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EXHIBIT 10.37
THE CHASE MANHATTAN BANK N.A.
One Chase Manhattan Plaza
New York, New York 10005
CHASE SECURITIES, INC.
One Chase Manhattan Plaza
New York, New York 10005
GLENAYRE ELECTRONICS INC.
5935 Carnegie Boulevard
Charlotte, North Carolina 28209
June 25, 1996
PCSD Financial Corp.
$225 Million Equipment Financing Credit Facilities
Commitment Letter
PCSD Financial Corp.
15 South Main Street
Suite 810
Greenville, South Carolina 29601
Attention: Mr. Mark Moore
Chief Financial Officer
Ladies and Gentlemen:
You have advised The Chase Manhattan Bank N.A. ("Chase"),
Chase Securities, Inc. ("CSI") and Glenayre Electronics Inc. ("Glenayre") that
PCSD Financial Corp. (the "Borrower") and its subsidiaries intend to construct
and operate a nationwide paging system (the "Project") and that, in connection
therewith, you have need for $225,000,000 of senior credit facilities (the
"Facilities") to provide a portion of the financing necessary in connection
therewith.
CSI is pleased to advise you that it is willing to act as
exclusive advisor and arranger for the Facilities, Chase is pleased to advise
you that it is willing to provide the entire $150,000,000 of the "Tranche A
Facility" and the "Tranche B Facility" referred to in the Term Sheet and to act
as administrative agent in respect of the Facilities, and Glenayre is pleased
to advise you that it is willing to provide the entire $75,000,000 of the
"Glenayre
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Facility" referred to in the Term Sheet. Attached hereto as Exhibit A is a
Summary of Terms and Conditions (the "Term Sheet") setting forth the principal
terms and conditions on and subject to which Chase and Glenayre are willing to
make available their respective portions of the Facilities. It is a condition
to Chase's commitments hereunder that the portion of the Facilities being
provided by Glenayre shall be provided and it is a condition to Glenayre's
commitments hereunder that the portion of the Facilities not being provided by
Gleanayre shall be provided by Chase or the Syndicated Lenders referred to
below.
You agree that no other agents, co-agents or arrangers will be
appointed, no other titles will be awarded and no compensation (other than that
expressly contemplated by the Term Sheet and the Fee Letter referred to below)
will be paid in connection with the Facilities unless you and we shall so
agree.
Chase intends to syndicate the Tranche A Facility and the
Tranche B Facility (including, in our discretion, all or part of Chase's
commitment hereunder) to a group of financial institutions (the "Syndicated
Lenders" and together with Chase and Glenayre, the "Lenders") identified by
Chase and CSI in consultation with you. CSI intends to commence syndication
efforts promptly upon the execution of this Commitment Letter, and you agree
actively to assist CSI in completing a syndication satisfactory to it. Such
assistance shall include (a) your direct contact between senior management and
advisors of the Borrower and the proposed Lenders, (b) assistance in the
preparation of a Confidential Information Memorandum and other marketing
materials to be used in connection with the syndication and (c) the hosting,
with CSI, of one or more meetings of prospective Lenders.
CSI will manage all aspects of the syndication, including
decisions as to the selection of institutions to be approached and when they
will be approached, when their commitments will be accepted, which institutions
will participate, the allocations of the commitments among the Syndicated
Lenders and the amount and distribution of fees among the Syndicated Lenders.
To assist CSI in its syndication efforts, you agree promptly to prepare and
provide to CSI, Chase and Glenayre all information with respect to the
Borrower, the Project and the other transactions contemplated hereby, including
all financial information and projections (the "Projections"), as we may
reasonably request in connection with the arrangement and syndication of the
Facilities. You hereby represent and covenant that (a) all information other
than the Projections (the "Information") that has been or will be made
available to Chase, Glenayre or CSI by you or any of your representatives is or
will be, when furnished, complete and correct in all material respects and does
not or will not, when furnished, contain any untrue statement of a material
fact or omit to state a material fact necessary in order to make the statements
contained therein not materially misleading in light of the circumstances under
which such statements are made and (b) the Projections that have been or will
be made available to Chase, Glenayre or CSI by you or any of your
representatives have been or will be prepared in good faith based upon
reasonable assumptions. In arranging and syndicating the Facilities, we will
use and rely on the Information and Projections without independent
verification thereof.
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As consideration for Chase's commitment hereunder and CSI's
agreement to perform the services described herein, you agree to pay to Chase
the nonrefundable fees set forth in the Fee Letter dated the date hereof and
delivered herewith (the "Fee Letter").
Chase's and Glenayre's commitments hereunder and CSI's
agreement to perform the services described herein are subject to (a) there not
occurring or becoming known to us any material adverse condition or material
adverse change in or affecting the business, operations, property, condition
(financial or otherwise) or prospects of the Borrower and its subsidiaries,
taken as a whole, (b) our completion of and satisfaction in all respects with a
due diligence investigation of the Borrower and the Project, (c) our not
becoming aware after the date hereof of any information or other matter which
is inconsistent in a material and adverse manner with any information or other
matter disclosed to us prior to the date hereof, (d) there not having occurred
a material disruption of or material adverse change in financial, banking or
capital market conditions that, in our judgment, could materially impair the
syndication of the Facilities, (e) our satisfaction that prior to and during
the syndication of the Facilities there shall have been no competing offering,
placement or arrangement of any debt securities or bank financing by or on
behalf of the Borrower or any affiliate thereof (other than the Senior Notes
referred to in the Term Sheet), (f) the negotiation, execution and delivery on
or before August 31, 1996 of definitive documentation with respect to the
Facilities satisfactory to Chase and Glenayre and their respective counsel and
(g) the other conditions set forth in the Term Sheet. The terms and conditions
of Chase's and Glenayre's commitments hereunder and of the Facilities are not
limited to those set forth herein and in the Term Sheet. Those matters that
are not covered by the provisions hereof and of the Term Sheet are subject to
the approval and agreement of Chase, CSI, Glenayre and the Borrower.
You agree (a) to indemnify and hold harmless Chase, CSI,
Glenayre and their respective officers, directors, employees, affiliates,
advisors, agents and controlling persons (each, an "indemnified person") from
and against any and all losses, claims damages and liabilities to which any
such indemnified person may become subject arising out of or in connection with
this Commitment Letter, the Facilities, the use of the proceeds thereof, the
Project or any related transaction or any claim, litigation, investigation or
proceeding relating to any of the foregoing, regardless of whether any
indemnified person is a party thereto, and to reimburse each indemnified person
upon demand for any legal or other expenses incurred in connection with
investigating or defending any of the foregoing, provided that the foregoing
indemnity will not, as to any indemnified person, apply to losses, claims,
damages, liabilities or related expenses to the extent they arise from the
willful misconduct or gross negligence of such indemnified person, and (b) to
reimburse Chase, CSI, Glenayre and their affiliates on demand for all
reasonable out-of-pocket expenses (including due diligence expenses,
syndication expenses, travel expenses, and reasonable fees, charges and
disbursements of counsel) incurred in connection with the Facilities and any
related documentation (including this Commitment Letter, the Term Sheet, the
Fee Letter and the definitive financing documentation). No indemnified person
shall be liable for any indirect or consequential damages in connection with
its activities related to the Facilities.
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This Commitment Letter shall not be assignable by you without
the prior written consent of Chase, CSI and Glenayre (and any purported
assignment without such consent shall be null and void), is intended to be
solely for the benefit of the parties hereto and is not intended to confer any
benefits upon, or create any rights in favor of, any person other than the
parties hereto. This Commitment Letter may not be amended or waived except by
an instrument in writing signed by you, Chase, CSI and Glenayre. This
Commitment Letter may be executed in any number of counterparts, each of which
shall be an original, and all of which, when taken together, shall constitute
one agreement. Delivery of an executed signature page of this Commitment
Letter by facsimile transmission shall be effective as delivery of a manually
executed counterpart hereof. This Commitment Letter and the Fee Letter are the
only agreements which have been entered into among us with respect to the
Facilities and set forth the entire understanding of the parties with respect
thereto. This Commitment Letter shall be governed by, and construed in
accordance with, the laws of the State of New York.
This Commitment Letter is delivered to you on the
understanding that neither this Commitment Letter, the Term Sheet or the Fee
Letter nor any of their terms or substance shall be disclosed, directly or
indirectly, to any other person except (a) to your officers, agents and
advisors who are directly involved in the consideration of this matter or (b)
as may be compelled in a judicial or administrative proceeding or as otherwise
required by law (in which case you agree to inform us promptly thereof).
The compensation, reimbursement, indemnification and
confidentiality provisions contained herein and in the Fee Letter shall remain
in full force and effect regardless of whether definitive financing
documentation shall be executed and delivered and notwithstanding the
termination of this Commitment Letter or Chase's and Glenayre's commitments
hereunder.
If the foregoing correctly sets forth our agreement, please
indicate your acceptance of the terms hereof and of the Term Sheet and the Fee
Letter by returning to us executed counterparts hereof and of the Fee Letter
not later than 5:00 p.m., New York City time, on July 1, 1996. Chase's and
Glenayre's commitments and CSI's agreements herein will expire at such time in
the event Chase and Glenayre have not received such executed counterparts of
this letter and, if the case of Chase only, the Fee Letter, in accordance with
the immediately preceding sentence.
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Chase, CSI and Glenayre are pleased to have been given the
opportunity to assist you in connection with this important financing.
Very truly yours,
THE CHASE MANHATTAN BANK, N.A.
By:____________________________
Title:
CHASE SECURITIES, INC.
By:____________________________
Title:
GLENAYRE ELECTRONICS INC.
By:____________________________
Title:
Accepted and agreed to
as of the date first
written above by:
PCSD FINANCIAL CORP.
By:____________________________
Title:
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$225 MILLION EQUIPMENT FINANCING CREDIT FACILITIES
Summary of Terms and Conditions
June 25, 1996
I. Parties
Borrower: PCSD Financial Corp. (the "Borrower").
Guarantors: Each of the Borrower's direct and indirect
subsidiaries (the "Guarantors"; the Borrower
and the Guarantors, collectively, the "Credit
Parties").
Lenders: In the case of the Tranche A and Tranche B
Loans, the banks, financial institutions and
other entities, including The Chase Manhattan
Bank N.A. ("Chase"), selected in the
syndication effort and, in the case of the
Glenayre Credit Extensions, Glenayre
Electronics Inc. ("Glenayre") (all of the
foregoing, collectively, the "Lenders").
Advisor and Arranger: Chase and/or Chase Securities, Inc. (in such
capacity, the "Arranger").
Administrative Agent: Chase (in such capacity, the "Administrative
Agent").
II. Types and Amounts of Credit Facilities
1. Glenayre Facility
Type and Amount of
Facility: 4-year multiple drawdown term loan facility
in the amount of $75,000,000 (the extensions
of credit thereunder, the "Glenayre Credit
Extensions").
Availability: The Glenayre Facility shall be available for
extensions of credit against the Borrower's
purchases of Glenayre equipment, related
software and technical services during the
period commencing on the Closing Date and
ending on the date which is three and one
half
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years thereafter (the "Glenayre Conversion
Date"), after which the Glenayre Credit
Extensions will amortize as described below.
Amortization: The Glenayre Credit Extensions outstanding on
the Glenayre Conversion Date shall be
repayable in two consecutive quarterly
installments, commencing on March 31, 2000,
and ending on June 30, 2000, in an equal
amount for each quarter based on the amount
of the Glenayre Credit Extensions outstanding
on the Glenayre Conversion Date.
Purpose: The Glenayre Credit Extensions shall be
available to finance the acquisition by the
Borrower from Glenayre of Glenayre equipment,
related software and technical services
associated with the installation and
servicing of Glenayre equipment.
2. Tranche A Facility
Type and Amount of
Facility: 4-year revolving credit facility (the
"Tranche A Facility" in the amount of
$35,000,000 (the loans thereunder, the
"Tranche A Loans").
Availability: The Tranche A Facility shall be available on
a revolving basis during the period
commencing on the Closing Date (as defined
below) and ending on the date which is three
and one half years thereafter (the "Tranche A
Conversion Date"), after which the Tranche A
Loans will amortize as described below.
Amortization: The Tranche A Loans outstanding on the
Tranche A Conversion Date shall be repayable
in two consecutive quarterly installments,
commencing on March 31, 2000, and ending on
June 30, 2000, in an equal amount for each
quarter based on the amount of the Tranche A
Loans outstanding on the Tranche A Conversion
Date.
Purpose: The proceeds of the Tranche A Loans shall be
used to finance the working capital and
capital expenditure
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needs of the Borrower and its subsidiaries in
the ordinary course of business.
3. Tranche B Facility
Type and Amount of
Facility: 8-year reducing revolving credit facility
(the "Tranche B Facility; together with the
Glenayre Facility and Tranche A Facility, the
"Credit Facilities") in the amount of
$115,000,000 (the loans thereunder, the
"Tranche B Loans").
Availability: The Tranche B Facility shall be available on
a revolving basis during the period
commencing on the Closing Date and ending on
June 30, 2004 (the "Tranche B Termination
Date"), provided that the Tranche B Facility
shall automatically terminate on June 30,
2000 unless the initial borrowing thereunder
is made on or before such date.
Stepdowns: The Tranche B Facility shall be reduced in
fourteen consecutive quarterly installments,
commencing on March 31, 2001 and ending on
June 30, 2004, in an aggregate amount for
each calendar year set forth below equal to
the percentage set forth opposite such year
multiplied by the amount of the Tranche B
Facility (with the installments during each
such year being equal in amount):
Year Percentage
---- ----------
2001 10.0%
2002 22.5
2003 37.5
2004 30.0
Maturity: The Tranche B Termination Date.
Purpose: The proceeds of the Tranche B Loans shall be
used to finance the working capital and
capital expenditure needs of the Borrower and
its subsidiaries in the ordinary course of
business and to repay maturing Glenayre
Credit Extensions and Tranche A Loans.
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III. General Payment Provisions
Fees and Interest Rates: As set forth on Annex I.
Optional Prepayments and Loans may be prepaid and commitments may be
Commitment Reductions: reduced by the Borrower in minimum amounts to
be agreed upon, provided that Eurodollar
Loans (as defined in Annex I) may only be
prepaid on the last day of an interest period
applicable thereto. Optional prepayments of
the Loans and reductions of the commitments
to lend under the Credit Facilities shall be
applied ratably among the Credit Facilities
and, with respect to each Credit Facility, to
the installments and mandatory stepdowns
thereof ratably in accordance with the then
outstanding amounts thereof. In the case of
any such reduction of a revolving credit
commitment to lend under the Tranche B
Facility, the Loans thereunder shall be
prepaid to the extent they exceed the Tranche
B Facility as so reduced.
Mandatory Prepayments and The following amounts shall be applied to
Commitment Reductions: prepay the Loans and reduce the Credit
Facilities:
(a) subject to certain exceptions to be
agreed upon, 50% of the net proceeds of any
sale or issuance of equity or incurrence of
indebtedness after the Closing Date by the
corporation which is the owner of all of the
capital stock of the Borrower (the "Parent")
or by the Borrower or any of its
subsidiaries;
(b) 100% of the net proceeds of any sale or
other disposition by the Borrower or any of
its subsidiaries of any material assets
(except for the sale of inventory or obsolete
or worn-out property in the ordinary course
of business and certain other sales to be
agreed on);
(c) 100% of the net proceeds of any
insurance or condemnation recoveries not
reasonably promptly applied toward repair
or replacement of the affected property; and
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(d) a percentage of Excess Cash Flow for
each fiscal year of the Borrower based on the
Borrower's Leverage Ratio as set forth on
Annex II (commencing with the fiscal year
ending December 31, 1998).
All such prepayments of the Loans and
reductions of the commitments to lend under
the Credit Facilities shall be applied
ratably between the Credit Facilities (except
that any such prepayment made with the
proceeds of the sale of any equipment,
related software and technical services
supplied by Glenayre shall be applied, so
long as any Glenayre Credit Extensions are
outstanding, first to the Glenayre Credit
Extensions) and, with respect to each Credit
Facility, to the installments and mandatory
stepdowns thereof ratably in accordance with
the then outstanding amounts thereof. In the
case of any such reduction of a revolving
credit commitment to lend under the Tranche B
Facility, the Loans thereunder shall be
prepaid to the extent they exceed the Tranche
B Facility as so reduced.
IV. Guarantees and Collateral (See Annex III)
Guarantees: All obligations of the Borrower under the
Credit Documentation shall be unconditionally
guaranteed by the Guarantors.
Collateral: All the assets used in the business of the
Borrower will be lodged in one of three
separate subsidiaries of the Borrower into
which will be placed, respectively: (a) all
FCC and other governmental licenses and
permits ("the License Subsidiary"), (b) all
real estates leasehold interests (the
"Leasehold Subsidiary"), and (c) all other
assets (the "Operating Subsidiary"). The
obligations of the Borrower under the Credit
Facilities will be secured by a pledge of all
the capital stock of such Subsidiaries. In
addition, the Operating Subsidiary will
create perfected liens on receivables,
general intangibles and all equipment owned
by it that shall be supplied by Glenayre and
other vendors.
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All collateral will be held by Chase as
collateral agent for the Lenders and will be
shared by them equally and ratably, except
that the Glenayre Credit Extensions will have
a first priority security interest in the
equipment and related software supplied by
Glenayre.
V. Certain Conditions
Initial Conditions: The availability of the Credit Facilities
shall be conditioned upon satisfaction of,
among other things, the following conditions
precedent (the date upon which all such
conditions precedent shall be satisfied, the
"Closing Date") on or before June 30, 1996:
(a) Each Credit Party shall have executed and
delivered satisfactory definitive financing
documentation with respect to the Credit
Facilities (the "Credit Documentation").
(b) The Parent shall have received at least
$145,000,000 in cash in gross proceeds from
the issuance of its Senior Discount Notes due
2006 (the "Senior Notes") on satisfactory
terms and conditions, and the Borrower shall
have received at least $200,000,000 from the
issuance of its common stock to the Parent
(constituting the proceeds of the Senior
Notes and the preferred stock referred to in
paragraph (c) below). All the proceeds from
the Senior Discount Notes offering and
preferred stock offering must be invested in
the Borrower. The capital structure of each
Credit Party after the completion of the
foregoing shall be satisfactory in all
respects.
(c) The Administrative Agent and Glenayre
shall be satisfied with all the terms and
conditions of the Parent's currently
outstanding preferred stock.
(d) The Borrower shall have entered into
equipment supply contracts with all vendors
containing satisfactory terms and conditions
to allow the Borrower to fulfill its business
plan and such contracts shall be satisfactory
to the Administrative Agent.
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(e) The Lenders, the Administrative Agent and
the Arranger shall have received all fees and
expenses required to be paid on or before the
Closing Date.
(f) All governmental and third party
approvals (including landlords' and other
consents) necessary or advisable in
connection with the financing contemplated
hereby and the continuing operations of the
Borrower and its subsidiaries shall have been
obtained and be in full force and effect.
(g) The Lenders shall have received (i)
satisfactory audited consolidated financial
statements of the Borrower for the two most
recent fiscal years ended prior to the
Closing Date as to which such financial
statements are available and (ii)
satisfactory unaudited interim consolidated
financial statements of the Borrower for each
quarterly period ended subsequent to the date
of the latest financial statements delivered
pursuant to clause (i) of this paragraph as
to which such financial statements are
available.
(h) The Lenders shall have received a
satisfactory pro forma consolidated balance
sheet of the Borrower as at the date of the
most recent consolidated balance sheet
delivered pursuant to paragraph (g) above,
adjusted to give effect to the consummation
on the Closing Date of the issuance by the
Parent of the Senior Notes and the financings
contemplated hereby.
(i) The Lenders shall have received a
satisfactory business plan for fiscal years
1996 through 2000 and a satisfactory written
analysis of the business and prospects of the
Borrower and its subsidiaries for the period
from the Closing Date through the final
maturity of the Loans (the "Business Plan").
(j) The Lenders shall have received the
results of a recent lien search in each of
the jurisdictions and offices where assets of
the Borrower and its subsidiaries are located
or recorded, and such search shall reveal no
liens on any of the assets of the
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Borrower or its subsidiaries except for liens
approved by the Administrative Agent.
(k) The Administrative Agent and Glenayre
shall have received satisfactory evidence
that the Borrower constitutes a "Designated
Entity" within the meaning of the FCC rules
and regulations entitled to all the benefits
of such status, and the Administrative Agent
shall be satisfied with all of the terms and
conditions of the payment obligations of the
Borrower with respect to all licenses
acquired by the Borrower from the FCC.
Conditions to The making of each Glenayre Loan shall be
Glenayre Credit Extensions: subject to the satisfaction of certain
conditions to be agreed upon among Chase,
Glenayre and the Borrower, including, but not
limited to, the condition that the borrower
shall be operating in accordance with the
Business Plan.
Conditions to The making of each Tranche A Loan shall be
Tranche A Loans: subject to (a) the Borrower having expended
$185,000,000 of the $200,000,000 referred to
in paragraph (b) under "Initial Conditions"
above, (b) the Borrower having drawn down the
full amount of the Glenayre Facility and (c)
the Borrower having (both before and after
giving effect to such Loan) (i) a minimum
number of "Qualified Pagers in Service" (to
be defined as paging units in service for a
minimum of 60 days) and (ii) a minimum level
of Average Monthly Revenue Per Unit ("ARPU"),
all as set forth on Annex IV.
Conditions to The making of each Tranche B Loan shall be
Tranche B Loans: subject to (a) the Borrower having expended
$185,000,000 of the $200,000,000 referred to
in paragraph (b) under "Initial Conditions"
above and (b) the Borrower having (both
before and after giving effect to such Loan)
(i) a maximum ratio of Total Debt to
"Qualified Pagers in Service" (to be defined
as paging units in service for a minimum of
60 days) and (ii) a maximum ratio of Total
Debt to Operating Cash Flow, all as set forth
on Annex V.
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On-Going Conditions: The making of each extension of credit shall
be conditioned upon (a) all representations
and warranties in the Credit Documentation
(including, without limitation, the material
adverse change and litigation
representations) being true and correct in
all material respects and (b) there being no
default or event of default in existence at
the time of, or after giving effect to the
making of, such extension of credit. As used
herein and in the Credit Documentation a
"material adverse change" shall mean any
event, development or circumstance that has
had or could reasonably be expected to have a
material adverse effect on (a) the business,
assets, property, condition (financial or
otherwise) or prospects of the Borrower and
its subsidiaries taken as a whole, or (b) the
validity or enforceability of any of the
Credit Documentation or the rights and
remedies of the Administrative Agent and the
Lenders thereunder.
VI. Representations, Warranties,
Covenants and Events of Default
The Credit Documentation shall contain
representations, warranties, covenants and
events of default customary for financings of
this type and other terms deemed appropriate
by the Lenders, including, without
limitation:
Representations and Accuracy of financial statements (including
Warranties: pro forma financial statements); absence of
undisclosed liabilities; no material adverse
change; corporate existence; compliance with
law; corporate power and authority;
enforceability of Credit Documentation; no
conflict with law or contractual obligations;
no material litigation; no default; ownership
of property; liens; intellectual property; no
burdensome restrictions; taxes; Federal
Reserve regulations; FCC compliance; ERISA;
Investment Company Act; subsidiaries;
environmental matters; solvency; accuracy of
disclosure; and creation and perfection of
security interests.
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Affirmative Covenants: Delivery of annual audited (within 90 days of
year-end) and unaudited quarterly (within 45
days of quarter-end) and monthly financial
statements, reports, accountants' letters,
budgets, officers' compliance certificates,
reasonably detailed reports (on a regular
basis) of the Borrower's Beta testing in
Atlanta and Boston and other information
requested by the Lenders; payment of other
obligations; continuation of business and
maintenance of existence and material rights
and privileges (including FCC licenses);
compliance with the Communications Act and
other laws and material contractual
obligations; maintenance of property and
insurance; maintenance of books and records;
right of the Lenders to inspect property and
books and records; notices of defaults,
litigation and other material events; and
compliance with environmental laws; agreement
to grant security interests in after-acquired
property.
Financial Covenants: Financial covenants (including, without
limitation, a maximum Total Debt to Operating
Cash Flow Ratio, minimum Interest and Fixed
Charge Coverage Ratios and a maximum ratio of
Total Debt to Qualified Pagers in Service,
all as set forth on Annex VI).
Negative Covenants: Limitations on: indebtedness (including
preferred stock); liens; guarantee
obligations; mergers, consolidations,
liquidations and dissolutions; sales of
assets; leases; dividends and other payments
in respect of capital stock (except as
described under "Permitted Restricted
Payments" below); capital expenditures;
investments, loans and advances; optional
payments and modifications of subordinated
and other debt instruments; amendments to
charter and by-laws; transactions with
affiliates; sale and leasebacks; changes in
fiscal year; negative pledge clauses; changes
in lines of business; and changes in passive
holding company status of the Parent.
Permitted Restricted Distributions may be made on the capital
Payments: stock of the Borrower commencing in 2001 to
the extent necessary to pay cash interest on
the Senior Notes provided that (before and
after giving effect thereto) no Default or
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Event of Default shall have occurred and be
continuing.
Events of Default: Nonpayment of principal when due; nonpayment
of interest, fees or other amounts after a
grace period to be agreed upon; material
inaccuracy of representations and warranties;
violation of covenants (subject, in the case
of certain affirmative covenants, to a grace
period to be agreed upon); cross-default;
bankruptcy; certain ERISA events; material
judgments; actual or asserted invalidity of
any guarantee or security document or
security interest or of any credit support
document; loss of material FCC licenses; and
a change of control. Certain of the
foregoing events of default shall be
applicable to the provider of credit support
as well as to the Borrower and its
subsidiaries and to the Parent.
VII. Certain Other Terms
Voting: Amendments and waivers with respect to the
Credit Documentation shall require the
approval of Lenders holding Loans and
commitments representing a majority of the
aggregate amount of the Loans and commitments
under the Credit Facilities with certain
issues also requiring a vote of a majority of
each class of Lender, except that (a) the
consent of each Lender directly affected
thereby shall be required with respect to (i)
reductions in the amount or extensions of the
scheduled date of maturity of any Loan, (ii)
reductions in the rate of interest or any fee
or extensions of any due date thereof, (iii)
increases in the amount or extensions of the
expiry date of any Lender's commitment or any
scheduled stepdown thereof and (b) the
consent of 100% of the Lenders shall be
required with respect to (i) modifications to
any of the voting percentages, and (ii)
releases of all or substantially all of the
collateral. Class voting provisions shall be
included with respect to changes in the
application of prepayments and certain other
matters.
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Assignments and The Lenders shall be permitted to assign and
Participations: sell participations in their Loans and
commitments, subject, in the case of
assignments (other than to another Lender or
to an affiliate of the assigning Lender), to
the consent of the Administrative Agent and
the Borrower (which consent in each case
shall not be unreasonably withheld). Non-pro
rata assignments shall be permitted. In the
case of partial assignments, the minimum
assignment amount shall be $5,000,000.
Participants shall have the same benefits as
the Lenders with respect to yield protection
and increased cost provisions. Voting rights
of participants shall be limited to those
matters with respect to which the affirmative
vote of the Lender from which it purchased
its participation would be required as
described under "Voting" above. Pledges of
Loans in accordance with applicable law shall
be permitted without restriction. Promissory
notes shall be issued under the Credit
Facilities only upon request.
Yield Protection: The Credit Documentation shall contain
customary provisions (a) protecting the
Lenders against loss of yield resulting from
changes in reserve, tax, capital adequacy and
other requirements of law and from the
imposition of withholding or other taxes and
(b) indemnifying the Lenders for "breakage
costs" incurred in connection with, among
other things, prepayment of a Eurodollar Loan
(as defined in Annex I) on a day other than
the last day of an interest period with
respect thereto.
Expenses and The Borrower shall pay (a) all reasonable
Indemnification: out-of-pocket expenses of the Administrative
Agent and the Arranger associated with the
syndication of the Credit Facilities and the
preparation, execution, delivery and
administration of the Credit Documentation
and any amendment or waiver with respect
thereto (including the reasonable fees and
disbursements and other charges of counsel)
and (b) all out-of-pocket expenses of the
Administrative Agent and the Lenders in
connection with the enforcement of the Credit
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13
Documentation (including the fees and
disbursements and other charges of counsel).
The Borrower shall indemnify, pay and hold
harmless the Administrative Agent, the
Arranger and the Lenders (and their
respective directors, officers, employees and
agents) against any loss, liability, cost or
expense incurred in respect of the financing
contemplated hereby or the use or the
proposed use of proceeds thereof (except to
the extent resulting from the gross
negligence or willful misconduct of the
indemnified party).
Governing Law and Forum: State of New York.
Counsel to the Simpson Thacher & Bartlett
Administrative
Agent and the Arranger:
Commitment Termination The Credit Documentation must have been
Date: entered into on or before June 30, 1996.
VIII. Certain Defined Terms
Capital Expenditures: Shall mean, for any period, expenditures
(including, without limitation, the aggregate
amount of capital lease obligations incurred
during such period) made by the Borrower or
any of its Subsidiaries to acquire or
construct fixed or other capital assets
(including renewals, improvements and
replacements, but excluding repairs) during
such period computed in accordance with GAAP.
Debt Service: Shall mean, for any period, the sum of
Interest Expense for such period and
scheduled principal payments and required
commitment reductions under the Credit
Facilities during such period, as well as any
capital lease payments due during such
period.
Designated Corporate [to be determined].
Overhead:
Excess Cash Flow: Shall mean, for any fiscal year, the amount
(if any)
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14
by which (a) Net Operating Cash Flow for such
fiscal year exceeds (b) the sum of (i) Debt
Service for such fiscal year plus (ii) the
aggregate amount of Capital Expenditures made
by the Borrower and its subsidiaries during
such fiscal year plus (iii) the aggregate
amount of income taxes paid during such
fiscal year plus (iv) $3,000,000.
Fixed Charge Coverage Shall mean, as at any date of determination
Ratio: thereof, the ratio of (a) Net Operating Cash
Flow of the Borrower for the then most
recently ended fiscal quarter for which
financial statements shall have been
delivered to the Lenders, plus cash then on
hand (for the periods from The Closing Date
to 12/31/2000), plus (after the Tranche B
Incurrence Date (as defined on Annex V) but
before December 31, 2000) the then unused
amount of the Tranche B Facility to (b) Fixed
Charges for such period.
Fixed Charges: Shall mean, for any period, for the Borrower
and its subsidiaries (determined on a
consolidated basis without duplication in
accordance with GAAP): the sum of (i) Debt
Service for such period plus (ii) taxes paid
during such period; plus (iii) the aggregate
amount of Capital Expenditures made during
such period.
Interest Coverage Ratio: Shall mean, as at any date of determination
thereof, the ratio of (a) Net Operating Cash
Flow for the two then most recently ended
consecutive fiscal quarters for which
financial statements shall have been
delivered to the Lenders, plus cash then on
hand (for the periods from the Closing Date
to 12/31/2000) to (b) Interest Expense for
such fiscal quarters.
Interest Expense: Shall mean, for any period, the sum, for the
Borrower and its subsidiaries (determined on
a consolidated basis without duplication in
accordance with GAAP), of all interest in
respect of Indebtedness (including, without
limitation, the interest component of any
payments in respect of capital lease
obligations and net amounts received or paid
under interest rate swaps).
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15
Leverage Ratio: Shall mean, as at any date of determination
thereof, the ratio of (a) Total Debt at such
time to (b) Operating Cash Flow for the two
then most recently ended consecutive fiscal
quarters for which financial statements shall
have been delivered to the Lenders multiplied
by two.
Net Operating Cash Flow: Shall mean, for any period, Operating Cash
Flow for such period less Designated
Corporate Overhead for such period.
Operating Cash Flow: Shall mean, for any period, the sum
(determined on a consolidated basis in
accordance with GAAP and without duplication)
of (a) gross operating revenue (whether
recurring or non-recurring) of the Borrower
and its subsidiaries derived in the ordinary
course of business during such period
(including, without limitation, all service
charges and all revenues realized from the
sale or lease of mobile radio or paging
equipment but excluding interest income and
unusual, non-recurring or extraordinary
items) minus (b) gross operating expenses
(whether recurring or non-recurring) of the
Borrower and its subsidiaries during such
period (including, without limitation, all
site rental charges, maintenance expenses,
general administration expenses and general
corporate overhead expenditures but excluding
Interest Expense and excluding also
depreciation, amortization of intangibles,
certain Designated Corporate Overhead, other
non-cash charges and any unusual,
non-recurring or extraordinary items).
Total Debt: Shall mean all indebtedness of the Borrower
(including, without limitation, capital lease
obligations).
21
Annex I
Interest and Certain Fees
Interest Rate Options: The Borrower may elect that all or a portion
of the Loans bear interest at a rate per
annum equal to:
(a) the Base Rate plus the Applicable Margin;
or
(b) the Eurodollar Rate plus the Applicable
Margin.
As used herein:
"Base Rate" means the higher of (i) the rate
of interest publicly announced by Chase as
its prime rate in effect at its principal
office in New York City (the "Prime Rate")
and (ii) the federal funds effective rate
from time to time plus 0.5%.
"Applicable Margin" means:
(a) in the case of Glenayre Credit
Extensions, (i) which are Base Rate Loans (as
defined below), 3% or (ii) which are
Eurodollar Loans (as defined below), 4%, or
(b) in the case of Tranche A, (i) which are
Base Rate Loans (as defined below), 3% or
(ii) which are Eurodollar Loans (as defined
below), 4% or
(c) in the case of Tranche B Loans, (i) which
are Base Rate Loans (x) 2% (when the Debt to
Operating Cash Flow Ratio is equal to or
greater than 5 to 1) or (y) 1 1/2% (when such
Ratio is less than 5 to 1) or (ii) which are
Eurodollar Loans (x) 3% (when such Ratio is
equal to or greater than 5 to 1) or (y) 2
1/2% (when such Ratio is less than 5 to 1).
"Eurodollar Rate" means the rate (grossed-up
for maximum statutory reserve requirements
for eurocurrency liabilities) at which
eurodollar deposits for one, two, three or
six months (as selected by the Borrower) are
offered to Chase in the interbank eurodollar
market in the approximate amount of Chase's
share of the relevant Loan.
22
2
Interest Payment Dates: In the case of Loans bearing interest based
upon the Base Rate ("Base Rate Loans"),
quarterly in arrears.
In the case of Loans bearing interest based
upon the Eurodollar Rate ("Eurodollar
Loans"), on the last day of each relevant
interest period and, in the case of any
interest period longer than three months, on
each successive date three months after the
first day of such interest period.
Commitment Fees: The Borrower shall pay to the Lenders
(including Glenayre) a commitment fee
calculated at the rate of 1/2 of 1% per annum
on the average daily unused portion of the
Credit Facilities, payable quarterly in
arrears.
Default Rate: At any time when the Borrower is in default
in the payment of any amount due under the
Credit Facilities, the principal of all Loans
shall bear interest at 3% above the rate
otherwise applicable thereto. Overdue
interest, fees and other amounts shall bear
interest at 3% above the rate applicable to
Base Rate Loans.
Rate and Fee Basis: All per annum rates shall be calculated on
the basis of a year of 360 days (or 365/366
days, in the case of Base Rate Loans the
interest rate payable on which is then based
on the Prime Rate) for actual days elapsed.
23
Annex II
Excess Cash Flow
Mandatory Prepayments
Leverage Ratio Percentage of Excess Cashflow
applied to prepay Loans
- -------------- ------------------------------
greater than 3 to 1 75%
less than 3 to 1 50%
but more than 2 to 1
less than 2 to 1 0%
24
Annex IV
Incurrence Tests For Tranche A
Pagers in Service 750,000
Minimum Average Revenue $ 8.25
per Unit
Debt/Qualified Pagers in $250 to 1
Service
The "Tranche A Incurrence Date" is defined as the first day upon which the
Borrower meets the incurrence tests above and Tranche A is available to be
borrowed by the Borrower.
25
Annex V
Incurrence Tests For Tranche B
Debt/Qualified Pagers in $250 to 1
Service
Leverage Ratio 7 to 1
The "Tranche B Incurrence Date" is defined as the first day upon which the
Borrower meets the incurrence tests above and Tranche B is available to be
borrowed by the Borrower.
26
Annex VI
Quarterly Maintenance Tests For Glenayre Facility, Tranche A and B
Tranche B 12/31/99 6/30/2000 12/31/2000 12/30/2001
Incurrence Date to to to to and
12/30/99 6/29/2000 12/30/2000 12/30/2001 Thereafter
-------- --------- ---------- ---------- ----------
Total Debt/ $200 to 1 $200 to 1 $200 to 1 $150 to 1 $150 to 1
Qualified Pagers in
Service
Leverage Ratio 8.0 to 1 8.0 to 1 4.5 to 1 3.25 to 1 3.00 to 1
Interest Coverage 1.5 to 1 1.50 to 1 2 to 1 2 to 1 2 to 1
Ratio
Fixed Charge N/A N/A N/A 1.10 to 1 1.35 to 1
Coverage Ratio