
this Agreement or the Notes shall be made not later than 1:00 p.m. (New York
time) on the date specified for payment under this Agreement to the
Administrative Agent at the Administrative Agent's Office, for the account of
the Banks or the Administrative Agent, as the case may be, in lawful money of
the United States of America in immediately available funds. Any payment
received by the Administrative Agent after 1:00 p.m. (New York time) shall be
deemed received on the next Business Day. Receipt by the Administrative Agent of
any payment intended for any Bank or Banks hereunder prior to 1:00 p.m. (New
York time) on any Business Day shall be deemed to constitute receipt by such
Bank or Banks on such Business Day. In the case of a payment for the account of
a Bank, the Administrative Agent will promptly thereafter distribute the amount
so received in like funds to such Bank. If the Administrative Agent shall not
have received any payment from the Borrower as and when due, the Administrative
Agent will promptly notify the Banks accordingly. In the event that the
Administrative Agent shall fail to make distribution to any Bank as required
under this Section 2.9, the Administrative Agent agrees to pay such Bank
interest from the date such payment was due until paid at the Federal Funds
Rate.
(b) The Borrower agrees to pay principal, interest, fees and all
other amounts due hereunder or under the Notes without set-off or counterclaim
or any deduction whatsoever and free and clear of all taxes, levies and
withholding. If the Borrower is required by Applicable Law to deduct any taxes
from or in respect of any sum payable to the Administrative Agent or any Bank
hereunder, under any Note or under any other Loan Document: (i) the sum payable
hereunder or thereunder, as applicable, shall be increased to the extent
necessary to provide that, after making all required deductions (including
deductions applicable to additional sums payable under this Section 2.9(b)), the
Administrative Agent or such Bank, as applicable, receives an amount equal to
the sum it would have received had no such deductions been made; (ii) the
Borrower shall make such deductions from such sums payable hereunder or
thereunder, as applicable, and pay the
- 41 -
<PAGE> 41
amount so deducted to the relevant taxing authority as required by Applicable
Law; and (iii) the Borrower shall provide the Administrative Agent or such Bank,
as applicable, with evidence satisfactory to the Administrative Agent or such
Bank, as applicable, that such deducted amounts have been paid to the relevant
taxing authority.
(c) Prior to the declaration of an Event of Default under Section
8.2 hereof, if some but less than all amounts due from the Borrower are received
by the Administrative Agent with respect to the Obligations, the Administrative
Agent shall distribute such amounts in the following order of priority, all in
accordance where applicable with the respective Commitment Ratios of the Banks
for the applicable Commitment: (i) to the payment of any fees or expenses then
due and payable to the Administrative Agent and the Banks, or any of them; (ii)
to the payment of interest then due and payable on the Loans; (iii) to the
payment of all other amounts not otherwise referred to in this Section 2.9(c)
then due and payable to the Administrative Agent and the Banks, or any of them,
hereunder or under the Notes or any other Loan Document; (iv) to the payment of
principal then due and payable on the Loans made under the Facility B Commitment
and the Facility C Commitment, pro rata between the Facility B Commitment and
the Facility C Commitment on the basis of the respective Commitment Ratios of
the Banks applicable to the particular Facility B Commitment and Facility C
Commitment; and (v) to the payment of principal then due and payable on the
Loans made under the Facility A Commitment.
(d) Subject to any contrary provisions in the definition of Interest
Period, if any payment under this Agreement or any of the other Loan Documents
is specified to be made on a day which is not a Business Day, it shall be made
on the next Business Day, and such extension of time shall in such case be
included in computing interest and fees, if any, in connection with such
payment.
Section 2.10 Reimbursement.
(a) Whenever any Bank shall sustain or incur any losses or
out-of-pocket expenses in connection with (i) failure by the Borrower to borrow
any Eurodollar Advance after having given notice of its intention to borrow in
accordance with Section 2.2 hereof (whether by reason of the Borrower's election
not to proceed or the non-fulfillment of any of the conditions set forth in
Article 3), or (ii) prepayment (or failure to prepay after giving notice
thereof) of any Eurodollar Advance in whole or in part for any reason, the
Borrower agrees to pay to such Bank, upon the earlier of such Bank's demand or
the Maturity Date, an amount sufficient to compensate such Bank for all such
losses and out-of-pocket expenses other than any lost margin on the Loans. Such
Bank's good faith determination of the amount of such losses or out-of-pocket
expenses, as set forth in writing and accompanied by calculations in reasonable
detail demonstrating the basis for its demand, shall be conclusively correct
absent manifest error.
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(b) Losses subject to reimbursement hereunder shall include, without
limiting the generality of the foregoing, expenses incurred by any Bank or any
participant of such Bank permitted hereunder in connection with the
re-employment of funds prepaid, paid, repaid, not borrowed, or not paid, as the
case may be, and will be payable as a result of acceleration of the Obligations.
Section 2.11 Pro Rata Treatment.
(a) Advances. Each Advance from the Banks under any Commitment shall
be made pro rata on the basis of the respective Commitment Ratios of the Banks
applicable to the particular Commitment.
(b) Payments. Except as provided in Section 2.2(e) and Article 10
hereof, each payment and prepayment of principal of the Loans and each payment
of interest on the Loans, shall be made to the Banks pro rata on the basis of
their respective unpaid principal amounts outstanding under the Notes
immediately prior to such payment or prepayment. If any Bank shall obtain any
payment (whether involuntary, through the exercise of any right of set-off, or
otherwise) on account of the Loans in excess of its ratable share of the Loans
under its Commitment Ratio, such Bank shall forthwith purchase from the other
Banks such participations in the portion of the Loans made by them as shall be
necessary to cause such purchasing Bank to share the excess payment ratably with
each of them; provided, however, that if all or any portion of such excess
payment is thereafter recovered from such purchasing Bank, such purchase from
each Bank shall be rescinded and such Bank shall repay to the purchasing Bank
the purchase price to the extent of such recovery. The Borrower agrees that any
Bank so purchasing a participation from another Bank pursuant to this Section
2.11(b) may, to the fullest extent permitted by law, exercise all its rights of
payment (including the right of set-off) with respect to such participation as
fully as if such Bank were the direct creditor of the Borrower in the amount of
such participation.
Section 2.12 Capital Adequacy. If after the date hereof, the adoption of
any Applicable Law regarding the capital adequacy of banks or bank holding
companies, or any change in Applicable Law (whether adopted before or after the
Agreement Date) or any change in the interpretation or administration thereof by
any governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by such Bank with any
directive regarding capital adequacy (whether or not having the force of law) of
any such governmental authority, central bank or comparable agency, has or would
have the effect of reducing the rate of return on any Bank's or any Bank's
holding company's capital as a consequence of its obligations hereunder with
respect to the Loans and the Commitments to a level below that which it could
have achieved but for such adoption, change or compliance (taking into
consideration such Bank's policies with respect to capital adequacy immediately
before such adoption, change or compliance and assuming that such Bank's capital
was fully utilized
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<PAGE> 43
prior to such adoption, change or compliance) by an amount reasonably deemed by
such Bank to be material, then, upon the earlier of demand by such Bank or the
Maturity Date, the Borrower shall promptly pay to such Bank such additional
amounts as shall be sufficient to compensate such Bank for such reduced return,
together with interest on such amount from the fourth (4th) day after the date
of demand or the Maturity Date, as applicable, until payment in full thereof at
the Default Rate. A certificate of such Bank setting forth the amount to be paid
to such Bank by the Borrower as a result of any event referred to in this
paragraph and supporting calculations in reasonable detail shall be
presumptively correct absent manifest error.
Section 2.13 Bank Tax Forms. On or prior to the Agreement Date and on or
prior to the first Business Day of each calendar year thereafter, to the extent
available under Applicable Law, each Bank which is organized in a jurisdiction
other than the United States shall provide each of the Administrative Agent and
the Borrower with a properly executed original of Forms 4224 or 1001 (or any
successor form) prescribed by the Internal Revenue Service or other documents
satisfactory to the Borrower and the Administrative Agent, and a properly
executed Internal Revenue Service Form W-8 or W-9, as the case may be,
certifying (i) as to such Bank's status for purposes of determining exemption
from United States withholding taxes with respect to all payments to be made to
such Bank hereunder and under the Notes or (ii) that all payments to be made to
such Bank hereunder and under the Notes are subject to such taxes at a rate
reduced to zero by an applicable tax treaty. Each such Bank agrees to provide
the Administrative Agent and the Borrower with new forms prescribed by the
Internal Revenue Service upon the expiration or obsolescence of any previously
delivered form, or after the occurrence of any event requiring a change in the
most recent forms delivered by it to the Administrative Agent and the Borrower,
to the extent available under Applicable Law.
ARTICLE 3 Conditions Precedent
Conditions Precedent
Section 3.1 Conditions Precedent to Effectiveness of Agreement. The
obligation of the Banks to undertake the Facility C Commitment and the
effectiveness of this Agreement are subject to the prior or contemporaneous
fulfillment of each of the following conditions:
(a) The Administrative Agent and the Banks shall have received each
of the following:
(i) the certificate of the Borrower dated as of the Agreement
Date, confirming the effectiveness of the Security Documents.
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<PAGE> 44
(ii) a certificate of each Restricted Subsidiary of the
Borrower (including all License Subs existing as of the Agreement Date)
dated as of the Agreement Date, confirming the effectiveness of the
Security Documents.
(iii) duly executed Facility C Notes;
(iv) the Managing Agents shall have received evidence
satisfactory to them that the AT&T Acquisition has been consummated and
the Series C Preferred Stock issued pursuant to terms and conditions
satisfactory to the Managing Agents.
(v) The Managing Agents shall have received opinions of FCC
and special corporate counsel to the Borrower with respect to this
Agreement and the AT&T Acquisition, which opinions shall be in form and
substance satisfactory to the Managing Agents.
(vi) The Managing Agents shall have received certification to
the Agents and the Banks of the Borrower's compliance with Sections 7.8,
7.9, 7.10, 7.11 and 7.12 of this Agreement after giving effect to the AT&T
Acquisition together with any calculations necessary to demonstrate such
compliance.
(vii) The Managing Agents shall have received all
documentation required under Section 5.13 of this Agreement with respect
to the AT&T Acquisition.
(viii) The Managing Agents shall have received copies of the
AT&T Acquisition Agreement and all other documents related to the AT&T
Acquisition, including, without limitation, lien search results from
appropriate jurisdictions, all of which shall be certified by an
Authorized Signatory to be true, complete and correct as of the Agreement
Date, together with duly executed UCC-1 financing statements and other
collateral documentation deemed reasonably necessary by the Managing
Agents to reflect or perfect the Security Interest of the Administrative
Agent (for itself and on behalf of the Banks) in such assets.
(ix) The Managing Agents shall have received reliance letters
regarding opinions of counsel to the other parties to the AT&T Acquisition
Agreement in form and substance satisfactory to the Managing Agents and
its special counsel.
(x) all such other documents as the Administrative Agent or
any Bank may reasonably request, certified by an appropriate governmental
official or an Authorized Signatory if so requested.
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<PAGE> 45
(b) The Administrative Agent and the Banks shall have received
evidence satisfactory to them that all Necessary Authorizations, including all
necessary consents to the closing of this Agreement and the AT&T Acquisition
Agreement, the other Loan Documents and the AT&T Acquisition Agreement, have
been obtained or made, are in full force and effect and with the exception of
the running of any waiting periods, are not subject to any pending or, to the
knowledge of the Borrower, threatened reversal or cancellation, and the
Administrative Agent and the Banks shall have received a certificate of an
Authorized Signatory so stating.
(c) The Borrower shall certify to the Administrative Agent and the
Banks that each of the representations and warranties in Article 4 hereof and
each other Loan Document are true and correct as of the Agreement Date and that
no Default or Event of Default then exists or is continuing or will be caused by
the AT&T Acquisition.
(d) There shall not exist as of the Agreement Date any action, suit,
proceeding or investigation pending against, or, to the knowledge of the
Borrower, threatened against or in any manner relating adversely to, the
Borrower, any of its Subsidiaries, any of their respective properties, the AT&T
Acquisition the transactions contemplated hereby, which could be expected to
have a Materially Adverse Effect.
(e) No event shall have occurred and no condition shall exist which,
in the judgment of the Administrative Agent, has had or could be expected to
have a materially adverse effect on the business, assets or financial condition
of the Borrower or any of its Subsidiaries from that reflected in the audited
annual financial statements for the fiscal year ending December 31, 1997 or the
Form 10-Q for the fiscal quarter ending June 30, 1998 of the Borrower, each as
delivered to the Administrative Agent and the Banks.
Section 3.2 Conditions Precedent to Each Advance. The obligation of the
Banks to make each Advance after the Agreement Date is subject to the
fulfillment of each of the following conditions immediately prior to or
contemporaneously with such Advance:
(a) All of the representations and warranties of the Borrower under
this Agreement and the other Loan Documents (including, without limitation, all
representations and warranties with respect to the Borrower's Subsidiaries),
which, pursuant to Section 4.2 hereof, are made at and as of the time of such
Advance, shall be true and correct at such time in all material respects, both
before and after giving effect to the application of the proceeds of such
Advance, and after giving effect to any updates to information provided to the
Banks in accordance with the terms of such representations and warranties, and
no Default hereunder shall then exist or be caused thereby;
(b) With respect to Advances which, if funded, would increase the
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<PAGE> 46
aggregate principal amount of the Loans outstanding hereunder, the
Administrative Agent and the Banks shall have received a certificate of the
Borrower stating that there is no default or event of default, and no event or
condition exists which could give rise to any put right or other right of
prepayment under, any of the agreements evidencing Indebtedness for Money
Borrowed of the Borrower or any of its Subsidiaries, both before and after
giving effect to the proposed Advance of the Loans hereunder.
(c) With respect to Advances which, if funded, would increase the
aggregate principal amount of Loans outstanding hereunder, the Administrative
Agent shall have received a duly executed Request for Advance and a Use of
Proceeds Letter;
(d) Each of the Administrative Agent and the Banks shall have
received all such other certificates, reports, statements, opinions of counsel
(if such Advance is in connection with an Acquisition) or other documents as the
Administrative Agent or any Bank may reasonably request;
(e) With respect to any Advance relating to any Acquisition or the
formation of any Subsidiary which is permitted hereunder, the Administrative
Agent and the Banks shall have received such documents and instruments relating
to such Acquisition or formation of such new Subsidiary as are described in
Section 5.13 hereof or otherwise required herein; and
(f) No event shall have occurred and no condition shall exist which,
in the judgment of the Majority Banks, has had or may be expected to have a
Materially Adverse Effect on the business, assets or financial condition of the
Borrower or any of its Subsidiaries.
ARTICLE 4 Representations and Warranties
Representations and Warranties
Section 4.1 Representations and Warranties. The Borrower hereby agrees,
represents and warrants, upon the Agreement Date, and at all times thereafter as
required pursuant to the terms hereof, in favor of the Administrative Agent and
each Bank that:
(a) Organization; Ownership; Power; Qualification. The Borrower
is a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware. The Borrower has the corporate power and
authority to own its properties and to carry on its business as now being and as
proposed hereafter to be conducted. Each Subsidiary of the Borrower is a
corporation or partnership duly organized, validly existing
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<PAGE> 47
and in good standing under the laws of the state of its incorporation or
formation, as the case may be, and has the corporate or partnership power, as
the case may be, and authority to own its properties and to carry on its
business as now being and as proposed hereafter to be conducted. The Borrower
and each of its Subsidiaries are duly qualified, in good standing and authorized
to do business in each jurisdiction in which the character of their respective
properties or the nature of their respective businesses requires such
qualification or authorization.
(b) Authorization; Enforceability. The Borrower has the corporate
power and has taken all necessary corporate action to authorize it to borrow
hereunder, to execute, deliver and perform this Agreement and each of the other
Loan Documents to which it is a party in accordance with their respective terms,
and to consummate the transactions contemplated hereby and thereby. This
Agreement has been duly executed and delivered by the Borrower and is, and each
of the other Loan Documents to which the Borrower is party is, a legal, valid
and binding obligation of the Borrower enforceable against the Borrower in
accordance with its terms, subject, as to enforcement of remedies, to the
following qualifications: (i) an order of specific performance and an injunction
are discretionary remedies and, in particular, may not be available where
damages are considered an adequate remedy at law, and (ii) enforcement may be
limited by bankruptcy, insolvency, liquidation, reorganization, reconstruction
and other similar laws affecting enforcement of creditors' rights generally
(insofar as any such law relates to the bankruptcy, insolvency or similar event
of the Borrower).
(c) Subsidiaries: Authorization; Enforceability. The Borrower's
Subsidiaries and the Borrower's direct and indirect ownership thereof as of the
Agreement Date are as set forth on Schedule 5 attached hereto, and to the extent
such Subsidiaries are corporations, the Borrower has the unrestricted right to
vote the issued and outstanding shares of the Subsidiaries shown thereon and
such shares of such Subsidiaries have been duly authorized and issued and are
fully paid and nonassessable. Each Subsidiary of the Borrower has the corporate
or partnership power and has taken all necessary corporate or partnership action
to authorize it to execute, deliver and perform each of the Loan Documents to
which it is a party in accordance with their respective terms and to consummate
the transactions contemplated by this Agreement and by such Loan Documents. Each
of the Loan Documents to which any Subsidiary of the Borrower is party is a
legal, valid and binding obligation of such Subsidiary enforceable against such
Subsidiary in accordance with its terms, subject, as to enforcement of remedies,
to the following qualifications: (i) an order of specific performance and an
injunction are discretionary remedies and, in particular, may not be available
where damages are considered an adequate remedy at law, and (ii) enforcement may
be limited by bankruptcy, insolvency, liquidation, reorganization,
reconstruction and other similar laws affecting enforcement of creditors' rights
generally (insofar as any such law relates to the bankruptcy, insolvency or
similar event of any such Subsidiary). Except as set forth on Schedule 5,
attached hereto, the Borrower's ownership interest in each of its
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<PAGE> 48
Subsidiaries represents a direct or indirect controlling interest of such
Subsidiary for purposes of directing or causing the direction of the management
and policies of each Subsidiary.
(d) Compliance with Other Loan Documents and Contemplated
Transactions. The execution, delivery and performance, in accordance with their
respective terms, by the Borrower of this Agreement and the Notes, and by the
Borrower and its Subsidiaries of each of the other Loan Documents to which they
are respectively party, and the consummation of the transactions contemplated
hereby and thereby, do not and will not (i) require any consent or approval,
governmental or otherwise, not already obtained, (ii) violate any Applicable Law
respecting the Borrower or any Subsidiary of the Borrower, (iii) conflict with,
result in a breach of, or constitute a default under the certificate or articles
of incorporation or by-laws or partnership agreement, as the case may be, as
amended, of the Borrower or of any Subsidiary of the Borrower, or under any
indenture, agreement, or other instrument, including without limitation the
Licenses, to which the Borrower or any of its Subsidiaries is a party or by
which any of them or their respective properties may be bound, or (iv) result in
or require the creation or imposition of any Lien upon or with respect to any
property now owned or hereafter acquired by the Borrower or any of its
Subsidiaries, except for Permitted Liens.
(e) Business. The Borrower, together with its Subsidiaries, is
engaged solely in the business of owning, constructing, managing, operating, and
investing in paging service systems and communications businesses incidental or
directly relating thereto.
(f) Licenses, etc. Except as set forth on Schedule 6 attached
hereto, the Licenses have been duly issued are in full force and effect and, as
of the Agreement Date, are held by License Subs as set forth on Schedule 7
attached hereto. The Borrower and the Restricted Subsidiaries are in compliance
in all material respects with all of the provisions thereof. The Borrower and
the Restricted Subsidiaries have secured all Necessary Authorizations and all
such Necessary Authorizations are in full force and effect. Neither any License
nor any Necessary Authorization is the subject of any pending or, to the best of
the Borrower's knowledge, threatened revocation. The sole assets of each License
Sub are Licenses used in the operation and construction of the paging business
of the Borrower and the Restricted Subsidiaries and management agreements with
the Borrower and such of the Restricted Subsidiaries as operate the portion of
the paging system subject to the License held by it.
(g) Compliance with Law. The Borrower and its Subsidiaries are in
compliance in all material respects with all Applicable Law.
(h) Title to Assets. The Borrower and the Restricted Subsidiaries
have good, legal and marketable title to, or a valid leasehold interest in, all
of the assets referred to
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<PAGE> 49
in the audited annual financial statements of the Borrower and the Restricted
Subsidiaries for the fiscal year ended December 31, 1997 delivered to the Banks
prior to the Agreement Date (or such later date as a balance sheet is delivered
pursuant to Article 6 hereof). None of the properties or assets of the Borrower
or any of the Restricted Subsidiaries is subject to any Liens, except for
Permitted Liens. Except for financing statements evidencing Permitted Liens, no
financing statement under the Uniform Commercial Code as in effect in any
jurisdiction and no other filing which names the Borrower or any of its
Subsidiaries as debtor or which covers or purports to cover any of the assets of
the Borrower or any of the Restricted Subsidiaries is currently effective and on
file in any state or other jurisdiction, and neither the Borrower nor any of the
Restricted Subsidiaries has signed any such financing statement or filing or any
security agreement authorizing any secured party thereunder to file any such
financing statement or filing.
(i) Litigation. There is no action, suit, proceeding or
investigation pending against, or, to the best of the Borrower's knowledge,
threatened against or in any other manner relating adversely to, the Borrower or
any of its Subsidiaries or, any of their respective properties, including
without limitation the Licenses, in any court or before any arbitrator of any
kind or before or by any governmental body (including without limitation the
FCC) except as set forth on Schedule 8 attached hereto (as such schedule may be
updated with the consent of the Majority Banks from time to time). No such
action, suit, proceeding or investigation (i) calls into question the validity
of this Agreement or any other Loan Document, or (ii) individually or
collectively involves the possibility of any judgment or liability not fully
covered by insurance which, if determined adversely to the Borrower or any of
its Subsidiaries, would have a Materially Adverse Effect.
(j) Taxes. All federal, state and other tax returns of the Borrower
and each of its Subsidiaries required by law to be filed have been duly filed
and all federal, state and other taxes, including, without limitation,
withholding taxes, assessments and other governmental charges or levies required
to be paid by the Borrower or any of its Subsidiaries or imposed upon the
Borrower or any of its Subsidiaries or any of their respective properties,
income, profits or assets, which are due and payable, have been paid, except any
such taxes (i) (x) the payment of which the Borrower or any of its Subsidiaries
is diligently contesting in good faith by appropriate proceedings, (y) for which
adequate reserves have been provided on the books of the Borrower or the
Subsidiary of the Borrower involved, and (z) as to which no Lien other than a
Permitted Lien has attached and no foreclosure, distraint, sale or similar
proceedings have been commenced, or (ii) which may result from audits not yet
conducted. The charges, accruals and reserves on the books of the Borrower and
each of its Subsidiaries in respect of taxes are, in the judgment of the
Borrower, adequate.
(k) Financial Statements. The Borrower has furnished or caused to be
furnished to the Administrative Agent and the Banks the audited financial
statements for the Borrower and its Subsidiaries on a consolidated basis for the
fiscal year ended December 31,
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<PAGE> 50
1997, and unaudited financial statements for the fiscal quarter ended June 30,
1998, all of which, together with other financial statements furnished to the
Banks subsequent to the Agreement Date have been prepared in accordance with
GAAP and present fairly in all material respects the financial position of the
Borrower and the Restricted Subsidiaries on a consolidated and consolidating
basis, as the case may be, on and as at such dates and the results of operations
for the periods then ended (subject, in the case of unaudited financial
statements, to normal year-end and audit adjustments). Neither the Borrower nor
any of the Restricted Subsidiaries has any material liabilities, contingent or
otherwise, other than as disclosed in the financial statements referred to in
the preceding sentence or as set forth or referred to in this Agreement, and
there are no material unrealized losses of the Borrower or any of the Restricted
Subsidiaries and no material anticipated losses of the Borrower or any of the
Restricted Subsidiaries other than those which have been previously disclosed in
writing to the Administrative Agent and the Banks and identified as such.
(l) No Material Adverse Change. Since December 31, 1997, there has
occurred no event which has had or which could reasonably be expected to have a
Materially Adverse Effect.
(m) ERISA. The Borrower and each Subsidiary of the Borrower and each
of their respective Plans are in compliance with ERISA and the Code and neither
the Borrower nor any of its ERISA Affiliates, including its Subsidiaries, has
incurred any accumulated funding deficiency with respect to any such Plan within
the meaning of ERISA or the Code. The Borrower, each of its Subsidiaries, and
each other ERISA Affiliate have complied with all requirements of COBRA. Neither
the Borrower nor any of its Subsidiaries has made any promises of retirement or
other benefits to employees, except as set forth in the Plans, in written
agreements with such employees, or in the Borrower's employee handbook and
memoranda to employees. Neither the Borrower nor any of its ERISA Affiliates,
including its Subsidiaries, has incurred any material liability to PBGC in
connection with any such Plan. The assets of each such Plan which is subject to
Title IV of ERISA are sufficient to provide the benefits under such Plan, the
payment of which PBGC would guarantee if such Plan were terminated, and such
assets are also sufficient to provide all other "benefit liabilities" (within
the meaning of Section 4041 of ERISA) due under the Plan upon termination. No
Reportable Event has occurred and is continuing with respect to any such Plan.
No such Plan or trust created thereunder, or party in interest (as defined in
Section 3(14) of ERISA), or any fiduciary (as defined in Section 3(21) of
ERISA), has engaged in a "prohibited transaction" (as such term is defined in
Section 406 of ERISA or Section 4975 of the Code) which would subject such Plan
or any other Plan of the Borrower or any of its Subsidiaries, any trust created
thereunder, or any such party in interest or fiduciary, or any party dealing
with any such Plan or any such trust, to the tax or penalty on "prohibited
transactions" imposed by Section 502 of ERISA or Section 4975 of the Code.
Neither the Borrower nor any of its ERISA Affiliates, including its
Subsidiaries, is or has been obligated to make any payment to a Multiemployer
Plan.
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<PAGE> 51
(n) Compliance with Regulations T, U and X. Neither the Borrower nor
any of the Borrower's Subsidiaries is engaged principally in or has as one of
its important activities the business of extending credit for the purpose of
purchasing or carrying, and neither the Borrower nor any of the Borrower's
Subsidiaries owns or presently intends to acquire, any "margin security" or
"margin stock" as defined in Regulations T, U, and X (12 C.F.R. Parts 207, 220,
221 and 224) of the Board of Governors of the Federal Reserve System (herein
called "margin stock"). None of the proceeds of the Loans will be used, directly
or indirectly, for the purpose of purchasing or carrying any margin stock or for
the purpose of reducing or retiring any Indebtedness which was originally
incurred to purchase or carry margin stock or for any other purpose which might
constitute this transaction a "purpose credit" within the meaning of said
Regulations T, U, and X. The Borrower has not taken, caused or authorized to be
taken, and will not take any action which might cause this Agreement or the
Notes to violate Regulation T, U, or X or any other regulation of the Board of
Governors of the Federal Reserve System or to violate the Securities Exchange
Act of 1934, in each case as now in effect or as the same may hereafter be in
effect. If so requested by the Administrative Agent, the Borrower will furnish
the Administrative Agent with (i) a statement or statements in conformity with
the requirements of Federal Reserve Forms G-3 and/or U-1 referred to in
Regulation U of said Board of Governors and (ii) other documents evidencing its
compliance with the margin regulations, reasonably requested by the
Administrative Agent. Neither the making of the Loans nor the use of proceeds
thereof will violate, or be inconsistent with, the revisions of Regulations T,
U, or X of said Board of Governors.
(o) Investment Company Act. Neither the Borrower nor any of its
Subsidiaries is required to register under the provisions of the Investment
Company Act of 1940, as amended, and neither the entering into or performance by
the Borrower and its Subsidiaries of this Agreement and the Loan Documents nor
the issuance of the Notes violates any provision of such Act or requires any
consent, approval or authorization of, or registration with, the Securities and
Exchange Commission or any other governmental or public body or authority
pursuant to any provisions of such Act.
(p) Governmental Regulation. Neither the Borrower nor any of its
Subsidiaries is required to obtain any consent, approval, authorization, permit
or license which has not already been obtained from, or effect any filing or
registration which has not already been effected with, any federal, state or
local regulatory authority in connection with the execution and delivery of this
Agreement or any other Loan Document. Neither the Borrower nor any of its
Subsidiaries is required to obtain any consent, approval, authorization, permit
or license which has not already been obtained from, or effect any filing or
registration which has not already been effected with, any federal, state or
local regulatory authority in connection with the performance, in accordance
with their respective terms, of this Agreement or any other Loan Document.
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<PAGE> 52
(q) Absence of Default, Etc. The Borrower and its Subsidiaries are
in compliance in all respects with all of the provisions of their respective
partnership agreements, Certificates or Articles of Incorporation and By-Laws,
as the case may be, and no event has occurred or failed to occur (including,
without limitation, any matter which could create a Default hereunder by
cross-default) which has not been remedied or waived, the occurrence or
non-occurrence of which constitutes, (i) a Default or (ii) a material default by
the Borrower or any of its Subsidiaries, or an event or condition giving rise to
any put right or other prepayment right of any holder of Indebtedness, under any
indenture, agreement or other instrument relating to Indebtedness of the
Borrower or any of its Subsidiaries (other than as set forth on Schedule 6
attached hereto), or a default under any License (which Default could reasonably
be expected to result in an Event of Default under Section 8.1(m) hereof), or a
default under any judgment, decree or order to which the Borrower or any of its
Subsidiaries is a party or by which the Borrower or any of its Subsidiaries or
any of their respective properties may be bound or affected. Neither the
Borrower nor any of its Subsidiaries is a party to or bound by any contract or
agreement continuing after the Agreement Date, or bound by any Applicable Law,
the performance of which or the compliance with which, as applicable, could have
a Materially Adverse Effect or result in the loss of any License issued by the
FCC.
(r) Accuracy and Completeness of Information. All information,
reports, prospectuses and other papers and data relating to the Borrower or any
of its Subsidiaries or, to the best of the Borrower's knowledge, the other
parties to the AT&T Acquisition Agreement, or any of their respective
Subsidiaries and furnished by or on behalf of the Borrower or any of its
Subsidiaries to the Administrative Agent or the Banks were, at the time
furnished, true, complete and correct in all material respects to the extent
necessary to give the Administrative Agent and the Banks true and accurate
knowledge of the subject matter.
(s) Agreements with Affiliates. Except for agreements or
arrangements with Affiliates wherein the Borrower or one or more of the
Restricted Subsidiaries provides services to such Affiliates for fair
consideration and which are set forth on Schedule 9 attached hereto, neither the
Borrower nor any of the Restricted Subsidiaries has (i) any agreements or
arrangements of any kind with any Affiliate or (ii) any management or consulting
agreements of any kind with any Affiliate.
(t) Payment of Wages. The Borrower and each of the Restricted
Subsidiaries are in compliance with the Fair Labor Standards Act, as amended, in
all material respects, and such Persons have paid all minimum and overtime wages
required by law to be paid to their respective employees.
(u) Priority. The Security Interest is a valid and perfected first
priority
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<PAGE> 53
security interest in the Collateral in favor of the Administrative Agent, for
the benefit of itself and the Banks, securing, in accordance with the terms of
the Security Documents, the Obligations, and the Collateral is subject to no
Liens other than Permitted Liens. The Liens created by the Security Documents
are enforceable as security for the Obligations in accordance with their terms
with respect to the Collateral subject, as to enforcement of remedies, to the
following qualifications: (i) an order of specific performance and an injunction
are discretionary remedies and, in particular, may not be available where
damages are considered an adequate remedy at law, and (ii) enforcement may be
limited by bankruptcy, insolvency, liquidation, reorganization, reconstruction
and other similar laws affecting enforcement of creditors' rights generally
(insofar as any such law relates to the bankruptcy, insolvency or similar event
of the Borrower or any of its Subsidiaries, as the case may be). The fair market
value of all partnership interests owned by the Borrower or any of its
Subsidiaries which do not constitute Collateral is less than $5,000,000 in the
aggregate.
(v) Indebtedness for Money Borrowed. Except as described on Schedule
10 attached hereto, neither the Borrower nor any of its Subsidiaries has
outstanding, as of the Agreement Date, and after giving effect to the initial
Advances hereunder on the Agreement Date, any Indebtedness for Money Borrowed.
(w) Solvency. As of the Agreement Date and after giving effect to
the transactions contemplated by the Loan Documents and, both before and after
giving effect to the AT&T Acquisition, (i) the property of the Borrower, at a
fair valuation, will exceed its debt; (ii) the capital of the Borrower will not
be unreasonably small to conduct its business; (iii) the Borrower will not have
incurred debts, or have intended to incur debts, beyond its ability to pay such
debts as they mature; and (iv) the present fair salable value of the assets of
the Borrower will be materially greater than the amount that will be required to
pay its probable liabilities (including debts) as they become absolute and
matured. For purposes of this Section, "debt" means any liability on a claim,
and "claim" means (i) the right to payment, whether or not such right is reduced
to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured,
undisputed, legal, equitable, secured or unsecured, or (ii) the right to an
equitable remedy for breach of performance if such breach gives rise to a right
to payment, whether or not such right to an equitable remedy is reduced to
judgment, fixed, contingent, matured, unmatured, undisputed, secured or
unsecured.
Section 4.2 Survival of Representations and Warranties, etc. All
representations and warranties made under this Agreement and any other Loan
Document shall be deemed to be made, and shall be true and correct, at and as of
the Agreement Date and on the date of each Advance except to the extent
previously fulfilled in accordance with the terms hereof and to the extent
relating specifically to the Agreement Date. All representations and warranties
made under this Agreement and the other Loan Documents shall survive, and not be
waived by, the execution hereof by the Banks and the Administrative Agent, any
investigation or inquiry by
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any Bank or the Administrative Agent, or the making of any Advance under this
Agreement.
ARTICLE 5 General Covenants
General Covenants
So long as any of the Obligations is outstanding and unpaid or the Banks
have an obligation to fund Advances hereunder (whether or not the conditions to
borrowing have been or can be fulfilled), and unless the Majority Banks, or such
greater number of Banks as may be expressly provided herein, shall otherwise
consent in writing:
Section 5.1 Preservation of Existence and Similar Matters. Except as
permitted under Section 7.4(b) below and except with respect to Subsidiaries
which are created solely for the purpose of effecting Acquisitions permitted
hereby which are dissolved immediately following the subject Acquisitions, the
Borrower will, and will cause each of the Restricted Subsidiaries to:
(i) preserve and maintain its existence, and its material rights,
franchises, licenses and privileges in the state of its
incorporation, including, without limiting the foregoing, the
Licenses and all other Necessary Authorizations; and
(ii) qualify and remain qualified and authorized to do business in
each jurisdiction in which the character of its properties or the
nature of its business requires such qualification or authorization.
Section 5.2 Business; Compliance with Applicable Law. The Borrower
will, and will cause each of its Subsidiaries to, (a) engage solely in the
business of owning, constructing, managing, operating and investing in paging
service systems and communications businesses incidental or directly relating
thereto, and (b) comply in all material respects with the requirements of all
Applicable Law.
Section 5.3 Maintenance of Properties. The Borrower will, and will
cause each of the Restricted Subsidiaries to, maintain or cause to be maintained
in the ordinary course of business in good repair, working order and condition
(reasonable wear and tear excepted) all properties used in their respective
businesses (whether owned or held under lease), other than obsolete equipment or
unused assets, and from time to time make or cause to be made all needed and
appropriate repairs, renewals, replacements, additions, betterments and
improvements thereto.
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Section 5.4 Accounting Methods and Financial Records. The Borrower
will, and will cause each of the Restricted Subsidiaries on a consolidated and
consolidating basis to, maintain a system of accounting established and
administered in accordance with GAAP, keep adequate records and books of account
in which complete entries will be made in accordance with GAAP and reflecting
all transactions required to be reflected by GAAP, and keep accurate and
complete records of their respective properties and assets. The Borrower and the
Restricted Subsidiaries will maintain a fiscal year ending on December 31.
Section 5.5 Insurance. The Borrower will, and will cause each of the
Restricted Subsidiaries to:
(a) Maintain insurance including, but not limited to, business
interruption coverage and public liability coverage insurance from responsible
companies in such amounts and against such risks to the Borrower and each of the
Restricted Subsidiaries as is prudent for similarly situated companies engaged
in the paging and wireless communications industry.
(b) Keep their respective assets insured by insurers on terms and in
a manner acceptable to the Administrative Agent against loss or damage by fire,
theft, burglary, loss in transit, explosions and hazards insured against by
extended coverage, in amounts which are prudent for the paging and wireless
communications industry and satisfactory to the Administrative Agent, all
premiums thereon to be paid by the Borrower and the Restricted Subsidiaries.
(c) Require that each insurance policy provide for at least thirty
(30) days' prior written notice to the Administrative Agent of any termination
of or proposed cancellation or nonrenewal of such policy, and name the
Administrative Agent as additional named lender loss payee and, as appropriate,
additional insured, to the extent of the Obligations.
Section 5.6 Payment of Taxes and Claims. The Borrower will, and will
cause each of its Subsidiaries to, pay and discharge all taxes, including,
without limitation, withholding taxes, assessments and governmental charges or
levies required to be paid by them or imposed upon them or their income or
profits or upon any properties belonging to them, prior to the date on which
penalties attach thereto, and all lawful claims for labor, materials and
supplies which, if unpaid, might become a Lien or charge upon any of their
properties; except that no such tax, assessment, charge, levy or claim need be
paid which is being diligently contested in good faith by appropriate
proceedings and for which adequate reserves shall have been set aside on the
appropriate books, but only so long as such tax, assessment, charge, levy or
claim does not become a Lien or charge other than a Permitted Lien and no
foreclosure, distraint, sale or
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similar proceedings shall have been commenced. The Borrower will, and will cause
each of its Subsidiaries to, timely file all information returns required by
federal, state or local tax authorities.
Section 5.7 Compliance with ERISA.
(a) The Borrower shall, and shall cause its Subsidiaries to, make
all contributions to any Employee Pension Plan when such contributions are due
and not incur any "accumulated funding deficiency" within the meaning of Section
412(a) of the Code, whether or not waived, and will otherwise comply in all
material respects with the requirements of the Code and ERISA with respect to
the operation of all Plans.
(b) The Borrower shall, and shall cause its Subsidiaries to, comply
in all material respects with the requirements of COBRA with respect to any
Plans subject to the requirements thereof.
(c) The Borrower shall furnish to the Administrative Agent and the
Banks (i) within thirty (30) days after any officer of the Borrower obtains
knowledge that a "prohibited transaction" (within the meaning of Section 406 of
ERISA or Section 4975 of the Code) has occurred with respect to any Plan of the
Borrower or its ERISA Affiliates, including its Subsidiaries, that any
Reportable Event has occurred with respect to any Employee Pension Plan or that
PBGC has instituted or will institute proceedings under Title IV of ERISA to
terminate any Employee Pension Plan or to appoint a trustee to administer any
Employee Pension Plan, a statement setting forth the details as to such
prohibited transaction, Reportable Event or termination or appointment
proceedings and the action which it (or any other Employee Pension Plan sponsor
if other than the Borrower) proposes to take with respect thereto, together with
a copy of the notice of such Reportable Event given to PBGC if a copy of such
notice is available to the Borrower, any of its Subsidiaries or any of its ERISA
Affiliates, (ii) promptly after receipt thereof, a copy of any notice the
Borrower, any of its Subsidiaries or any of its ERISA Affiliates or the sponsor
of any Plan receives from PBGC, or the Internal Revenue Service or the
Department of Labor which sets forth or proposes any action or determination
with respect to such Plan, (iii) promptly after the filing thereof, any annual
report required to be filed pursuant to ERISA in connection with each Plan
maintained by the Borrower or any of its ERISA Affiliates, including the
Subsidiaries, and (iv) promptly upon the Administrative Agent's or any Bank's
request therefor, such additional information concerning any such Plan as may be
reasonably requested by the Administrative Agent or any Bank.
(d) The Borrower will promptly notify the Administrative Agent and
the Banks of any excise taxes which have been assessed or which the Borrower,
any of its Subsidiaries or any of its ERISA Affiliates has reason to believe may
be assessed against the Borrower, any of its Subsidiaries or any of its ERISA
Affiliates by the Internal Revenue
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Service or the Department of Labor with respect to any Plan of the Borrower or
its ERISA Affiliates, including its Subsidiaries.
(e) Within the time required for notice to the PBGC under Section
302(f)(4)(A) of ERISA, the Borrower will notify the Administrative Agent and the
Banks of any lien arising under Section 302(f) of ERISA in favor of any Plan of
the Borrower or its ERISA Affiliates, including its Subsidiaries.
(f) The Borrower will not, and will not permit any of its
Subsidiaries or any of its ERISA Affiliates to take any of the following actions
or permit any of the following events to occur if such action or event together
with all other such actions or events would subject the Borrower, any of its
Subsidiaries, or any of its ERISA Affiliates to any tax, penalty, or other
liabilities which could have a Materially Adverse Effect:
(i) engage in any transaction in connection with which the
Borrower, any of its Subsidiaries or any ERISA Affiliate could be subject
to either a civil penalty assessed pursuant to Section 502(i) of ERISA or
a tax imposed by Section 4975 of the Code;
(ii) terminate any Employee Pension Plan in a manner, or take any
other action, which could result in any liability of the Borrower, any of
its Subsidiaries or any ERISA Affiliate to the PBGC;
(iii) fail to make full payment when due of all amounts which,
under the provisions of any Plan, the Borrower, any of its Subsidiaries or
any ERISA Affiliate is required to pay as contributions thereto, or permit
to exist any accumulated funding deficiency within the meaning of Section
412(a) of the Code, whether or not waived, with respect to any Employee
Pension Plan; or
(iv) permit the present value of all benefit liabilities under
all Employee Pension Plans which are subject to Title IV of ERISA to
exceed the present value of the assets of such Plans allocable to such
benefit liabilities (within the meaning of Section 4041 of ERISA), except
as may be permitted under actuarial funding standards adopted in
accordance with Section 412 of the Code.
Section 5.8 Visits and Inspections. The Borrower will, and will cause
each of its Subsidiaries to, permit representatives of the Administrative Agent
and any of the Banks, upon reasonable notice, to (i) visit and inspect the
properties of the Borrower or any of its Subsidiaries during business hours,
(ii) inspect and make extracts from and copies of their respective books and
records, and (iii) discuss with their respective principal officers their
respective businesses, assets, liabilities, financial positions, results of
operations and business prospects. The Borrower and each of its
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Subsidiaries will also permit representatives of the Administrative Agent and
any of the Banks to discuss with their respective accountants the Borrower's and
the Borrower's Subsidiaries' businesses, assets, liabilities, financial
positions, results of operations and business prospects.
Section 5.9 Payment of Indebtedness; Loans. Subject to any provisions
herein or in any other Loan Document, the Borrower will, and will cause each of
the Restricted Subsidiaries to, pay any and all of their respective Indebtedness
when and as it becomes due or to the extent of trade payables of such Persons
otherwise in accordance with ordinary business practices customary for the
wireless communications industry, other than amounts diligently disputed in good
faith and for which adequate reserves have been set aside in accordance with
GAAP.
Section 5.10 Use of Proceeds. The Borrower will use the aggregate
proceeds of all Advances under the Facility A Commitment and the Facility C
Commitment directly or indirectly: (a) to fund Capital Expenditures of the
Borrower and the Restricted Subsidiaries; (b) for working capital needs and
other general corporate purposes of the Borrower and the Restricted Subsidiaries
which do not otherwise conflict with this Section 5.10 (including, without
limitation, the payment of fees and expenses incurred in connection with the
execution and delivery of this Agreement and the other Loan Documents); and (c)
subject to compliance with Section 5.13 hereof, to finance Acquisitions
permitted pursuant to Section 7.6 hereof. No proceeds of Advances hereunder
shall be used for the purchase or carrying or the extension of credit for the
purpose of purchasing or carrying, any margin stock within the meaning of
Regulations T, U, and X of the Board of Governors of the Federal Reserve System.
Section 5.11 Indemnity. The Borrower for itself and on behalf of each of
the Restricted Subsidiaries jointly and severally agrees to indemnify and hold
harmless each Bank, the Administrative Agent, the Managing Agents, the
Documentation Agent, the Syndication Agent and each of their respective
affiliates, employees, representatives, shareholders, officers, directors and
counsel (any of the foregoing shall be an "Indemnitee") from and against any and
all claims, liabilities, losses, damages, actions, attorneys' fees and expenses
(as such fees and expenses are incurred) and demands by any party, including the
costs of investigating and defending such claims, whether or not the Borrower,
any Subsidiary or the Person seeking indemnification is the prevailing party (a)
resulting from any breach or alleged breach by the Borrower or any Subsidiary of
the Borrower of any representation or warranty made hereunder; or (b) otherwise
arising out of (i) the Commitments or otherwise under this Agreement, any Loan
Document or any transaction contemplated hereby or thereby, including, without
limitation, the use of the proceeds of Loans hereunder in any fashion by the
Borrower or the performance of their respective obligations under the Loan
Documents by the Borrower or any of its Subsidiaries, (ii) allegations of any
participation by the Banks, the Managing
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Agents, the Documentation Agent, the Syndication Agent and the Administrative
Agent, or any of them, in the affairs of the Borrower or any of its
Subsidiaries, or allegations that any of them has any joint liability with the
Borrower or any of its Subsidiaries for any reason, (iii) any claims against the
Banks, the Managing Agents, the Documentation Agent, the Syndication Agent and
the Administrative Agent, or any of them, by any shareholder or other investor
in or lender to the Borrower or any Subsidiary, by any brokers or finders or
investment advisers or investment bankers retained by the Borrower or by any
other third party, arising out of the Commitments or otherwise under this
Agreement; or (c) in connection with taxes (not including federal or state
income taxes or other taxes based solely upon the revenues of such Persons),
fees, and other charges payable in connection with the Loans, or the execution,
delivery, and enforcement of this Agreement, the Security Documents, the other
Loan Documents, and any amendments thereto or waivers of any of the provisions
thereof; unless the Person seeking indemnification hereunder is determined in
such case to have acted with gross negligence or willful misconduct, in any
case, by a final, non-appealable judicial order of a court of competent
jurisdiction. The obligations of the Borrower and the Restricted Subsidiaries
under this Section 5.11 are in addition to, and shall not otherwise limit, any
liabilities which the Borrower might otherwise have in connection with any
warranties or similar obligations of the Borrower or any of its Subsidiaries in
any other Loan Document.
Section 5.12 Interest Rate Hedging. The Borrower shall at all times
maintain one or more Interest Rate Hedge Agreements with respect to the
Borrower's interest obligations on an aggregate principal amount of not less
than fifty percent (50%) of the principal amount of Total Debt outstanding from
time to time. Such Interest Rate Hedge Agreements shall provide interest rate
protection in conformity with ISDA standards and for a period of at least three
(3) years from the date of such Interest Rate Hedge Agreements or, if earlier,
until the Maturity Date on terms acceptable to the Managing Agents, such terms
to include consideration of the creditworthiness of the other party to the
proposed Interest Rate Hedge Agreement. Interest Rate Hedge Agreements required
hereby may be in the form of (i) an "on-market" interest rate swap, (ii) an
interest rate cap having a cap not higher than two percent (2%) per annum above
the prevailing interest rate for U.S. Treasury securities having a term
approximately equal to the term of the interest rate cap in question, or (iii)
any other interest rate hedging product satisfactory to the Managing Agents.
Indebtedness for Money Borrowed of the Borrower and the Restricted Subsidiaries
which bears interest at a fixed rate shall be deemed to be subject to an
Interest Rate Hedge Agreement for purposes of this Section. Subject to
compliance with Section 7.1(d) hereof, the Borrower may also enter into interest
rate floors corresponding to any interest rate caps it has entered into in
accordance with this Agreement, so long as (i) the floors are lower in rate than
the corresponding caps, (ii) such floors have terms no longer than the
corresponding caps, and (iii) such floors conform to ISDA standards. All
Obligations of the Borrower to the Administrative Agent or any of the Banks
pursuant to any Interest Rate Hedge Agreement permitted hereunder and all Liens
granted to secure such
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Obligations shall rank pari passu with all other Obligations and Liens securing
such other Obligations; and any Interest Rate Hedge Agreement between the
Borrower and any other Person shall be unsecured.
Section 5.13 Covenants Regarding Formation of Subsidiaries and
Acquisitions. At the time of (i) any Acquisition permitted hereunder or (ii) the
formation of any new Restricted Subsidiary of the Borrower or any of its
Subsidiaries which is permitted under this Agreement, including, without
limitation, the formation of any License Sub, the Borrower will, and will cause
its Subsidiaries, as appropriate, to (a) provide to the Administrative Agent (1)
an executed Master Subsidiary Security Agreement for such new Restricted
Subsidiary, in substantially the form of Exhibit J attached hereto, together
with appropriate UCC-1 financing statements, (2) an executed Subsidiary Guaranty
for such new Restricted Subsidiary, in substantially the form of Exhibit K
attached hereto, and (3), to the extent applicable, a Trademark Security
Agreement, substantially in the form of Exhibit F attached hereto, together with
other appropriate documentation, all of which shall constitute both Security
Documents and Loan Documents for purposes of this Agreement, as well as a loan
certificate for such new Restricted Subsidiary, substantially in the form of
Exhibit I attached hereto, together with appropriate attachments; (b) pledge to
the Administrative Agent all of the Capital Stock of such Subsidiary or Person
which is acquired or formed, beneficially owned by the Borrower or any of the
Borrower's Subsidiaries, as the case may be, as additional Collateral for the
Obligations to be held by the Administrative Agent in accordance with the terms
of the Borrower's Pledge Agreement, an existing Subsidiary Pledge Agreement, or
a new Subsidiary Pledge Agreement in substantially the form of Exhibit L
attached hereto, and execute and deliver to the Administrative Agent all such
other documentation for such pledge as, in the opinion of the Administrative
Agent, is appropriate; and (c) provide revised financial projections for the
remainder of the fiscal year and for each subsequent year until the Maturity
Date which reflect such Acquisition or formation, certified by the chief
financial officer of the Borrower, together with a statement by such Person that
no Default exists or would be caused by such Acquisition or formation, and all
other documentation, including one or more opinions of counsel, which are
satisfactory to the Administrative Agent and which in its opinion is appropriate
with respect to such Acquisition or the formation of such Subsidiary. Any
document, agreement or instrument executed or issued pursuant to this Section
5.13 shall be a "Loan Document" for purposes of this Agreement.
Section 5.14 Payment of Wages. The Borrower shall and shall cause each
of the Restricted Subsidiaries to at all times comply, in all material respects,
with the requirements of the Fair Labor Standards Act, as amended, including,
without limitation, the provisions of such Act relating to the payment of
minimum and overtime wages as the same may become due from time to time.
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Section 5.15 Further Assurances. The Borrower will promptly cure, or
cause to be cured, defects in the creation and issuance of any of the Notes and
the execution and delivery of the Loan Documents (including this Agreement),
resulting from any acts or failure to act by the Borrower or any of the
Borrower's Subsidiaries or any employee or officer thereof. The Borrower at its
expense will promptly execute and deliver to the Administrative Agent and the
Banks, or cause to be executed and delivered to the Administrative Agent and the
Banks, all such other and further documents, agreements, and instruments in
compliance with or accomplishment of the covenants and agreements of the
Borrower in the Loan Documents, including this Agreement, or to correct any
omissions in the Loan Documents, or more fully to state the obligations set out
herein or in any of the Loan Documents, or to obtain any consents, all as may be
necessary or appropriate in connection therewith and as may be reasonably
requested.
Section 5.16 License Subs. Promptly (and in any event within one hundred
eighty (180) days) after the consummation of any Acquisition permitted
hereunder, the Borrower shall cause each of the Licenses held by the Borrower or
any of the Restricted Subsidiaries to be transferred to one or more License
Subs, each of which License Subs shall have as its sole asset or assets the
Licenses of the Borrower or any of the Restricted Subsidiaries and a management
agreement with the Borrower and such of the Restricted Subsidiaries as operates
the portion of the paging system of the Borrower and the Restricted Subsidiaries
subject to such License or Licenses, such that from and after such applicable
date neither the Borrower nor the Restricted Subsidiaries (other than License
Subs) shall hold any Licenses other than through one or more duly created and
existing License Subs. The Borrower shall not permit the License Subs to have
any business activities, operations, assets, Indebtedness, Guaranties or Liens
(other than pursuant to a Subsidiary Guaranty and Master Subsidiary Security
Agreement issued in connection herewith). At the time of the transfer of the
Licenses to the License Subs, the Borrower shall provide to the Administrative
Agent copies of any required consents to such transfer from the FCC and any
other governmental authority, together with a certificate of an Authorized
Signatory stating that all Necessary Authorizations relating to such transfer
have been obtained or made, are in full force and effect and are not subject to
any pending or threatened reversal or cancellation.
ARTICLE 6 Information Covenants
Information Covenants
So long as any of the Obligations is outstanding and unpaid or the Banks
have an obligation to fund Advances hereunder (whether or not the conditions to
borrowing have been or can be fulfilled) and unless the Majority Banks shall
otherwise consent in writing, the Borrower will furnish or cause to be furnished
to each Bank and the Administrative Agent, at their respective offices:
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Section 6.1 Quarterly Financial Statements and Information. Within
forty-five (45) days after the last day of each of the first three (3) fiscal
quarters of the Borrower during any fiscal year, a copy of the Form 10-Q of the
Borrower for such quarter, and, to the extent not contained therein, the balance
sheets of the Borrower on a consolidated and consolidating basis with its
Restricted Subsidiaries, and of the Unrestricted Subsidiaries on a stand-alone
basis, as at the end of such quarter and as of the end of the preceding fiscal
year, and the related statements of operations and the related statements of
cash flows of the Borrower on a consolidated and consolidating basis with its
Restricted Subsidiaries, and of the Unrestricted Subsidiaries on a stand-alone
basis, for such quarter and for the elapsed portion of the year ended with the
last day of such quarter, which shall set forth in comparative form such figures
as at the end of and for such quarter and appropriate prior period, shall
provide consolidated and consolidating figures with respect to any Acquisitions
consummated during such period, and shall be certified by the chief financial
officer of the Borrower to have been prepared in accordance with GAAP and to
present fairly in all material respects the financial position of the Borrower
on a consolidated and consolidating basis with its Restricted Subsidiaries, and
of the Unrestricted Subsidiaries on a stand-alone basis, as at the end of such
period and the results of operations for such period, and for the elapsed
portion of the year ended with the last day of such period, subject only to
normal year-end and audit adjustments.
Section 6.2 Annual Financial Statements and Information. Within ninety
(90) days after the end of each fiscal year of the Borrower, a copy of the Form
10-K of the Borrower for such year, and, to the extent not contained therein,
the audited consolidated and consolidating balance sheets of the Borrower and
the Restricted Subsidiaries, and of the Unrestricted Subsidiaries on a
stand-alone basis, as of the end of such fiscal year and the related audited
consolidated and consolidating statements of operations of the Borrower and the
Restricted Subsidiaries, and of the Unrestricted Subsidiaries on a stand-alone
basis, for such fiscal year and for the previous fiscal year, the related
audited consolidated and consolidating statements of cash flow and stockholders'
equity of the Borrower and the Restricted Subsidiaries, and of the Unrestricted
Subsidiaries on a stand-alone basis, for such fiscal year and for the previous
fiscal year, which shall be accompanied by an opinion of independent certified
public accountants of recognized national standing acceptable to the
Administrative Agent, together with a statement of such accountants that in
connection with their audit, nothing came to their attention that caused them to
believe that the Borrower was not in compliance with or was otherwise in Default
under the terms, covenants, provisions or conditions of Articles 7 and 8 hereof
insofar as they relate to accounting or financial matters.
Section 6.3 Performance Certificates. At the time the financial
statements are furnished pursuant to Sections 6.1 and 6.2, a certificate of the
president or chief financial officer of the Borrower as to its financial
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performance:
(a) setting forth as and at the end of such quarterly period or
fiscal year, as the case may be, the arithmetical calculations required to
establish (i) any adjustment to the Applicable Margins, as provided for in
Section 2.3(f), and (ii) whether or not the Borrower was in compliance with the
requirements of Sections 7.8, 7.9, 7.10, 7.11 and 7.12; and
(b) stating that no Default has occurred as at the end of such
quarterly period or year, as the case may be, or, if a Default has occurred,
disclosing each such Default and its nature, when it occurred, whether it is
continuing and the steps being taken by the Borrower with respect to such
Default.
Section 6.4 Copies of Other Reports.
(a) Promptly upon receipt thereof, copies of all reports, if any,
submitted to the Borrower by the Borrower's independent public accountants
regarding the Borrower, including, without limitation, any management report
prepared in connection with the annual audit referred to in Section 6.2.
(b) Promptly upon receipt thereof, copies of any material adverse
notice or report regarding any License from the FCC or any other governmental
authority.
(c) From time to time and promptly upon each request, such data,
certificates, reports, statements, documents or further information regarding
the business, assets, liabilities, financial position, projections, results of
operations or business prospects of the Borrower or any of its Subsidiaries or,
to the extent available to the Borrower, ProNet Inc. or any of its Subsidiaries,
as the Administrative Agent or any Bank may reasonably request.
(d) Annually, certificates of insurance indicating that the
requirements of Section 5.5 hereof remain satisfied for such fiscal year,
together with copies of any new or replacement insurance policies obtained
during such year.
(e) Prior to January 31 of each year, an annual budget for the
Borrower and the Restricted Subsidiaries, containing information and in a form
substantially similar to that shown in the budget delivered to the Banks in
connection with the execution of this Agreement.
(f) Promptly after the sending thereof, copies of all statements,
reports and other information which the Borrower or any of its Subsidiaries
sends to security holders of the Borrower generally or files with the Securities
and Exchange Commission or any national securities exchange.
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(g) Within thirty (30) days after the last day of each month prior
to the delivery of financial statements of the Borrower and the Restricted
Subsidiaries for the fiscal quarter ending September 30, 1996 as required
pursuant to Section 6.2 hereof, the balance sheet of the Borrower on a
consolidated basis with the Restricted Subsidiaries as at the end of such month,
and the related statements of operations and cash flows of the Borrower on a
consolidated basis with the Restricted Subsidiaries, certified by the chief
financial officer of the Borrower to have been prepared in accordance with GAAP
and to present fairly in all material respects the financial position of the
Borrower and the Restricted Subsidiaries on a consolidated basis as at the end
of such month and the results of operations for such month, subject only to
normal year-end and audit adjustments.
Section 6.5 Notice of Litigation and Other Matters. Notice specifying
the nature and status of any of the following events, promptly, but in any event
not later than fifteen (15) days after the occurrence of any of the following
events becomes known to the Borrower:
(i) the commencement of all proceedings and investigations by or
before any governmental body and all actions and proceedings in any court
or before any arbitrator against, or to the extent known to the Borrower,
in any other way relating materially adversely to the Borrower or any
Subsidiary of the Borrower, officers, directors or principal shareholders,
or any of their respective properties, assets or businesses or any
License;
(ii) any material adverse change with respect to the business,
assets, liabilities, financial position, results of operations or business
prospects of the Borrower or any Subsidiary of the Borrower, other than
changes in the ordinary course of business which have not had and would
not reasonably be expected to have a Materially Adverse Effect;
(iii) any material amendment or change to the financial
projections or annual budget provided to the Banks by the Borrower;
(iv) any Default or the occurrence or non-occurrence of any event
(A) which constitutes, or which with the passage of time or giving of
notice or both would constitute a default by the Borrower or any
Subsidiary of the Borrower, or an event or condition which gives rise to
any put right or other prepayment right of any holder of Indebtedness,
under any material agreement other than this Agreement and the other Loan
Documents to which the Borrower or any Subsidiary of the Borrower is party
or by which any of their respective properties may be bound, or (B) which
could have a Materially Adverse Effect, giving in each case the details
thereof and specifying the action proposed to be taken with respect
thereto;
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<PAGE> 65
(v) the occurrence of any Reportable Event or a "prohibited
transaction" (as such term is defined in Section 406 of ERISA or Section
4975 of the Code) with respect to any Plan of the Borrower or any of its
Subsidiaries or the institution or threatened institution by PBGC of
proceedings under ERISA to terminate or to partially terminate any such
Plan or the commencement or threatened commencement of any litigation
regarding any such Plan or naming it or the trustee of any such Plan with
respect to such Plan or any action taken by the Borrower, any Subsidiary
of the Borrower or any ERISA Affiliate of the Borrower to withdraw or
partially withdraw from any Plan or to terminate any Plan; and
(vi) the occurrence of any event subsequent to the Agreement Date
which, if such event had occurred prior to the Agreement Date, would have
constituted an exception to the representation and warranty in Section
4.1(m) of this Agreement.
ARTICLE 7 Negative Covenants
Negative Covenants
So long as any of the Obligations is outstanding and unpaid or the Banks
have an obligation to fund Advances hereunder (whether or not the conditions to
borrowing have been or can be fulfilled) and unless the Majority Banks, or such
greater number of Banks as may be expressly provided herein, shall otherwise
give their prior consent in writing:
Section 7.1 Indebtedness of the Borrower and its Subsidiaries. The
Borrower shall not, and shall not permit any of the Restricted Subsidiaries to,
create, assume, incur or otherwise become or remain obligated in respect of, or
permit to be outstanding, any Indebtedness except:
(a) the Obligations (other than the Obligations described in
Section 7.1(d) below);
(b) operating accounts payable, accrued expenses and customer
advance payments incurred in the ordinary course of business;
(c) Indebtedness secured by Permitted Liens;
(d) Obligations under Interest Hedge Agreements having a notional
principal amount of not more than $125,000,000 in the aggregate;
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<PAGE> 66
(e) Indebtedness of the Borrower or any of the Restricted
Subsidiaries to the Borrower or any other Restricted Subsidiary so long as the
corresponding debt instruments are pledged to the Administrative Agent as
security for the Obligations;
(f) Indebtedness for Money Borrowed of the Borrower which is pari
passu with the Obligations in an aggregate principal amount not to exceed
$100,000,000, provided that (i) such Indebtedness for Money Borrowed is issued
under and governed by this Agreement pursuant to an amendment to this Agreement
which is in form and substance satisfactory to the Majority Banks and (ii) both
before and after giving effect to the incurrence of such Indebtedness for Money
Borrowed, the Borrower shall be in compliance with the terms of this Agreement,
including, without limitation, Sections 7.8, 7.9, 7.10, 7.11 and 7.12 hereof;
(g) Unsecured Subordinated Debt of the Borrower issued pursuant to
the 1995 Indenture, the A+ Indenture, the ProNet Indenture and other unsecured
Subordinated Debt (including, without limitation, seller notes issued in
conjunction with Acquisitions permitted under Section 7.6 hereof), provided that
(i) such Subordinated Debt is subordinated to the prior payment and performance
of the Obligations on terms satisfactory to the Majority Banks, (ii) under the
terms of such Subordinated Debt there shall be no payment or prepayment of
principal in respect thereof prior to the first anniversary of the Maturity
Date, and (iii) both before and after giving effect to the incurrence of such
Subordinated Debt, the Borrower shall be in compliance with the terms of this
Agreement, including, without limitation, Sections 7.8, 7.9, 7.10, 7.11 and 7.12
hereof, and the Borrower shall have delivered to the Banks pro forma projections
satisfactory to the Majority Banks demonstrating such compliance through the
Maturity Date; and
(h) Other unsecured Indebtedness, including, without limitation,
Indebtedness under Capitalized Lease Obligations which does not exceed
$10,000,000 in the aggregate at any one time outstanding.
Section 7.2 Limitation on Liens. The Borrower shall not, and shall not
permit any of the Restricted Subsidiaries to, create, assume, incur or permit to
exist or to be created, assumed, incurred or permitted to exist, directly or
indirectly, any Lien on any of its properties or assets, whether now owned or
hereafter acquired, except for Permitted Liens.
Section 7.3 Amendment and Waiver. Except as set forth on Schedule 11
attached hereto, the Borrower shall not, and shall not permit any of the
Restricted Subsidiaries to, enter into any amendment of, or agree to or accept
or consent to any waiver of any of the provisions of (a) its articles or
certificate of incorporation or partnership agreement or by-laws, as appropriate
(other than immaterial amendments relating to corporate governance which could
not reasonably be expected to have an adverse
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<PAGE> 67
effect on the Administrative Agent or any Bank or any of their rights or claims
under any of the Loan Documents), or (b) any documents relating to Subordinated
Debt.
Section 7.4 Liquidation, Merger, or Disposition of Assets.
(a) Disposition of Assets. The Borrower shall not, and shall not
permit any Restricted Subsidiary to, make any Asset Disposition in one or more
transactions involving Net Available Proceeds of $10,000,000 or more,
individually or in the aggregate with all other Asset Dispositions, during each
fiscal year of the Borrower, without the prior written consent of the Majority
Banks. Further, the Borrower shall not make, and shall not permit any Restricted
Subsidiary to make, any Asset Disposition in one or more transactions, unless:
(i) the Borrower (or such Subsidiary, as the case may be) receives consideration
at the time of such Asset Disposition at least equal to the fair market value of
the assets sold or disposed of as determined by the Board of Directors of the
Borrower; (ii) at least 80% of the consideration for such Asset Disposition
consists of cash or Cash Equivalents or the assumption of Indebtedness for Money
Borrowed of the Borrower to the extent that the Borrower is released from all
liability on such Indebtedness for Money Borrowed; and (iii) all Net Available
Proceeds of such Asset Disposition, less any amounts invested within 180 days of
such Asset Disposition in assets related to the business of the Borrower (or
invested within one year of such Asset Disposition in assets related to the
business of the Borrower, pursuant to an agreement to make such investment
entered into within 180 days of such Asset Disposition), are applied within such
180- (or 360-) day period to repay Loans then outstanding.
If, within 180 days after an Asset Disposition, the Borrower or a
Restricted Subsidiary enters into a contract providing for the investment of Net
Available Proceeds in assets relating to the business of the Borrower and such
contract is terminated without fault on the part of the Borrower or such
Subsidiary prior to the making of such investment, the Borrower or such
Subsidiary, as the case may be, shall within 90 days after the termination of
such agreement, or within 180 days after such Asset Disposition, whichever is
later, invest or otherwise apply the funds that were to be invested pursuant to
such agreement in accordance with the preceding paragraph, and any funds so
invested or applied shall for all purposes hereof be deemed to have been so
invested or applied within the 180- (or 360-) day period provided for in such
paragraph.
(b) Liquidation or Merger. The Borrower shall not, and shall not
permit any of the Restricted Subsidiaries to, at any time liquidate or dissolve
itself (or suffer any liquidation or dissolution) or otherwise wind up, or enter
into any merger, other than (i) a merger or consolidation among the Borrower and
one or more of its Restricted Subsidiaries, provided the Borrower is the
surviving corporation, or (ii) a merger between or among two or more Restricted
Subsidiaries of the Borrower, or (iii) in connection with an Acquisition
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<PAGE> 68
permitted hereunder effected by a merger in which the Borrower is the surviving
corporation or, in a merger in which the Borrower is not a party, where the
surviving corporation is a Restricted Subsidiary or (iv) liquidation of the
Tracking Subsidiary after the Tracking Asset Disposition.
(c) Tracking Asset Disposition. Notwithstanding Sections 7.4(a) and
(b), the Borrower may make the Tracking Asset Disposition; provided, however,
that on or prior to the consummation of the Tracking Asset Disposition, the
Borrower shall provide to the Managing Agents, in form and substance
satisfactory to the Managing Agents, the following: (i) copies of the Tracking
Asset Purchase Agreement and all other documents related to the Tracking Asset
Disposition in form and substance satisfactory to the Managing Agents; (ii)
evidence satisfactory to the Managing Agents that the Tracking Asset Disposition
has been consummated pursuant to terms and conditions satisfactory to the
Managing Agents; (iii) certification to the Administrative Agent and the Banks
of the Borrower's compliance with Sections 7.8, 7.9, 7.10, 7.11 and 7.12 of the
Loan Agreement after giving effect to the Tracking Asset Disposition together
with any calculations necessary to demonstrate such compliance; (iv)
certification to the Administrative Agent, the Managing Agents and the Banks
that a Default does not exist and will not be caused by the Tracking Asset
Disposition; (v) all material information pertaining to the Tracking Asset
Disposition; and (vi) evidence of compliance with Sections 7.4(a)(i), 7.4(a)(ii)
and 7.4(a)(iii) hereof. For purposes of Section 7.4(a) hereof, the Net Available
Proceeds from the Tracking Asset Disposition shall not count against the
$10,000,000 basket in the first sentence thereof.
Section 7.5 Limitation on Guaranties. The Borrower shall not, and shall
not permit any of the Restricted Subsidiaries to, at any time Guaranty, assume,
be obligated with respect to, or permit to be outstanding any Guaranty of, any
obligation of any other Person other than (a) a guaranty by endorsement of
negotiable instruments for collection in the ordinary course of business, or (b)
obligations under agreements of the Borrower or any of the Restricted
Subsidiaries entered into in connection with leases of real property or the
acquisition of services, supplies and equipment in the ordinary course of
business of the Borrower or any of Restricted Subsidiaries, (c) Guaranties of
Indebtedness incurred as permitted pursuant to Section 7.1 hereof, or (d) as may
be contained in any Loan Document including, without limitation, the Subsidiary
Guaranty.
Section 7.6 Investments and Acquisitions. The Borrower shall not, and
shall not permit any of the Restricted Subsidiaries to, directly or indirectly,
make any loan or advance, or otherwise acquire for consideration evidences of
Indebtedness, Capital Stock or other securities of any Person or other assets or
property (other than assets or property in the ordinary course of business), or
make any Acquisition, except that so long as no Default then exists or would be
caused thereby:
(a) The Borrower and the Restricted Subsidiaries may, directly or
through
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<PAGE> 69
a brokerage account (i) purchase marketable, direct obligations of the United
States of America, its agencies and instrumentalities maturing within three
hundred sixty-five (365) days of the date of purchase, (ii) purchase commercial
paper issued by corporations, each of which shall have a combined net worth of
at least $100 million and each of which conducts a substantial part of its
business in the United States of America, maturing within two hundred seventy
(270) days from the date of the original issue thereof, and rated "P-2" or
better by Moody's Investors Service, Inc., or any successor, or "A-2" or better
by Standard and Poor's Ratings Group, a division of McGraw Hill, Inc., or any
successor, and (iii) purchase repurchase agreements, bankers' acceptances, and
certificates of deposit maturing within three hundred sixty-five (365) days of
the date of purchase which are issued by, or time deposits maintained with, a
United States national or state bank the deposits of which are insured by the
Federal Deposit Insurance Corporation or the Federal Savings and Loan Insurance
Corporation and having capital, surplus and undivided profits totaling more than
$100 million and rated "A" or better by Moody's Investors Service, Inc., or any
successor, or Standard and Poor's Ratings Group, a division of McGraw Hill,
Inc., or any successor;
(b) Subject to compliance with Section 5.13 hereof, the Borrower may
own Capital Stock of any License Sub as permitted by Section 5.16 hereof;
(c) Provided that the Borrower complies with Section 5.13 hereof in
connection therewith, and provides to the Administrative Agent and the Banks
financial projections and calculations, in form and substance satisfactory to
the Managing Agents, specifically demonstrating the Borrower's compliance with
Sections 7.8, 7.9, 7.10, 7.11 and 7.12 hereto and its ability to meet its
repayment obligations hereunder through the Maturity Date, after giving effect
thereto, the Borrower may make the following Acquisitions:
(i) the AT&T Acquisition;
(ii) Acquisitions of paging companies for an aggregate Net
Purchase Price not to exceed $50,000,000 during the term of this Agreement;
(iii) additional Acquisitions of paging companies so long as
the Total Leverage Ratio, after giving effect to the proposed Acquisition, is
less than 5.00 to 1; and
(iv) other Acquisitions with the prior written consent of
the Majority Banks.
(d) The Borrower may make investments in wireless communications
ventures in an aggregate amount not to exceed, during the term of this
Agreement, the sum of (i) $25,000,000 plus (ii) sixty percent (60%) of the
amount of all proceeds (net of reasonable and customary transaction costs) from
the issuance by the Borrower of additional equity on
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<PAGE> 70
or after the Agreement Date in excess of $25,000,000; provided that (a) all
ownership interests of the Borrower or any of its Subsidiaries in such ventures,
of whatever nature, are pledged to the Administrative Agent as Collateral for
the Obligations pursuant to documentation satisfactory to the Majority Banks,
and (b) all recourse to the Borrower or any of its Subsidiaries with respect to
any such venture shall be limited to the amount of the investment made therein
by the Borrower in accordance herewith.
Section 7.7 Restricted Payments and Purchases. The Borrower shall not,
and shall not permit any of its Subsidiaries to, directly or indirectly declare
or make any Restricted Payment or Restricted Purchase, except that so long as no
Default hereunder then exists or would be caused thereby, the Borrower may make
(a) scheduled payments of accrued interest in respect of Subordinated Debt
incurred in accordance with Section 7.1 hereof, and (b) dividend payments in
respect of any preferred stock or convertible preferred securities of the
Borrower in an aggregate amount not to exceed $10,000,000 in any calendar year.
Section 7.8 Senior Leverage Ratio. (a) As of the end of any calendar
quarter, (b) at the time of any Advance hereunder (after giving effect to such
Advance), (c) upon the incurrence by the Borrower of any Subordinated Debt
(after giving effect thereto), (d) at the time of any Asset Disposition by the
Borrower or any Restricted Subsidiary, and (e) at the time of any acquisition or
investment by the Borrower or any Restricted Subsidiary, the Borrower shall not
permit the Senior Leverage Ratio to exceed the ratios set forth below during the
periods indicated:
<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
January 1, 1998 through
December 31, 1998 3.50:1
January 1, 1999 through
December 31, 1999 3.25:1
January 1, 2000 and thereafter 3.00:1
</TABLE>
Section 7.9 Total Leverage Ratio. (a) As of the end of any calendar
quarter, (b) at the time of any Advance hereunder (after giving effect to such
Advance), (c) upon the incurrence by the Borrower of any Subordinated Debt
(after giving effect thereto), (d) at the time of any proposed Asset Disposition
by the Borrower or any Restricted Subsidiary, and (e) at the time of any
acquisition or investment by the Borrower or any Restricted Subsidiary, the
Borrower shall not permit the Total Leverage Ratio to exceed the ratios set
forth below during the periods indicated:
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<PAGE> 71
<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
January 1, 1997 through
December 31, 1998 6.00:1
January 1, 1999 through
December 31, 1999 5.75:1
January 1, 2000 through
December 31, 2000 5.25:1
January 1, 2001 through
December 31, 2001 4.50:1
January 1, 2002 and thereafter 4.00:1
</TABLE>
Section 7.10 Annualized Operating Cash Flow to Pro Forma Debt Service
Ratio. (a) As of the end of any calendar quarter, (b) at the time of any Advance
hereunder (after giving effect to such Advance), (c) upon the incurrence by the
Borrower of any Subordinated Debt (after giving effect thereto), (d) at the time
of any Asset Disposition by the Borrower or any Restricted Subsidiary, and (e)
at the time of any acquisition or investment by the Borrower or any Restricted
Subsidiary, the Borrower shall not permit the ratio of (i) Annualized Operating
Cash Flow (for the calendar quarter end being tested in the case of Section
7.10(a) hereof, or for the most recently completed fiscal quarter end for which
financial statements are required to have been delivered pursuant to Section 6.1
or 6.2 hereof, as the case may be, in the case of Sections 7.10(b), (c), (d) and
(e) hereof) to (ii) Pro Forma Debt Service to be less than 1.25:1.
Section 7.11 Total Sources to Total Uses Ratio. The Borrower shall not
permit the ratio of (a) Total Sources to (b) Total Uses as of any date to be
less than or equal to 1.05 to 1.
Section 7.12 Operating Cash Flow to Net Cash Interest Expense Ratio. (a)
As of the end of any calendar quarter, (b) at the time of any Advance, (c) upon
the incurrence by the Borrower of any Subordinated Debt, (d) at the time of any
proposed Asset Disposition by the Borrower or any Restricted Subsidiary, and (e)
at the time of any acquisition or investment by the Borrower or any Restricted
Subsidiary, the Borrower shall not permit the ratio of (i) Operating Cash Flow
for the most recently completed fiscal quarter (calculated as of the end of the
fiscal quarter being tested in the case of Section 7.12(a) hereof, or as of the
end of the
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<PAGE> 72
most recently completed fiscal quarter for which financial statements are
required to have been delivered pursuant to Section 6.1 or 6.2 hereof, as the
case may be, in the case of Sections 7.12(b), (c), (d) and (e) hereof) to (ii)
Net Cash Interest Expense for such fiscal quarter to be less than or equal to
the ratios set forth below for the periods indicated:
<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
April 1, 1997 through
December 31, 1999 1.75:1
January 1, 2000 through
December 31, 2000 2.00:1
January 1, 2001
and thereafter 2.25:1
</TABLE>
Section 7.13 Affiliate Transactions. Except as set forth on Schedule 9
attached hereto, the Borrower shall not, and shall not permit any of the
Restricted Subsidiaries to, at any time engage in any transaction with an
Affiliate, or make an assignment or other transfer of any of its properties or
assets to any Affiliate (other than to the Borrower or a Restricted Subsidiary),
on terms less advantageous to the Borrower or such Subsidiary than would be the
case if such transaction had been effected with a non-Affiliate.
Section 7.14 Real Estate. Except as set forth on Schedule 12 attached
hereto, neither the Borrower nor any of the Restricted Subsidiaries shall
purchase any real estate or enter into any sale/leaseback transaction.
Notwithstanding the foregoing, the Borrower may purchase the Office Building
Assets pursuant to the Office Building Acquisition Agreement provided that (a)
at all times prior to contribution of the Office Building Assets to the Office
Building Partnership (i) the Borrower grants a negative pledge on the Office
Building Assets to the Administrative Agent and delivers to the Administrative
Agent all other documentation, including, without limitation, opinions of
counsel, an appraisal and a Phase I environmental audit which in the reasonable
opinion of the Managing Agents is appropriate with respect to such grant,
including any documentation requested by the Banks (collectively, the "Office
Building Documents") and (ii) not less than five (5) days prior to the Office
Building Acquisition Date, the Borrower shall have provided the Managing Agents
with copies of the Office Building Acquisition Agreement, the Office Building
Documents and all other documents related to the transfer of the Office Building
Assets to the Borrower, including, without limitation, lien search results from
appropriate jurisdictions with respect to the Office Building Assets, all of
which shall be certified by an Authorized Signatory to be true, complete and
correct, and all of which shall be in form and
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<PAGE> 73
substance satisfactory to the Managing Agents; (b) prior to or simultaneously
with the contribution of the Office Building Assets to the Office Building
Partnership, (i) the Borrower shall have provided the Managing Agents with all
documentation required by Section 5.13 hereof and (ii) the Borrower shall have
provided the Managing Agents with replacement Office Building Documents pursuant
to which the Office Building Partnership grants a negative pledge on the Office
Building Assets to the Administrative Agent all of which replacement Office
Building Documents shall be form and substance satisfactory to the Managing
Agents and (c) the Borrower shall promptly cause the contribution of the Office
Building Assets to the Office Building Partnership.
Section 7.15 ERISA Liabilities. The Borrower shall not, and shall cause
each of its ERISA Affiliates not to, (i) permit the assets of any of their
respective Plans to be less than the amount necessary to provide all accrued
benefits under such Plans, or (ii) enter into any Multiemployer Plan.
Section 7.16 Unrestricted Subsidiaries. The Borrower may form or
otherwise acquire Unrestricted Subsidiaries with the prior written consent of
the Majority Banks. The Borrower shall not permit any Unrestricted Subsidiary
to: (a) create, assume, incur or otherwise become or remain obligated in respect
of or permit to be outstanding any Indebtedness, other than Indebtedness which
is non-recourse to the Borrower and the Restricted Subsidiaries; (b) create,
assume, incur or permit to exist or to be created, any Lien on any of its
properties or assets, whether now owned or hereafter acquired, other than Liens
securing Indebtedness which is non-recourse to the Borrower and the Restricted
Subsidiaries; (c) Guaranty, assume, be obligated with respect to, or permit to
be outstanding any Guaranty of, any obligation of any other Person other than
Guaranties which are non-recourse to the Borrower and the Restricted
Subsidiaries; or (d) own any assets or conduct any business or other activities
without the prior written consent of the Majority Banks. In addition, the
Borrower shall not and shall not permit any of its Subsidiaries to: (x) pledge
or permit the pledge of the Capital Stock or other ownership interests of any
Unrestricted Subsidiary to any Person (other than to the Administrative Agent as
additional Collateral for the Obligations); (y) make any loan or advance to, or
Guaranty any obligations of, any Unrestricted Subsidiary or otherwise acquire
for consideration evidences of Indebtedness, Capital Stock or other securities
of any Unrestricted Subsidiary, other than investments permitted under Section
7.6 hereof and other than intercompany loans and advances among the Unrestricted
Subsidiaries; or (z) transfer any assets to any Unrestricted Subsidiary. The
Borrower shall not permit the net worth of any Unrestricted Subsidiary, after
giving effect to all contingent liabilities and as otherwise determined in
accordance with GAAP, to be less than zero at any time.
Section 7.17 No Limitation on Upstream Dividends by Subsidiaries. The
Borrower shall not permit any Restricted Subsidiary to enter into or agree, or
otherwise become subject, to any
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<PAGE> 74
agreement, contract or other arrangement with any Person pursuant to the terms
of which (a) such Restricted Subsidiary is or would be prohibited from or
limited in declaring or paying any cash dividends or distributions on any class
of its Capital Stock or any other ownership interests owned directly or
indirectly by the Borrower or from making any other distribution on account of
any class of any such Capital Stock or ownership interests (herein referred to
as "Upstream Dividends") or (b) the declaration or payment of Upstream Dividends
by a Restricted Subsidiary to the Borrower or to another Restricted Subsidiary,
on an annual or cumulative or other basis, is or would be otherwise limited or
restricted.
ARTICLE 8 Default
Default
Section 8.1 Events of Default. Each of the following shall constitute
an Event of Default, whatever the reason for such event and whether it shall be
voluntary or involuntary or be effected by operation of law or pursuant to any
judgment or order of any court or any order, rule or regulation of any
governmental or non-governmental body:
(a) Any representation or warranty made under this Agreement or any
other Loan Document shall prove incorrect or misleading in any material respect
when made or deemed to be made pursuant to Section 4.2 hereof; or
(b) The Borrower shall default in the payment of: (i) any interest
under any of the Notes or fees or other amounts payable to the Banks and the
Administrative Agent under any of the Loan Documents, or any of them, when due
and such default is not cured within three (3) Business Days after the
occurrence thereof; or (ii) any principal under any of the Notes when due; or
(c) The Borrower shall default in the performance or observance of
any agreement or covenant contained in Sections 5.2(a), 5.10, 5.13, or 5.16 or
in Articles 6 or 7 hereof; or
(d) The Borrower shall default in the performance or observance of
any other agreement or covenant contained in this Agreement not specifically
referred to elsewhere in this Section 8.1, and such default shall not be cured
within a period of thirty (30) days from the occurrence of such default; or
(e) There shall occur any default in the performance or observance
of any agreement or covenant or breach of any representation or warranty
contained in any of the Loan Documents (other than this Agreement or as
otherwise provided in Section 8.1 of this
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<PAGE> 75
Agreement) by the Borrower, any of its Subsidiaries, or any other obligor
thereunder, which shall not be cured within a period of thirty (30) days from
the occurrence of such default; or
(f) There shall be entered and remain unstayed a decree or order for
relief in respect of the Borrower or any of the Borrower's Subsidiaries under
Title 11 of the United States Code, as now constituted or hereafter amended, or
any other applicable Federal or state bankruptcy law or other similar law, or
appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or
similar official of the Borrower or any of the Borrower's Subsidiaries, or of
any substantial part of their respective properties; or ordering the winding-up
or liquidation of the affairs of the Borrower, or any of the Borrower's
Subsidiaries; or an involuntary petition shall be filed against the Borrower or
any of the Borrower's Subsidiaries and a temporary stay entered, and (i) such
petition and stay shall not be diligently contested, or (ii) any such petition
and stay shall continue undismissed for a period of sixty (60) consecutive days;
or
(g) The Borrower or any of the Borrower's Subsidiaries shall file a
petition, answer or consent seeking relief under Title 11 of the United States
Code, as now constituted or hereafter amended, or any other applicable Federal
or state bankruptcy law or other similar law, or the Borrower or any of the
Borrower's Subsidiaries shall consent to the institution of proceedings
thereunder or to the filing of any such petition or to the appointment or taking
of possession of a receiver, liquidator, assignee, trustee, custodian,
sequestrator or other similar official of the Borrower or any of the Borrower's
Subsidiaries or of any substantial part of their respective properties, or the
Borrower or any of the Borrower's Subsidiaries shall fail generally to pay their
respective debts as they become due or shall be adjudicated insolvent; the
Borrower shall suspend or discontinue its business; the Borrower or any of the
Borrower's Subsidiaries shall have concealed or removed any of its property with
the intent to hinder or defraud its creditors or shall have made a fraudulent or
preferential transfer under any applicable fraudulent conveyance or bankruptcy
law, or the Borrower or any of the Borrower's Subsidiaries shall take any action
in furtherance of any such action; or
(h) A judgment not covered by insurance shall be entered by any
court against the Borrower or any of the Borrower's Subsidiaries for the payment
of money which exceeds singly or in the aggregate with other such judgments,
$500,000, or a warrant of attachment or execution or similar process shall be
issued or levied against property of the Borrower or any of the Borrower's
Subsidiaries which, together with all other such property of the Borrower or any
of the Borrower's Subsidiaries subject to other such process, exceeds in value
$500,000 in the aggregate, and if, within thirty (30) days after the entry,
issue or levy thereof, such judgment, warrant or process shall not have been
paid or discharged or stayed pending appeal or removed to bond, or if, after the
expiration of any such stay, such judgment, warrant or process shall not have
been paid or discharged or removed to bond; or
(i) There shall be at any time any "accumulated funding deficiency,"
as
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defined in ERISA or in Section 412 of the Code, with respect to any Plan
maintained by the Borrower or any of its Subsidiaries or any ERISA Affiliate, or
to which the Borrower or any of its Subsidiaries or any ERISA Affiliate has any
liabilities, or any trust created thereunder; or a trustee shall be appointed by
a United States District Court to administer any such Plan; or PBGC shall
institute proceedings to terminate any such Plan; or the Borrower or any of its
Subsidiaries or any ERISA Affiliate shall incur any liability to PBGC in
connection with the termination of any such Plan; or any Plan or trust created
under any Plan of the Borrower or any of its Subsidiaries or any ERISA Affiliate
shall engage in a "prohibited transaction" (as such term is defined in Section
406 of ERISA or Section 4975 of the Code) which would subject any such Plan, any
trust created thereunder, any trustee or administrator thereof, or any party
dealing with any such Plan or trust to the tax or penalty on "prohibited
transactions" imposed by Section 502 of ERISA or Section 4975 of the Code; or
(j) Any event not referred to elsewhere in this Section 8.1 shall
occur which has a Materially Adverse Effect; or
(k) There shall occur (i) any default under (A) the 1995 Indenture,
(B) the ProNet Indenture, (C) the 1997 Indenture or (D) any other document,
instrument or agreement relating to any Indebtedness of the Borrower or any of
the Borrower's Subsidiaries having an aggregate principal amount exceeding
$5,000,000; or (ii) any event which directly or indirectly causes the Borrower
or any of its Subsidiaries to be required to offer to prepay any Indebtedness or
which directly or indirectly gives any holder of any Indebtedness of the
Borrower or any of its Subsidiaries the right to require the Borrower or any of
its Subsidiaries to prepay any such Indebtedness under the 1995 Indenture, the
ProNet Indenture, the 1997 Indenture or any other document, instrument or
agreement relating to any Indebtedness of the Borrower or any of the Borrower's
Subsidiaries having an aggregate principal amount exceeding $5,000,000; or (iii)
any default under any Interest Rate Hedge Agreement having a notional principal
amount of $1,000,000 or more; or
(l) The FCC shall deliver to the Borrower or any of its Subsidiaries
an order to show cause why an order of revocation should not be issued based
upon any alleged attribution of "alien ownership" (within the meaning of 47
U.S.C. Section 310(b) and any interpretation of the FCC thereunder) to the
Borrower or any of its Subsidiaries and (i) the Borrower shall fail to respond
thereto in accordance with such order and Applicable Law within thirty (30) days
after such delivery (or such shorter period specified by such order or
Applicable Law), or (ii) such order shall not have been rescinded within one
hundred eighty (180) days after such delivery; or
(m) One or more Licenses shall be terminated or revoked or
substantially adversely modified such that the Borrower and the Restricted
Subsidiaries are no longer able to operate the related paging system or portions
thereof and retain the revenue received therefrom, if any, or any such License
shall fail to be renewed at the stated expiration thereof
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such that the Borrower and the Restricted Subsidiaries are no longer able to
operate the related paging system or portions thereof and retain the revenue
received therefrom, if any, and, in either case, there shall be any loss of
revenue or forecast revenue of the Borrower or any of the Restricted
Subsidiaries as a direct or indirect result thereof; or
(n) Any Loan Document or any material provision thereof, shall at
any time and for any reason be declared by a court of competent jurisdiction to
be null and void, or a proceeding shall be commenced by the Borrower or any of
the Borrower's Subsidiaries or any shareholder, or by any governmental authority
having jurisdiction over the Borrower or any of the Borrower's Subsidiaries or
any shareholder, seeking to establish the invalidity or unenforceability thereof
(exclusive of questions of interpretation of any provision thereof), or the
Borrower or any of the Borrower's Subsidiaries shall deny that it has any
liability or obligation for the payment of principal or interest purported to be
created under any Loan Document; or
(o) Any Security Document shall for any reason, fail or cease
(except by reason of lapse of time) to create a valid and perfected and
first-priority Lien on or Security Interest in any portion of the Collateral
purported to be covered thereby, subject only to Permitted Liens; or
(p) Any Change in Control Event shall occur or exist; or
(q) All or substantially all of the Capital Stock of the Borrower
shall be held by a holding company or parent company; or
(r) There shall occur any default by the Borrower or any Restricted
Subsidiary under or a cancellation of, without replacement, any Transponder
Lease Agreement which default is not cured within any applicable cure period; or
(s) Any objection to the AT&T Acquisition is filed within the thirty
and forty day waiting periods following the grant of FCC approval for the AT&T
Acquisition and such objection remains outstanding on the sixty-first day
following the filing thereof.
Section 8.2 Remedies.
(a) If an Event of Default specified in Section 8.1 (other than an
Event of Default under Section 8.1(f) or Section 8.1(g)) shall have occurred and
shall be continuing, the Administrative Agent, at the request of the Majority
Banks subject to Section 9.8(a) hereof, shall (i) terminate the Commitments,
and/or (ii) declare the principal of and interest on the Loans and the Notes and
all other amounts owed to the Banks and the Administrative Agent under this
Agreement, the Notes and any other Loan Documents to be forthwith due and
payable without presentment, demand, protest or other notice of any kind, all of
which
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are hereby expressly waived, anything in this Agreement, the Notes or any other
Loan Document to the contrary notwithstanding, and the Commitments shall
thereupon forthwith terminate.
(b) Upon the occurrence and continuance of an Event of Default
specified in Section 8.1(f) or Section 8.1(g), all principal, interest and other
amounts due hereunder and under the Notes, and all other Obligations, shall
thereupon and concurrently therewith become due and payable and the Commitments
shall forthwith terminate and the principal amount of the Loans outstanding
hereunder shall bear interest at the Default Rate, all without any action by the
Administrative Agent or the Banks, or the Majority Banks, or any of them, and
without presentment, demand, protest or other notice of any kind, all of which
are expressly waived, anything in this Agreement or in the other Loan Documents
to the contrary notwithstanding.
(c) Upon acceleration of the Notes, as provided in subsection (a) or
(b) of this Section 8.2, above, the Administrative Agent and the Banks shall
have all of the post-default rights granted to them, or any of them, as
applicable, under the Loan Documents and under Applicable Law.
(d) Following acceleration of the Notes as provided in subsection
(a) or (b) of this Section 8.2, provided the Majority Banks elect to initiate
(or direct the Administrative Agent to initiate) either (i) a civil proceeding
for the appointment of a receiver with respect to the Borrower's assets or (ii)
an involuntary bankruptcy (or similar) petition against the Borrower, the
Majority Banks shall have the right, but not the obligation, to direct the
Administrative Agent, to the extent permitted under Applicable Law, to take
possession of and to operate the paging systems of the Borrower and the
Restricted Subsidiaries during the "Pre-receivership Period," as defined below,
in accordance with the terms of the Licenses and pursuant to the terms and
subject to any limitations contained in the Security Documents and, within
guidelines established by the Majority Banks prior to such action, to make any
and all payments and expenditures necessary or desirable in connection
therewith, including, without limitation, payment of wages as required under the
Fair Labor Standards Act, as amended, and any necessary withholding taxes to
state or federal authorities. In the event the guidelines referred to in the
preceding sentence do not contemplate payments or expenditures that subsequently
arise in the ordinary course after the Administrative Agent has begun to operate
the systems, the Administrative Agent may, after giving three (3) Business Days'
notice to the Banks of its intention to do so, make such payments and
expenditures as it deems reasonable and advisable in its sole discretion to
maintain the normal day-to-day operation of such systems. All payments and
expenditures incurred in connection with this provision in excess of receipts
shall constitute costs and expenses of performance and/or collection
reimbursable by the Borrower pursuant to Section 11.2 hereof, which until paid
by the Borrower shall be reimbursed to the Administrative Agent by the Banks
pursuant to Section 9.11 hereof. No exercise by the Administrative Agent and the
Majority Banks of the
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rights granted to any of them under this Section 8.2(d) shall constitute a
waiver of any other rights and remedies granted to the Administrative Agent and
the Banks, or any of them, under this Agreement or any other Loan Document or at
law. The Borrower hereby irrevocably appoints the Administrative Agent, as
collateral agent for the Banks, the true and lawful attorney of the Borrower, in
its name and stead and on its behalf, to execute, receipt for or otherwise act
in connection with any and all contracts, instruments or other documents in
connection with the completion and operating of such systems in the exercise of
the Administrative Agent and Banks' rights under this Section 8.2(d). Such power
of attorney is coupled with an interest and is irrevocable. The rights of the
Administrative Agent and the Banks under this Section 8.2(d) shall be subject to
the prior compliance with the Communications Act and the FCC rules and policies
promulgated thereunder to the extent applicable to the exercise of such rights.
If the Administrative Agent (or the Banks) take possession of the systems
pursuant to this Section 8.2(d) prior to initiation of the actions described in
the first sentence of this Section, the Administrative Agent shall initiate such
action within the time period established by the Majority Banks prior to such
action. The "Pre-receivership Period" referred to in the first sentence of this
Section 8.2(d) shall mean the time period beginning on the date of the first
possession of the systems by the Administrative Agent (or the Banks) and ending
upon the earlier of (i) the taking of possession of the systems by a receiver
appointed by a court of competent jurisdiction or (ii) the taking of possession
of the systems by a trustee or by the Borrower as debtor-in-possession following
the entry of an order for relief in a case of the Borrower pending under the
United States Bankruptcy Code.
(e) Upon acceleration of the Notes, as provided in subsection (a) or
(b) of this Section 8.2, the Administrative Agent, upon request of the Majority
Banks, shall have the right to the appointment of a receiver for the properties
and assets of the Borrower and the Restricted Subsidiaries, and the Borrower,
for itself and on behalf of the Restricted Subsidiaries, hereby consents to such
rights and such appointment and hereby waives any objection the Borrower or any
Subsidiary may have thereto or the right to have a bond or other security posted
by the Administrative Agent on behalf of the Banks, in connection therewith. The
rights of the Administrative Agent under this Section 8.2(e) shall be subject to
its prior compliance with the Communications Act and the FCC rules and policies
promulgated thereunder to the extent applicable to the exercise of such rights.
(f) The rights and remedies of the Administrative Agent and the
Banks hereunder shall be cumulative, and not exclusive.
Section 8.3 Payments Subsequent to Declaration of Event of Default.
Subsequent to the acceleration of the Loans under Section 8.2 hereof, payments
and prepayments under this Agreement made to any of the Administrative Agent and
the Banks or otherwise received by any of such Persons (from realization on
Collateral for the Obligations or otherwise) shall be
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paid over to the Administrative Agent (if necessary) and distributed by the
Administrative Agent as follows: first, to the Administrative Agent's reasonable
costs and expenses, if any, incurred in connection with the collection of such
payment or prepayment, including, without limitation, any reasonable costs
incurred by it in connection with the sale or disposition of any Collateral for
the Obligations and all amounts under Section 11.2(b) and (c); second, to the
Banks and the Administrative Agent for any fees hereunder or under any of the
other Loan Documents then due and payable; third, to the Banks pro rata on the
basis of their respective unpaid principal amounts (except as provided in
Section 2.2(e)), to the payment of any unpaid interest which may have accrued on
the Obligations; fourth, to the Banks pro rata until all Loans have been paid in
full (and, for purposes of this clause, obligations under Interest Rate Hedge
Agreements with the Banks or any of them shall be paid on a pro rata basis with
the Loans); fifth, to the Banks pro rata on the basis of their respective unpaid
amounts, to the payment of any other unpaid Obligations; and sixth, to the
Borrower or as otherwise required by law.
ARTICLE 9 The Agents
Section 9.1 Appointment and Authorization. Each Bank hereby irrevocably
appoints and authorizes, and hereby agrees that it will require any transferee
of any of its interest in its portion of the Loans and in its Notes irrevocably
to appoint and authorize, the Administrative Agent to take such actions as its
agent on its behalf and to exercise such powers hereunder and under the other
Loan Documents as are delegated by the terms hereof and thereof, together with
such powers as are reasonably incidental thereto. Neither the Administrative
Agent nor any of its directors, officers, employees, agents or counsel, shall be
liable for any action taken or omitted to be taken by it or them hereunder or in
connection herewith, except for its or their own gross negligence or willful
misconduct as determined by a final, non-appealable judicial order of a court of
competent jurisdiction.
Section 9.2 Interest Holders. The Administrative Agent may treat each
Bank, or the Person designated in the last notice filed with the Administrative
Agent, as the holder of all of the interests of such Bank in its portion of the
Loans and in its Notes until written notice of transfer, signed by such Bank (or
the Person designated in the last notice filed with the Administrative Agent)
and by the Person designated in such written notice of transfer, in form and
substance satisfactory to the Administrative Agent, shall have been filed with
the Administrative Agent.
Section 9.3 Consultation with Counsel. The Administrative Agent may
consult with Powell, Goldstein, Frazer & Murphy LLP, Atlanta, Georgia, special
counsel to the Administrative Agent, or with other legal counsel selected by it
and shall not be liable for any action taken or suffered by it in good faith in
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consultation with such counsel and in reasonable reliance on such consultations.
Section 9.4 Documents. The Administrative Agent shall be under no duty
to examine, inquire into, or pass upon the validity, effectiveness or
genuineness of this Agreement, any Note, any other Loan Document, or any
instrument, document or communication furnished pursuant hereto or in connection
herewith, and the Administrative Agent shall be entitled to assume that they are
valid, effective and genuine, have been signed or sent by the proper parties and
are what they purport to be.
Section 9.5 Administrative Agent and Affiliates. With respect to the
Commitments and the Loans, the Bank which is an affiliate of the Administrative
Agent shall have the same rights and powers hereunder as any other Bank and the
Administrative Agent and affiliates of the Administrative Agent may accept
deposits from, lend money to and generally engage in any kind of business with
the Borrower, any of its Subsidiaries or any Affiliates of, or Persons doing
business with, the Borrower, as if they were not affiliated with the
Administrative Agent and without any obligation to account therefor.
Section 9.6 Responsibility of the Administrative Agent. The duties and
obligations of the Administrative Agent under this Agreement are only those
expressly set forth in this Agreement. The Administrative Agent shall be
entitled to assume that no Default or Event of Default has occurred and is
continuing unless it has actual knowledge, or has been notified in writing by
the Borrower, of such fact, or has been notified by a Bank in writing that such
Bank considers that a Default or an Event of Default has occurred and is
continuing, and such Bank shall specify in detail the nature thereof in writing.
The Administrative Agent shall not be liable hereunder for any action taken or
omitted to be taken except for its own gross negligence or willful misconduct as
determined by a final, non-appealable judicial order of a court of competent
jurisdiction. The Administrative Agent shall provide each Bank with copies of
such documents received from the Borrower as such Bank may reasonably request.
Section 9.7 Security Documents. The Administrative Agent is hereby
authorized to act on behalf of the Banks, in its own capacity and through other
agents and sub-agents appointed by it, under the Security Documents, provided
that the Administrative Agent shall not agree to the release of any Collateral,
or any property encumbered by any mortgage, pledge or security interest, except
in compliance with Section 11.12 hereof.
Section 9.8 Action by the Administrative Agent.
(a) The Administrative Agent shall be entitled to use its discretion
with
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respect to exercising or refraining from exercising any rights which may be
vested in it by, and with respect to taking or refraining from taking any action
or actions which it may be able to take under or in respect of, this Agreement,
unless the Administrative Agent shall have been instructed by the Majority Banks
to exercise or refrain from exercising such rights or to take or refrain from
taking such action; provided that the Administrative Agent shall not exercise
any rights under Section 8.2(a) of this Agreement without the request of the
Majority Banks (or, where expressly required, all the Banks) unless time is of
the essence. The Administrative Agent shall incur no liability under or in
respect of this Agreement with respect to anything which it may do or refrain
from doing in the reasonable exercise of its judgment or which may seem to it to
be necessary or desirable in the circumstances, except for its gross negligence
or willful misconduct as determined by a final, non-appealable judicial order of
a court of competent jurisdiction.
(b) The Administrative Agent shall not be liable to the Banks or to
any Bank or the Borrower or any of the Borrower's Subsidiaries in acting or
refraining from acting under this Agreement or any other Loan Document in
accordance with the instructions of the Majority Banks (or, where expressly
required, all the Banks), and any action taken or failure to act pursuant to
such instructions shall be binding on all Banks. The Administrative Agent shall
not be obligated to take any action which is contrary to law or which would in
the Administrative Agent's reasonable opinion subject the Administrative Agent
to liability.
Section 9.9 Notice of Default or Event of Default. In the event that
the Administrative Agent or any Bank shall acquire actual knowledge, or shall
have been notified, of any Default or Event of Default, the Administrative Agent
or such Bank shall promptly notify the Banks and the Administrative Agent, as
applicable (provided failure to give such notice shall not result in any
liability on the part of such Bank or the Administrative Agent), and the
Administrative Agent shall take such action and assert such rights under this
Agreement and the other Loan Documents as the Majority Banks shall request in
writing, and the Administrative Agent shall not be subject to any liability by
reason of its acting pursuant to any such request. If the Majority Banks shall
fail to request the Administrative Agent to take action or to assert rights
under this Agreement or any other Loan Documents in respect of any Default or
Event of Default within ten (10) days after their receipt of the notice of any
Default or Event of Default from the Administrative Agent or any Bank, or shall
request inconsistent action with respect to such Default or Event of Default,
the Administrative Agent may, but shall not be required to, take such action and
assert such rights (other than rights under Article 8 hereof) as it deems in its
discretion to be advisable for the protection of the Banks, except that, if the
Majority Banks have instructed the Administrative Agent not to take such action
or assert such right, in no event shall the Administrative Agent act contrary to
such instructions.
Section 9.10 Responsibility Disclaimed. The Administrative Agent shall
not be under any liability or responsibility whatsoever as
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Administrative Agent:
(a) To the Borrower or any other Person as a consequence of any
failure or delay in performance by or any breach by, any Bank or Banks of any of
its or their obligations under this Agreement;
(b) To any Bank or Banks, as a consequence of any failure or delay
in performance by, or any breach by, (i) the Borrower of any of its obligations
under this Agreement or the Notes or any other Loan Document, or (ii) any
Subsidiary of the Borrower or any other obligor under any other Loan Document;
(c) To any Bank or Banks, for any statements, representations or
warranties in this Agreement, or any other document contemplated by this
Agreement or any information provided pursuant to this Agreement, any other Loan
Document, or any other document contemplated by this Agreement, or for the
validity, effectiveness, enforceability or sufficiency of this Agreement, the
Notes, any other Loan Document, or any other document contemplated by this
Agreement; or
(d) To any Person for any act or omission other than that arising
from gross negligence or willful misconduct of the Administrative Agent as
determined by a final, non-appealable judicial order of a court of competent
jurisdiction.
Section 9.11 Indemnification. The Banks agree to indemnify the
Administrative Agent, the Managing Agents, the Syndication Agent and the
Documentation Agent (to the extent not reimbursed by the Borrower) pro rata
according to their respective Commitment Ratios, from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses (including fees and expenses of experts, agents, consultants and
counsel), or disbursements of any kind or nature whatsoever which may be imposed
on, incurred by or asserted against the Administrative Agent, the Managing
Agents, the Syndication Agent and the Documentation Agent in any way relating to
or arising out of this Agreement, any other Loan Document, or any other document
contemplated by this Agreement or any other Loan Document or any action taken or
omitted by the Administrative Agent, the Managing Agents, the Syndication Agent
and the Documentation Agent under this Agreement, any other Loan Document, or
any other document contemplated by this Agreement, except that no Bank shall be
liable to the Administrative Agent, the Managing Agents, the Syndication Agent
and the Documentation Agent for any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses, or
disbursements resulting from the gross negligence or willful misconduct of such
Person as determined by a final, non-appealable judicial order of a court of
competent jurisdiction.
Section 9.12 Credit Decision. Each Bank represents
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and warrants to each other and to the Administrative Agent that:
(a) In making its decision to enter into this Agreement and to make
its portion of the Loans it has independently taken whatever steps it considers
necessary to evaluate the financial condition and affairs of the Borrower and
that it has made an independent credit judgment, and that it has not relied upon
the Administrative Agent or information provided by the Administrative Agent
(other than information provided to the Administrative Agent by the Borrower and
forwarded by the Administrative Agent to the Banks); and
(b) So long as any portion of the Loans remains outstanding or such
Bank has an obligation to make its portion of Advances hereunder, it will
continue to make its own independent evaluation of the Collateral and of the
financial condition and affairs of the Borrower.
Section 9.13 Successor Administrative Agent. Subject to the appointment
and acceptance of a successor Administrative Agent as provided below, the
Administrative Agent may resign at any time by giving written notice thereof to
the Banks and the Borrower and may be removed at any time for cause by the
Majority Banks. Upon any such resignation or removal, the Majority Banks shall
have the right to appoint a successor Administrative Agent, which appointment
shall, prior to a Default, be subject to the consent of the Borrower, acting
reasonably. If no successor Administrative Agent shall have been so appointed by
the Majority Banks and shall have accepted such appointment within thirty (30)
days after the retiring Administrative Agent gave notice of resignation or the
Majority Banks' removal of the retiring Administrative Agent, then the retiring
Administrative Agent may, on behalf of the Banks, appoint a successor
Administrative Agent which shall be any Bank or a commercial bank organized
under the laws of the United States of America or any political subdivision
thereof which has combined capital and reserves in excess of $250,000,000. Such
appointment shall, prior to a Default, be subject to the consent of the
Borrower, acting reasonably. 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, duties and obligations of the retiring
Administrative Agent and the retiring Administrative Agent shall be discharged
from its duties and obligations hereunder and under the other Loan Documents.
After any retiring Administrative Agent's resignation or removal hereunder as
Administrative Agent the provisions of this Article shall continue in effect for
its benefit in respect of any actions taken or omitted to be taken by it while
it was acting as the Administrative Agent.
Section 9.14 Delegation of Duties. The Administrative Agent may execute
any of its duties under the Loan Documents by or through agents or attorneys
selected by it using reasonable care, and shall be entitled to advice of
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counsel concerning all matters pertaining to such duties.
Section 9.15 Agents. None of the Managing Agents, the Co-Agents or the
Documentation Agents shall have any duties or obligations under this Agreement
or the other Loan Documents in their capacities Managing Agents, as Co-Agents or
Documentation Agents.
ARTICLE 10 Change in Circumstances Affecting Eurodollar Advances
Change in Circumstances
Affecting Eurodollar Advances
Section 10.1 Eurodollar Basis Determination Inadequate or Unfair. If
with respect to any proposed Eurodollar Advance for any Interest Period, the
Administrative Agent determines after consultation with the Banks that deposits
in dollars (in the applicable amount) are not being offered to each of the Banks
in the relevant market for such Interest Period, the Administrative Agent shall
forthwith give notice thereof to the Borrower and the Banks, whereupon until the
Administrative Agent notifies the Borrower that the circumstances giving rise to
such situation no longer exist, the obligations of any affected Bank to make its
portion of such type of Eurodollar Advances shall be suspended.
Section 10.2 Illegality. If after the date hereof, the adoption of any
Applicable Law, or any change in any Applicable Law (whether adopted before or
after the Agreement Date), or any change in interpretation or administration
thereof by any governmental authority, central bank or comparable agency charged
with the interpretation or administration thereof, or compliance by any Bank
with any directive (whether or not having the force of law) of any such
authority, central bank or comparable agency, shall make it unlawful or
impossible for any Bank to make, maintain or fund its portion of Eurodollar
Advances, such Bank shall so notify the Administrative Agent, and the
Administrative Agent shall forthwith give notice thereof to the other Banks and
the Borrower. Before giving any notice to the Administrative Agent pursuant to
this Section 10.2, such Bank shall designate a different lending office if such
designation will avoid the need for giving such notice and will not, in the sole
judgment of such Bank, be otherwise materially disadvantageous to such Bank.
Upon receipt of such notice, notwithstanding anything contained in Article 2
hereof, the Borrower shall repay in full the then outstanding principal amount
of such Bank's portion of each affected Eurodollar Advance, together with
accrued interest thereon, on either (a) the last day of the then current
Interest Period applicable to such affected Eurodollar Advances if such Bank may
lawfully continue to maintain and fund its portion of such Eurodollar Advance to
such day or (b) immediately if such Bank may not lawfully continue to fund and
maintain its portion of such affected Eurodollar Advances to such day.
Concurrently with
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repaying such portion of each affected Eurodollar Advance, the Borrower may
borrow a Base Rate Advance from such Bank, and such Bank shall make such
Advance, if so requested, in an amount such that the outstanding principal
amount of the affected Note held by such Bank shall equal the outstanding
principal amount of such Note or Notes immediately prior to such repayment.
Section 10.3 Increased Costs.
(a) If after the date hereof, the adoption of any Applicable Law, or
any change in any Applicable Law (whether adopted before or after the Agreement
Date), or any interpretation or change in interpretation or administration
thereof by any governmental authority, central bank or comparable agency charged
with the interpretation or administration thereof or compliance by any Bank with
any directive (whether or not having the force of law) of any such authority,
central bank or comparable agency:
(1) shall subject any Bank to any tax, duty or other charge
with respect to its obligation to make its portion of Eurodollar Advances,
or its portion of existing Advances, or shall change the basis of taxation
of payments to any Bank of the principal of or interest on its portion of
Eurodollar Advances or in respect of any other amounts due under this
Agreement, in respect of its portion of Eurodollar Advances or its
obligation to make its portion of Eurodollar Advances (except for changes
in the rate or method of calculation of tax on the overall net income of
such Bank); or
(2) shall impose, modify or deem applicable any reserve
(including, without limitation, any imposed by the Board of Governors of
the Federal Reserve System, but excluding any included in an applicable
Eurodollar Reserve Percentage), special deposit, capital adequacy,
assessment or other requirement or condition against assets of, deposits
with or for the account of, or commitments or credit extended by, any Bank
or shall impose on any Bank or the London interbank borrowing market any
other condition affecting its obligation to make its portion of such
Eurodollar Advances or its portion of existing Advances;
and the result of any of the foregoing is to increase the cost to such Bank of
making or maintaining any of its portion of Eurodollar Advances, or to reduce
the amount of any sum received or receivable by such Bank under this Agreement
or under its Note with respect thereto, then, on the earlier of a date within
ten (10) days after demand by such Bank or the Maturity Date, the Borrower
agrees to pay to such Bank such additional amount or amounts as will compensate
such Bank for such increased costs. Each Bank will promptly notify the Borrower
and the Administrative Agent of any event of which it has knowledge, occurring
after the date hereof, which will entitle such Bank to compensation pursuant to
this Section 10.3 and will designate a different lending office if such
designation will avoid the
- 87 -
<PAGE> 87
need for, or reduce the amount of, such compensation and will not, in the sole
judgment of such Bank made in good faith, be otherwise disadvantageous to such
Bank.
(b) Any Bank claiming compensation under this Section 10.3 shall
provide the Borrower with a written certificate setting forth the additional
amount or amounts to be paid to it hereunder and calculations therefor in
reasonable detail. Such certificate shall be presumptively correct absent
manifest error. In determining such amount, such Bank may use any reasonable
averaging and attribution methods. If any Bank demands compensation under this
Section 10.3, the Borrower may at any time, upon at least five (5) Business
Days' prior notice to such Bank, prepay in full such Bank's portion of the then
outstanding Eurodollar Advances, together with accrued interest thereon to the
date of prepayment, along with any reimbursement required under Section 2.10
hereof. Concurrently with prepaying such portion of Eurodollar Advances the
Borrower may borrow a Base Rate Advance, or a Eurodollar Advance not so
affected, from such Bank, and such Bank shall, if so requested, make such
Advance in an amount such that the outstanding principal amount of the affected
Note or Notes held by such Bank shall equal the outstanding principal amount of
such Note or Notes immediately prior to such prepayment.
Section 10.4 Effect On Other Advances. If notice has been given
pursuant to Section 10.1, 10.2 or 10.3 suspending the obligation of any Bank to
make its portion of any type of Eurodollar Advance, or requiring such Bank's
portion of Eurodollar Advances to be repaid or prepaid, then, unless and until
such Bank notifies the Borrower that the circumstances giving rise to such
repayment no longer apply, all amounts which would otherwise be made by such
Bank as its portion of Eurodollar Advances shall, unless otherwise notified by
the Borrower, be made instead as Base Rate Advances.
ARTICLE 11 Miscellaneous
Miscellaneous
Section 11.1 Notices.
(a) Except as otherwise expressly provided herein, all notices and
other communications under this Agreement and the other Loan Documents (unless
otherwise specifically stated therein) shall be in writing and shall be deemed
to have been given three (3) Business Days after deposit in the mail, designated
as certified mail, return receipt requested, postage-prepaid, or one (1)
Business Day after being entrusted to a reputable commercial overnight delivery
service for next day delivery, or when sent on a Business Day prior to 5:00 p.m.
(New York time) by telecopy addressed to the party to which such notice is
directed at its address determined as provided in this Section 11.1. All notices
and other
- 88 -
<PAGE> 88
communications under this Agreement shall be given to the parties hereto at the
following addresses:
(i) If to the Borrower, to it at:
Metrocall, Inc.
6677 Richmond Highway
Alexandria, Virginia 22306
Attn: Vincent D. Kelly
Telecopy No.: (703) 768-3958
with a copy to:
Wilmer, Cutler & Pickering
2445 M Street, N.W.
Washington, D.C. 20037-1420
Attn: George P. Stamas, Esq. and
Thomas W. White, Esq.
Telecopy No.: (202) 663-6363
(ii) If to the Administrative Agent, to it at:
Toronto Dominion (Texas), Inc.
909 Fannin, Suite 1700
Houston, Texas 77010
Attn: Neva Nesbitt
Telecopy No.: (713) 951-9921
with a copy to:
Powell, Goldstein, Frazer & Murphy LLP
Sixteenth Floor
191 Peachtree Street, N.E.
Atlanta, Georgia 30303
Attn: Cindy A. Brazell, Esq.
Telecopy No.: (404) 572-6999
(iii) If to the Banks, to them at the addresses set forth beside
their names on Schedule 3 hereto.
Copies shall be provided to persons other than parties hereto only in the case
of notices under Article 8 hereof and the failure to provide such copies shall
not affect the validity of the
- 89 -
<PAGE> 89
notice given to the primary recipient.
(b) Any party hereto may change the address to which notices shall
be directed under this Section 11.1 by giving ten (10) days' prior written
notice of such change to the other parties.
Section 11.2 Expenses. The Borrower will promptly pay, or reimburse:
(a) all out-of-pocket expenses of the Administrative Agent, the
Managing Agents, the Syndication Agent and the Documentation Agent in connection
with the preparation, negotiation, execution and delivery of this Agreement and
the other Loan Documents, and the transactions contemplated hereunder and
thereunder and the making of the initial Advance hereunder (whether or not such
Advance is made), including, but not limited to, the fees and disbursements of
Powell, Goldstein, Frazer & Murphy, special counsel for the Administrative
Agent;
(b) all out-of-pocket expenses of the Administrative Agent, the
Managing Agents, the Syndication Agent and the Documentation Agent in connection
with the restructuring and "work out" of the transactions contemplated in this
Agreement or the other Loan Documents, and the preparation, negotiation,
execution and delivery of any waiver, amendment or consent by the Administrative
Agent and the Banks, or any of them, relating to this Agreement or the other
Loan Documents, including, but not limited to, the fees and disbursements of any
experts, agents or consultants and of special counsel for the Administrative
Agent; and
(c) all out-of-pocket costs and expenses of obtaining performance
under this Agreement or the other Loan Documents and all out-of-pocket costs and
expenses of collection if an Event of Default occurs in the payment of the
Notes, which in each case shall include fees and out-of-pocket expenses of
counsel for the Administrative Agent, the Managing Agents, the Syndication Agent
and the Documentation Agent and the Banks.
Section 11.3 Waivers. The rights and remedies of the Administrative
Agent and the Banks under this Agreement and the other Loan Documents shall be
cumulative and not exclusive of any rights or remedies which they would
otherwise have. No failure or delay by the Administrative Agent, the Majority
Banks, or the Banks, or any of them, in exercising any right, shall operate as a
waiver of such right. The Administrative Agent and the Banks expressly reserve
the right to require strict compliance with the terms of this Agreement in
connection with any future funding of a Request for Advance. In the event the
Banks decide to fund a Request for Advance at a time when the Borrower is not in
strict compliance with the terms of this Agreement, such decision by the Banks
shall not be deemed to constitute an undertaking by the Banks to fund any
further
- 90 -
<PAGE> 90
Request for Advance or preclude the Banks or the Administrative Agent from
exercising any rights available under the Loan Documents or at law or equity.
Any waiver or indulgence granted by the Administrative Agent, the Banks, or the
Majority Banks, or any of them, shall not constitute a modification of this
Agreement or any other Loan Document, except to the extent expressly provided in
such waiver or indulgence, or constitute a course of dealing at variance with
the terms of this Agreement or any other Loan Document such as to require
further notice of their intent to require strict adherence to the terms of this
Agreement or any other Loan Document in the future.
Section 11.4 Set-Off. In addition to any rights now or hereafter
granted under Applicable Law and not by way of limitation of any such rights,
upon the occurrence of an Event of Default and during the continuation thereof,
the Administrative Agent and each of the Banks are hereby authorized by the
Borrower at any time or from time to time, without notice to the Borrower or to
any other Person, any such notice being hereby expressly waived, to set off and
to appropriate and to apply any and all deposits (general or special, time or
demand, including, but not limited to, Indebtedness evidenced by certificates of
deposit, in each case whether matured or unmatured) and any other Indebtedness
at any time held or owing by any Bank or the Administrative Agent, to or for the
credit or the account of the Borrower or any of its Subsidiaries, against and on
account of the obligations and liabilities of the Borrower to the Banks and the
Administrative Agent, including, but not limited to, all Obligations and any
other claims of any nature or description arising out of or connected with this
Agreement, the Notes or any other Loan Document, irrespective of whether (a) any
Bank or the Administrative Agent shall have made any demand hereunder or (b) any
Bank or the Administrative Agent shall have declared the principal of and
interest on the Loans and other amounts due hereunder to be due and payable as
permitted by Section 8.2 and although such obligations and liabilities or any of
them shall be contingent or unmatured. Upon direction by the Administrative
Agent with the consent of the Banks, each Bank holding deposits of the Borrower
or any of its Subsidiaries shall exercise its set-off rights as so directed.
Section 11.5 Assignment.
(a) The Borrower may not assign or transfer any of its rights or
obligations hereunder, under the Notes or under any other Loan Document without
the prior written consent of each Bank.
(b) Each Bank may sell assignments or participations of one hundred
percent (100%) of its interests hereunder to (A) one or more affiliates of such
Bank, or (B) any Federal Reserve Bank as collateral security pursuant to
Regulation A of the Board of Governors of the Federal Reserve System and any
Operating Circular issued by such Federal Reserve Bank without limitation.
- 91 -
<PAGE> 91
(c) Each of the Banks may at any time enter into assignment
agreements or participations with one or more other banks or other Persons
pursuant to which such Bank may assign or participate its interests under this
Agreement and the other Loan Documents, including its interest in any particular
Advance or portion thereof, provided, that all assignments and participations
(other than assignments to another Bank, which may be made without limitation,
whether as to dollar amount or otherwise, so long as, if such assignment takes
place after the occurrence of an Event of Default such assignment is made with
the prior written consent of the Administrative Agent, which consent shall not
be unreasonably withheld, and other assignments and participations described in
Section 11.5(b) which may be made without any limitation whatsoever) shall be in
minimum principal amounts of $5,000,000, and shall be subject to the following
additional terms and conditions:
(i) No assignment shall be sold without the prior consent of the
Administrative Agent and, prior to the occurrence of an Event of Default,
the consent of the Borrower, which consents shall not be unreasonably
withheld;
(ii) Any Person purchasing a participation or an assignment of
any portion of the Loans from any Bank shall be required to represent and
warrant that its purchase shall not constitute a "prohibited transaction"
(as defined in Section 4.1(m) hereof);
(iii) Assignments permitted hereunder (including the assignment of
any Advance or portion thereof) may be made with all voting rights, and
shall be made pursuant to an Assignment and Assumption Agreement
substantially in the form of Exhibit M attached hereto;
(iv) An administrative fee of $2,500 shall be payable to the
Administrative Agent by the assigning Bank at the time of any assignment
hereunder;
(v) [RESERVED];
(vi) No participation agreement shall confer any rights under
this Agreement or any other Loan Document to any purchaser thereof, or
relieve any issuing Bank from any of its obligations under this Agreement,
and all actions hereunder shall be conducted as if no such participation
had been granted; provided, however, that any participation agreement may
confer on the participant the right to approve or disapprove decreases in
the interest rate, increases in the principal amount of the Loans
participated in by such participant, decreases in fees, extensions of the
Maturity Date or other principal payment date for the Loans or of a
scheduled reduction of either Commitment or releases of Collateral or any
Subsidiary Guaranty;
(vii) Each Bank agrees to provide the Administrative Agent and the
- 92 -
<PAGE> 92
Borrower with prompt written notice of any issuance of participations in
or assignments of its interests hereunder;
(viii) No assignment, participation or other transfer of any rights
hereunder or under the Notes shall be effected that would result in any
interest requiring registration under the Securities Act of 1933, as
amended, or qualification under any state securities law;
(ix) No such assignment may be made to any bank or other
financial institution (x) with respect to which a receiver or conservator
(including, without limitation, the Federal Deposit Insurance Corporation,
the Resolution Trust Company or the Office of Thrift Supervision) has been
appointed or (y) that is not "adequately capitalized" (as such term is
defined in Section 131(b)(1)(B) of the Federal Deposit Insurance
Corporation Improvement Act as in effect on the Agreement Date); and
(x) If applicable, each Bank shall, and shall cause each of its
assignees to, provide to the Administrative Agent on or prior to the
effective date of any assignment an appropriate Internal Revenue Service
form as required by Applicable Law supporting such Bank's or assignee's
position that no withholding by the Borrower or the Administrative Agent
for U.S. income tax payable by such Bank or assignee in respect of amounts
received by it hereunder is required. For purposes of this Agreement, an
appropriate Internal Revenue Service form shall mean Form 1001 (Ownership
Exemption or Reduced Rate Certificate of the U.S. Department of Treasury),
or Form 4224 (Exemption from Withholding of Tax on Income Effectively
Connected with the Conduct of a Trade or Business in the United States),
or any successor or related forms adopted by the relevant U.S. taxing
authorities.
(d) Except as specifically set forth in Section 11.5(c) hereof,
nothing in this Agreement or the Notes, expressed or implied, is intended to or
shall confer on any Person other than the respective parties hereto and thereto
and their successors and assignees permitted hereunder and thereunder any
benefit or any legal or equitable right, remedy or other claim under this
Agreement or the Notes.
(e) In the case of any participation, all amounts payable by the
Borrower under the Loan Documents shall be calculated and made in the manner and
to the parties hereto as if no such participation had been sold.
(f) The provisions of this Section 11.5 shall not apply to any
purchase of participations among the Banks pursuant to Section 2.11 hereof.
Section 11.6 Accounting Principles. All references in this Agreement to
GAAP shall be to such principles as in effect from time to
- 93 -
<PAGE> 93
time. All accounting terms used herein without definition shall be used as
defined under GAAP. All references to the financial statements of the Borrower
and to its Net Income, Operating Cash Flow, Senior Debt, Total Debt, Interest
Expense, Pro Forma Debt Service, and other such terms shall be deemed to refer
to such items of the Borrower and the Restricted Subsidiaries, on a fully
consolidated basis.
Section 11.7 Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original, but all such
separate counterparts shall together constitute but one and the same instrument.
Section 11.8 Governing Law. This Agreement and the Notes shall be
construed in accordance with and governed by the internal laws of the State of
New York applicable to agreements made and to be performed in New York. If any
action or proceeding shall be brought by the Administrative Agent or any Bank
hereunder or under any other Loan Document in order to enforce any right or
remedy under this Agreement or under any Note or any other Loan Document, the
Borrower hereby consents and will, and the Borrower will cause each Subsidiary
to, submit to the jurisdiction of any state or federal court of competent
jurisdiction sitting within the area comprising the Southern District of New
York on the date of this Agreement. The Borrower, for itself and on behalf of
its Subsidiaries, hereby agrees that service of the summons and complaint and
all other process which may be served in any such suit, action or proceeding may
be effected by mailing by registered mail a copy of such process to the offices
of the Borrower at the address given in Section 11.1 hereof and that personal
service of process shall not be required. Nothing herein shall be construed to
prohibit service of process by any other method permitted by law, or the
bringing of any suit, action or proceeding in any other jurisdiction. The
Borrower agrees that final judgment in such suit, action or proceeding shall be
conclusive and may be enforced in any other jurisdiction by suit on the judgment
or in any other manner provided by Applicable Law.
Section 11.9 Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall be ineffective to the
extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof in that jurisdiction or affecting the validity or
enforceability of such provision in any other jurisdiction.
Section 11.10 Interest.
(a) In no event shall the amount of interest due or payable
hereunder or under the Notes exceed the maximum rate of interest allowed by
Applicable Law, and in the event any such payment is inadvertently made by the
Borrower or inadvertently received by the Administrative Agent or any Bank, then
such excess sum shall be credited as a payment of principal, unless the Borrower
shall notify the Administrative Agent or such Bank, in
- 94 -
<PAGE> 94
writing, that it elects to have such excess sum returned forthwith. It is the
express intent hereof that the Borrower not pay and the Administrative Agent and
the Banks not receive, directly or indirectly in any manner whatsoever, interest
in excess of that which may legally be paid by the Borrower under Applicable
Law.
(b) Notwithstanding the use by the Banks of the Base Rate and the
Eurodollar Rate as reference rates for the determination of interest on the
Loans, the Banks shall be under no obligation to obtain funds from any
particular source in order to charge interest to the Borrower at interest rates
related to such reference rates.
Section 11.11 Table of Contents and Headings. The Table of Contents and
the headings of the various subdivisions used in this Agreement are for
convenience only and shall not in any way modify or amend any of the terms or
provisions hereof, nor be used in connection with the interpretation of any
provision hereof.
Section 11.12 Amendment and Waiver. Neither this Agreement nor any term
hereof may be amended orally, nor may any provision hereof be waived orally but
only by an instrument in writing signed by the Majority Banks and the
Administrative Agent and, in the case of an amendment, by the Borrower, except
that in the event of (a) any increase in the amount of any Commitment, (b) any
delay or extension in the terms of repayment of the Loans or any mandatory
reductions in either Commitment provided in Sections 2.5 or 2.7 hereof, (c) any
reduction in principal, interest or fees due hereunder or postponement of the
payment thereof without a corresponding payment by the Borrower, (d) any release
of any portion of the Collateral for the Loans, except in connection with a
merger, sale or other disposition otherwise permitted hereunder (in which case
such release shall require no further approval by the Banks), (e) any waiver of
any Default due to the failure by the Borrower to pay any sum due to any of the
Banks hereunder, (f) any release of any Guaranty of all or any portion of the
Obligations, except in connection with a merger, sale or other disposition
otherwise permitted hereunder (in which case, such release shall require no
further approval by the Banks), or (g) any amendment of this Section 11.12, of
the definition of Majority Banks, or of any Section herein to the extent that
such Section requires action by all Banks, any amendment or waiver or consent
may be made only by an instrument in writing signed by each of the Banks and the
Administrative Agent and, in the case of an amendment, by the Borrower. Any
amendment to any provision hereunder governing the rights, obligations, or
liabilities of the Administrative Agent may be made only by an instrument in
writing signed by the Administrative Agent and by each of the Banks.
Section 11.13 Entire Agreement. Except as otherwise
expressly provided herein, this Agreement and the other documents described or
contemplated herein will embody the entire agreement and understanding among the
parties hereto and thereto and supersede all prior agreements and understandings
relating to the
- 95 -
<PAGE> 95
subject matter hereof and thereof.
Section 11.14 Other Relationships. No relationship created hereunder or
under any other Loan Document shall in any way affect the ability of the
Administrative Agent and each Bank to enter into or maintain business
relationships with the Borrower or any of its Affiliates beyond the
relationships specifically contemplated by this Agreement and the other Loan
Documents.
Section 11.15 Directly or Indirectly. If any provision in this Agreement
refers to any action taken or to be taken by any Person, or which such Person is
prohibited from taking, such provision shall be applicable whether such action
is taken directly or indirectly by such Person, whether or not expressly
specified in such provision.
Section 11.16 Reliance on and Survival of Various Provisions. All
covenants, agreements, statements, representations and warranties made herein or
in any certificate delivered pursuant hereto (i) shall be deemed to have been
relied upon by the Administrative Agent and each of the Banks notwithstanding
any investigation heretofore or hereafter made by any of them, and (ii) shall
survive the execution and delivery of the Notes and shall continue in full force
and effect so long as any Note is outstanding and unpaid. Any right to
indemnification hereunder, including, without limitation, rights pursuant to
Sections 2.10, 2.12, 5.11, 10.3 and 11.2 hereof, shall survive the termination
of this Agreement and the payment and performance of all Obligations.
Section 11.17 Senior Debt. The Obligations are secured by the Security
Documents and are intended by the parties hereto to be senior in right of
payment to all other Indebtedness of the Borrower.
Section 11.18 Obligations Several. The obligations of the Administrative
Agent and each of the Banks hereunder are several, not joint.
ARTICLE 12 Waiver of Jury Trial
Waiver of Jury Trial
Section 12.1 Waiver of Jury Trial. THE BORROWER, FOR ITSELF AND ON
BEHALF OF THE SUBSIDIARIES, AND EACH OF THE ADMINISTRATIVE AGENT AND THE BANKS,
HEREBY AGREE TO WAIVE AND HEREBY WAIVE THE RIGHT TO A TRIAL BY JURY IN ANY COURT
AND IN
- 96 -
<PAGE> 96
ANY ACTION OR PROCEEDING OF ANY TYPE IN WHICH THE BORROWER, ANY OF THE
BORROWER'S SUBSIDIARIES, ANY OF THE BANKS, THE ADMINISTRATIVE AGENT, OR ANY OF
THEIR RESPECTIVE SUCCESSORS OR ASSIGNS IS A PARTY, AS TO ALL MATTERS AND THINGS
ARISING DIRECTLY OR INDIRECTLY OUT OF THIS AGREEMENT, ANY OF THE NOTES OR THE
OTHER LOAN DOCUMENTS AND THE RELATIONS AMONG THE PARTIES LISTED IN THIS SECTION
12.1. EXCEPT AS PROHIBITED BY LAW, EACH PARTY TO THIS AGREEMENT WAIVES ANY
RIGHTS IT MAY HAVE TO CLAIM OR RECOVER IN ANY LITIGATION REFERRED TO IN THIS
SECTION, ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY
DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES. EACH PARTY TO THIS
AGREEMENT (i) CERTIFIES THAT NEITHER ANY REPRESENTATIVE, AGENT OR ATTORNEY OF
THE ADMINISTRATIVE AGENT OR ANY BANK HAS REPRESENTED, EXPRESSLY OR OTHERWISE,
THAT THE ADMINISTRATIVE AGENT OR ANY BANK WOULD NOT, IN THE EVENT OF LITIGATION,
SEEK TO ENFORCE THE FOREGOING WAIVERS AND (ii) ACKNOWLEDGES THAT IT HAS BEEN
INDUCED TO ENTER INTO THIS AGREEMENT AND EACH OTHER LOAN DOCUMENT BY, AMONG
OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION. THE
PROVISIONS OF THIS SECTION HAVE BEEN FULLY DISCLOSED BY AND TO THE PARTIES AND
THE PROVISIONS SHALL BE SUBJECT TO NO EXCEPTIONS. NO PARTY HAS IN ANY WAY AGREED
WITH OR REPRESENTED TO ANY OTHER PARTY THAT THE PROVISIONS OF THIS SECTION WILL
NOT BE FULLY ENFORCED IN ALL INSTANCES.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
- 97 -
<PAGE> 97
IN WITNESS WHEREOF, the parties hereto have executed this Agreement or
caused it to be executed by their duly authorized officers, all as of the day
and year first above written.
METROCALL, INC., a Delaware corporation
By:
Name:
Title:
- 98 -
<PAGE> 98
TORONTO DOMINION (TEXAS), INC., as
Administrative Agent, as a Managing Agent and as a
Bank
By:
Name:
Title:
Metrocall, Inc.
Third Amended and Restated Loan Agreement
Signature Page 99
<PAGE> 99
BANKBOSTON, N.A., as a Managing Agent and as a
Bank
By:
Name:
Title:
Metrocall, Inc.
Third Amended and Restated Loan Agreement
Signature Page 100
<PAGE> 100
NATIONSBANK, N.A., as a Documentation Agent, as a
Managing Agent and as a Bank
By:
Name:
Title:
Metrocall, Inc.
Third Amended and Restated Loan Agreement
Signature Page 101
<PAGE> 101
FIRST UNION NATIONAL BANK, as a
Documentation Agent and as a Bank
By:
Name:
Title:
Metrocall, Inc.
Third Amended and Restated Loan Agreement
Signature Page 102
<PAGE> 102
FLEET NATIONAL BANK, as a Bank
By:
Name:
Title:
Metrocall, Inc.
Third Amended and Restated Loan Agreement
Signature Page 103
<PAGE> 103
ROYAL BANK OF CANADA, as a Bank
By:
Name:
Title:
Metrocall, Inc.
Third Amended and Restated Loan Agreement
Signature Page 104
<PAGE> 104
PNC BANK, NATIONAL ASSOCIATION, as a Bank
By:
Name:
Title:
Metrocall, Inc.
Third Amended and Restated Loan Agreement
Signature Page 105
<PAGE> 105
RIGGS BANK N.A., as a Bank
By:
Name:
Title:
Metrocall, Inc.
Third Amended and Restated Loan Agreement
Signature Page 106
<PAGE> 106
SUNTRUST BANK, CENTRAL FLORIDA, N.A.,
as a Bank
By:
Name:
Title:
Metrocall, Inc.
Third Amended and Restated Loan Agreement
Signature Page 107
<PAGE> 107
VAN KAMPEN AMERICAN CAPITAL PRIME RATE
INCOME TRUST, as a Bank
By:
Name:
Title:
Metrocall, Inc.
Third Amended and Restated Loan Agreement
Signature Page 108
<PAGE> 108
FINOVA CAPITAL CORPORATION, as a Bank
By:
Name:
Title:
Metrocall, Inc.
Third Amended and Restated Loan Agreement
Signature Page 109
<PAGE> 109
COMMERCIAL LOAN FUNDING TRUST I, as a Bank
By: LEHMAN COMMERCIAL PAPER, INC., not in
its individual capacity but solely as Administrative Agent
By:
Name:
Title:
Metrocall, Inc.
Third Amended and Restated Loan Agreement
Signature Page 110
<PAGE> 110
DEBT STRATEGIES FUND II, INC., as a Bank
By:
Name:
Title:
Metrocall, Inc.
Third Amended and Restated Loan Agreement
Signature Page 111
<PAGE> 111
VAN KAMPEN AMERICAN CAPITAL SENIOR
INCOME TRUST, as a Bank
By:
Name:
Title:
Metrocall, Inc.
Third Amended and Restated Loan Agreement
Signature Page 112
<PAGE> 112
KZH CNC LLC, as a Bank
By:
Name:
Title:
Metrocall, Inc.
Third Amended and Restated Loan Agreement
Signature Page 113
<PAGE> 113
MORGAN STANLEY SENIOR FUNDING, INC., as a Bank
By:
Name:
Title:
Metrocall, Inc.
Third Amended and Restated Loan Agreement
Signature Page 114
<PAGE> 1
EXHIBIT 11.1
METROCALL, INC.
STATEMENT RE COMPUTATION OF EARNINGS PER SHARE
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended September 30, Nine Months Ended September 30,
--------------------------------- ----------------------------------
1997 1998 1997 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net loss $ (13,836) $ (29,154) $ (37,888) $ (86,087)
Preferred dividends (2,184) (2,499) (5,353) (7,271)
------------- ------------ ------------ ------------
Net loss attributable to common stockholders $ (16,020) $ (31,653) $ (43,241) $ (93,358)
============= ============ ============ ============
Weighted-average shares outstanding:
Shares outstanding, beginning of period 24,521,135 40,548,414 24,521,135 40,548,414
Shares issued in acquisitions 4,443,932 - 1,776,462 -
Share issued for exercise of stock options 1,896 - 1,146
Shares issued in settlement of litigation - 270,000 - 270,000
Shares issued in employee stock purchase plan 109,747 112,801 60,037 72,863
------------- ------------ ------------ ------------
Weighted-average shares outstanding 29,076,710 40,931,215 26,358,780 40,891,277
============= ============ ============ ============
Loss per share attributable to common stockholders $ (0.55) $ (0.77) $ (1.64) $ (2.28)
============= ============ ============ ============
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 5,105
<SECURITIES> 0
<RECEIVABLES> 36,028
<ALLOWANCES> 7,175
<INVENTORY> 2,812
<CURRENT-ASSETS> 55,841
<PP&E> 371,010
<DEPRECIATION> 151,713
<TOTAL-ASSETS> 986,698
<CURRENT-LIABILITIES> 68,513
<BONDS> 617,330
61,254
0
<COMMON> 410
<OTHER-SE> 87,518
<TOTAL-LIABILITY-AND-EQUITY> 986,689
<SALES> 33,529
<TOTAL-REVENUES> 312,474
<CGS> 20,941
<TOTAL-COSTS> 363,072
<OTHER-EXPENSES> (626)
<LOSS-PROVISION> 10,196
<INTEREST-EXPENSE> 47,035
<INCOME-PRETAX> (117,948)
<INCOME-TAX> (31,861)
<INCOME-CONTINUING> (86,087)
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</TABLE>
