<PAGE> 1
================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ______ TO ______.
COMMISSION FILE NO. 0-19494
PAGING NETWORK, INC.
(Exact name of the Registrant as specified in charter)
DELAWARE 04-2740516
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
14911 QUORUM DRIVE
DALLAS, TEXAS 75240
(Address of principal executive offices, including zip code)
(972) 801-8000
(Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
--- ---
Indicate the number of shares outstanding of each of the Registrant's
classes of Common Stock, as of the latest practicable date.
Title Shares Outstanding as of July 31, 1999
----------------------------- --------------------------------------
Common Stock, $ .01 par value 103,959,240
The Company's Common Stock is publicly traded on the Nasdaq Stock Market
under the symbol "PAGE".
================================================================================
<PAGE> 2
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
Index to Financial Statements
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Consolidated Balance Sheets as of
December 31, 1998 and June 30, 1999 (Unaudited)............................ 3
Consolidated Statements of Operations
for the Three and Six Months Ended June 30, 1998 and 1999 (Unaudited)...... 4
Consolidated Statements of Cash Flows
for the Six Months Ended June 30, 1998 and 1999 (Unaudited)................ 5
Notes to Consolidated Financial Statements...................................... 6
</TABLE>
2
<PAGE> 3
CONSOLIDATED BALANCE SHEETS
(in thousands, except share information)
(Unaudited)
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
1998 1999
----------- -----------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents .................................................. $ 3,077 $ 11,343
Accounts receivable, less allowance
for doubtful accounts ................................................. 84,440 67,523
Inventories ................................................................ 6,379 10,406
Prepaid expenses and other assets .......................................... 15,065 13,160
----------- -----------
Total current assets .................................................. 108,961 102,432
Property, equipment, and leasehold improvements, at cost ........................ 1,452,870 1,488,508
Less accumulated depreciation .............................................. (547,599) (693,722)
----------- -----------
Net property, equipment, and leasehold improvements ................... 905,271 794,786
Other non-current assets, at cost ............................................... 629,372 609,070
Less accumulated amortization .............................................. (62,360) (73,022)
----------- -----------
Net other non-current assets .......................................... 567,012 536,048
----------- -----------
$ 1,581,244 $ 1,433,266
=========== ===========
LIABILITIES AND SHAREOWNERS' DEFICIT
Current liabilities:
Accounts payable ........................................................... $ 96,478 $ 92,883
Accrued expenses ........................................................... 49,692 41,715
Accrued interest ........................................................... 43,209 44,716
Accrued restructuring costs, current portion ............................... 8,256 13,306
Customer deposits .......................................................... 22,735 19,078
Deferred revenue ........................................................... 15,874 19,445
----------- -----------
Total current liabilities ............................................. 236,244 231,143
----------- -----------
Long-term obligations ........................................................... 1,815,137 1,864,142
Accrued restructuring costs, non-current portion ................................ 18,765 12,782
Minority interest ............................................................... 1,517 (70)
Commitments and contingencies ................................................... -- --
Shareowners' deficit:
Common Stock - $.01 par, authorized 250,000,000 shares;
103,640,554 and 103,959,140 shares issued and outstanding
as of December 31, 1998 and June 30, 1999, respectively .............. 1,036 1,040
Paid-in capital ............................................................ 132,950 134,156
Accumulated other comprehensive income ..................................... 2,378 1,371
Accumulated deficit ........................................................ (626,783) (811,298)
----------- -----------
Total shareowners' deficit ........................................... (490,419) (674,731)
----------- -----------
$ 1,581,244 $ 1,433,266
=========== ===========
</TABLE>
See accompanying notes
3
<PAGE> 4
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share information)
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
---------------------- ----------------------
1998 1999 1998 1999
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Services, rent and maintenance revenues ........... $ 235,172 $ 231,635 $ 465,033 $ 473,503
Product sales ..................................... 29,329 22,930 55,218 44,622
--------- --------- --------- ---------
Total revenues ............................... 264,501 254,565 520,251 518,125
Cost of products sold ............................. (23,161) (10,462) (44,264) (26,639)
--------- --------- --------- ---------
241,340 244,103 475,987 491,486
Operating expenses:
Services, rent and maintenance ............... 53,545 63,782 105,368 130,672
Selling ...................................... 23,546 21,962 45,036 45,992
General and administrative ................... 74,153 87,939 144,224 176,229
Depreciation and amortization ................ 70,293 128,668 144,161 195,548
Provision for asset impairment ............... -- -- -- 17,798
Restructuring charge ......................... -- -- 74,000 --
--------- --------- --------- ---------
Total operating expenses ................ 221,537 302,351 512,789 566,239
--------- --------- --------- ---------
Operating income (loss) ........................... 19,803 (58,248) (36,802) (74,753)
Other income (expense):
Interest expense ............................. (36,753) (37,770) (73,531) (73,801)
Interest income .............................. 518 715 1,030 1,305
Minority interest ............................ 813 (8) 1,312 180
--------- --------- --------- ---------
Total other income (expense) ............ (35,422) (37,063) (71,189) (72,316)
--------- --------- --------- ---------
Loss before cumulative effect of a change in
accounting principle ......................... (15,619) (95,311) (107,991) (147,069)
Cumulative effect of a change in accounting
principle .................................... -- -- -- (37,446)
--------- --------- --------- ---------
Net loss .......................................... $ (15,619) $ (95,311) $(107,991) $(184,515)
========= ========= ========= =========
Net loss per share (basic and diluted):
Loss before cumulative effect of a change in
accounting principle ......................... $ (0.15) $ (0.92) $ (1.05) $ (1.42)
Cumulative effect of a change in accounting
principle .................................... -- -- -- (0.36)
--------- --------- --------- ---------
Net loss per share ................................ $ (0.15) $ (0.92) $ (1.05) $ (1.78)
========= ========= ========= =========
</TABLE>
See accompanying notes
4
<PAGE> 5
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
----------------------
1998 1999
--------- ---------
<S> <C> <C>
Operating activities:
Net loss ............................................................. $(107,991) $(184,515)
Adjustments to reconcile net loss to net cash provided
by operating activities:
Provision for asset impairment ........................... -- 17,798
Cumulative effect of a change in accounting principle .... -- 37,446
Restructuring charge ..................................... 74,000 --
Depreciation ............................................. 130,146 186,545
Amortization ............................................. 14,015 9,003
Provision for doubtful accounts .......................... 9,201 12,630
Amortization of debt issuance costs ...................... 2,215 2,260
Minority interest ........................................ (1,312) (180)
Other .................................................... 2,313 --
Changes in operating assets and liabilities:
Accounts receivable ...................................... (3,201) 3,155
Inventories .............................................. 3,080 (4,194)
Prepaid expenses and other assets ........................ 147 1,762
Accounts payable ......................................... (13,658) (1,947)
Accrued expenses and accrued interest .................... 6,919 (6,160)
Accrued restructuring costs .............................. (1,335) (933)
Customer deposits and deferred revenue ................... 3,484 (12)
--------- ---------
Net cash provided by operating activities ................................. 118,023 72,658
--------- ---------
Investing activities:
Capital expenditures ................................................. (87,726) (105,956)
Payments for spectrum licenses ....................................... (4,524) (2,546)
Business acquisitions and joint venture investments .................. (3,500) --
Other, net ........................................................... 7,753 (6,749)
--------- ---------
Net cash used in investing activities ..................................... (87,997) (115,251)
--------- ---------
Financing activities:
Borrowings of long-term obligations .................................. 123,349 144,637
Repayments of long-term obligations .................................. (148,618) (94,979)
Proceeds from exercise of stock options .............................. 6,724 1,201
--------- ---------
Net cash provided by (used in) financing activities ....................... (18,545) 50,859
--------- ---------
Net increase in cash and cash equivalents ................................. 11,481 8,266
Cash and cash equivalents at beginning of period .......................... 2,924 3,077
--------- ---------
Cash and cash equivalents at end of period ................................ $ 14,405 $ 11,343
========= =========
</TABLE>
See accompanying notes
5
<PAGE> 6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1999
(Unaudited)
1. THE COMPANY
Paging Network, Inc. (the Company) is a provider of wireless
messaging and information delivery services. The Company provides
service in all 50 states, the District of Columbia, the U.S. Virgin
Islands, Puerto Rico, Canada, and Spain, including service in all of
the largest 100 markets (in population) in the United States, and owns
a minority interest in a wireless messaging company in Brazil. The
consolidated financial statements include the accounts of all of its
wholly and majority-owned subsidiaries. All intercompany transactions
have been eliminated.
2. UNAUDITED INTERIM FINANCIAL STATEMENTS
The interim consolidated financial information contained
herein is unaudited but, in the opinion of management, includes all
adjustments, which are of a normal recurring nature, except for the
cumulative effect of a change in accounting principle discussed in Note
3, the provision for asset impairment discussed in Note 4, and the
restructuring charge discussed in Note 5, necessary for a fair
presentation of the financial position, results of operations, and cash
flows for the periods presented. These financial statements have been
prepared in accordance with generally accepted accounting principles
for interim financial information and the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, these financial statements
do not include all of the information and footnotes required by
generally accepted accounting principles for complete financial
statements. The balance sheet as of December 31, 1998, has been derived
from the audited financial statements as of that date. Results of
operations for the periods presented herein are not necessarily
indicative of results of operations for the entire year. These
financial statements and related notes should be read in conjunction
with the financial statements and notes included in the Company's
Annual Report on Form 10-K for the year ended December 31, 1998.
3. ACCOUNTING CHANGES
Effective April 1, 1999, the Company changed the depreciable
lives for its subscriber devices and certain network equipment. The
Company changed the depreciable lives of its subscriber devices from
three years to two years and the depreciable life of certain of its
network equipment from seven years to ten years. The changes resulted
from a review by the Company of the historical usage periods of its
subscriber device and its network equipment and the Company's
expectations regarding future usage periods for subscriber devices
considering current and projected technological advances. As a result
of these changes, depreciation expense increased by approximately $69
million during the three months ended June 30, 1999.
The Company adopted the provisions of Statement of Position
98-5 "Reporting on the Costs of Start-Up Activities" (SOP 98-5),
effective January 1, 1999. SOP 98-5 requires the expensing of all
start-up costs as incurred as well as writing off the remaining
unamortized balance of capitalized start-up costs at the date of
adoption of SOP 98-5. The impact of the Company's adoption of SOP 98-5
was a charge of $37 million representing the cumulative effect of a
change in accounting principle to write-off all unamortized start-up
costs as of January 1, 1999, and an increase in services, rent and
maintenance expenses of $5 million and $10 million, respectively, for
the three and six months ended June 30, 1999 and a decrease in
depreciation and amortization expense of $1 million and $3 million,
respectively, for the three and six months ended June 30, 1999.
In March 1998, the Accounting Standards Executive Committee of
the American Institute of Certified Public Accountants issued Statement
of Position 98-1, "Accounting for the Costs of Computer Software
Developed For of Obtained for Internal Use" (SOP 98-1). SOP 98-1
requires the capitalization
6
<PAGE> 7
of certain costs of developing or acquiring computer software for
internal use. The Company adopted the provisions of SOP 98-1 effective
January 1, 1999. The adoption of SOP 98-1 had an insignificant impact
on the Company's results of operations or financial position as the
Company's policy for accounting for the costs of developing or
acquiring computer software for internal use is generally consistent
with the provisions of SOP 98-1.
4. PROVISION FOR ASSET IMPAIRMENT
The Company recorded a provision of $18 million during the
quarter ended March 31, 1999, for the impairment of the assets of the
Company's majority-owned Spanish subsidiaries in accordance with
Statement of Financial Accounting Standards No. 121, "Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to Be
Disposed Of", which requires impairment losses to be recorded on
long-lived assets used in operations when indicators of impairment are
present and the undiscounted cash flows estimated to be generated by
those assets are less than the assets' carrying amount. During the
first quarter of 1999, the Company made the decision to narrow its
focus to its North American operations and, as a result, made the
decision to sell or otherwise dispose of its operations in Spain. As a
result of this decision, the Company analyzed the estimated future cash
flows expected to be generated from its Spanish operations and
determined that they would not be sufficient to recover the net book
value of the assets of the subsidiaries and, accordingly, recorded a
provision to writedown the assets of the Spanish subsidiaries based on
the estimated value of the Company's investment in its Spanish
subsidiaries as of March 31, 1999. No cash costs have been incurred or
are expected as a result of the provision for the impairment of the
assets of the Company's Spanish subsidiaries. Effective April 1, 1999,
the Company began accounting for its Spanish subsidiaries under the
cost method due to the temporary nature of the investment.
5. RESTRUCTURING CHARGE
In February 1998, the Company's Board of Directors approved a
restructuring of the Company's domestic operations (the Restructuring).
As part of the Restructuring, the Company is reorganizing its
operations to expand its sales organization, eliminate local and
redundant administrative operations, and consolidate certain key
support functions. The Company expects to eliminate approximately 1,600
positions, net of positions added, through the consolidation of
redundant administrative operations and certain key support functions
located in offices throughout the country into central facilities (the
Centers of Excellence). As a result of the Restructuring, the Company
recorded a charge of $74 million, or $0.72 per share (basic and
diluted), during the quarter ended March 31, 1998. The components of
the charge included (in thousands):
<TABLE>
<S> <C>
Write-down of property and equipment $ 38,900
Lease obligations and terminations 18,900
Severance and related benefits 12,700
Other 3,500
----------
Total restructuring charge $ 74,000
==========
</TABLE>
The write-down of property and equipment relates to a non-cash
charge to reduce the carrying amount of certain machinery and
equipment, furniture and fixtures, and leasehold improvements, that the
Company will not continue to utilize following the Restructuring, to
their estimated net realizable value as of the date such assets are
projected to be disposed of or abandoned by the Company, allowing for
the recognition of normal depreciation expense on such assets through
their projected disposal date. The net realizable value of these assets
was determined based on management estimates, which considered such
factors as the nature and age of the assets to be disposed of, the
timing of the assets' disposal, and the method and potential costs of
the disposal. Such estimates are subject to change.
7
<PAGE> 8
The provision for lease obligations and terminations relates
primarily to future lease commitments on local and regional office
facilities that will be closed as part of the Restructuring. The charge
represents future lease obligations, net of projected sublease income,
on such leases past the dates the offices will be closed by the
Company, or, for certain leases, the cost of terminating the leases
prior to their scheduled expiration. Projected sublease income was
based on management estimates, which are subject to change. Cash
payments on the leases and lease terminations will occur over the
remaining lease terms, the majority of which expire prior to 2003.
Through the elimination of certain local and regional
administrative operations and the consolidation of certain support
functions, the Company expects to eliminate approximately 1,600 net
positions, the majority of which are non-sales related positions in
local and regional offices. As a result of eliminating these positions,
the Company will involuntarily terminate an estimated 1,950 employees.
The majority of the severance and benefits costs to be paid by the
Company will be paid during 1999.
During the fourth quarter of 1998, the Company identified
additional furniture, fixtures, and equipment that will not be utilized
following the Restructuring, resulting in an additional non-cash charge
of $3 million. This charge was offset by reductions in the provisions
for lease obligations and terminations and severance costs as a result
of refinements to the Company's schedule for local and regional offices
closures. Also as a result of the refinements to the office closing
schedule, the Company adjusted, effective October 1, 1998, the
depreciable lives of certain of the assets written down in the first
quarter of 1998, resulting in a decrease in depreciation expense of
approximately $5 million for the second quarter of 1999 and $10 million
for the six months ended June 30, 1999.
The Company's restructuring activity from January 1, 1999
through June 30, 1999 is as follows (in thousands):
<TABLE>
<CAPTION>
Beginning Utilization of Reserve Remaining
Reserve Cash Non-Cash Reserve
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Lease obligation costs............ $ 16,917 $ 471 $ -- $ 16,446
Severance costs................... 10,104 462 -- 9,642
--------- --------- --------- ---------
Total....................... $ 27,021 $ 933 $ -- $ 26,088
========= ========= ========= =========
</TABLE>
6. LONG-TERM OBLIGATIONS
As of June 30, 1999, the Company had $612 million of
borrowings outstanding under its domestic $1 billion revolving credit
agreement (the Credit Agreement).
7. INCOME TAX PROVISION
No provision or benefit for income taxes has been made for the
three and six months ended June 30, 1998 and 1999, as the deferred
benefit from operating losses was offset by an increase in the
valuation allowance.
8. COMMON STOCK AND NET LOSS PER SHARE
Net loss per share amounts are computed based on the weighted
average number of common shares outstanding. The number of shares used
to compute per share amounts for the three months ended June 30, 1998
and 1999 were 103 million and 104 million, respectively. The number of
shares used to compute per share amounts for the six months ended June
30, 1998 and 1999 were 103 million and 104 million, respectively. The
average number of options to purchase shares of the Company's Common
Stock during the three and six months ended June 30, 1998 were 8
million and 7 million, respectively, at exercise prices ranging from
$2.67 per share to $25.50 per share. The average number of options to
purchase shares of the Company's Common Stock during the three and six
months ended June 30, 1999 were 10 million at exercise prices ranging
from $2.73 per share to $25.50 per share. These stock options
8
<PAGE> 9
were not included in the computation of diluted earnings per share
because the effect of assuming their exercise would have been
antidilutive.
The Company has 275 million authorized shares, of which 250
million are Common Stock and 25 million are preferred stock. As of June
30, 1999, there were no preferred shares issued or outstanding.
9. COMPREHENSIVE LOSS
Comprehensive loss for the three and six months ended June 30,
1998 and 1999, is as follows (in thousands):
<TABLE>
<CAPTION>
Three Months Six Months
ended June 30, Ended June 30,
------------------------ -------------------------
1998 1999 1998 1999
--------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net loss ......................................... $(15,619) $ (95,311) $ (107,991) $ (184,515)
Foreign currency translation adjustments ......... 1,295 (166) 1,110 (1,007)
-------- ---------- ---------- ----------
Total comprehensive loss ..................... $(14,324) $ (95,477) $ (106,881) $ (185,522)
======== ========== ========== ==========
</TABLE>
10. STATEMENT OF CASH FLOWS INFORMATION
Cash and cash equivalents include highly liquid debt
instruments with an original maturity of three months or less. As of
June 30, 1999, cash equivalents also include investments in money
market instruments, which are carried at fair market value. Cash
payments made for interest during both the six months ended June 30,
1998 and 1999, were approximately $70 million, net of interest
capitalized during the six months ended June 30, 1998 and 1999 of $9
million and $11 million, respectively. There were no significant
federal or state income taxes paid or refunded for the six months ended
June 30, 1998 and 1999.
11. SEGMENT INFORMATION
The Company has determined that it has two reportable segments,
core operations and advanced messaging operations. The Company's basis
for the segments relates to the types of products and services each
segment provides. The core operating segment includes the traditional
display and alphanumeric services, which are basic one-way services,
and 1 1/2-way paging services. The advanced messaging operating segment
includes the new two-way wireless messaging services, advanced wireless
integration products, wireless software sales, consumer content,
VoiceNow service, Iridium WorldPage, and other future advanced
messaging products.
9
<PAGE> 10
The following table presents certain information related to the
Company's business segments for the three and six months ended June 30,
1998 and 1999.
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
---------------------- ------------------------
(IN THOUSANDS) 1998 1999 1998 1999
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Net Revenues (1):
Core (2) ............... $ 241,281 $ 240,721 $ 475,826 $ 485,231
Advanced Messaging .... 59 3,382 161 6,255
--------- --------- --------- ---------
$ 241,340 $ 244,103 $ 475,987 $ 491,486
========= ========= ========= =========
Operating income (loss):
Core (2) ............... $ 25,223 $ (46,525) $ (26,575)(3) $ (54,246)(4)
Advanced Messaging ..... (5,420) (11,723) (10,227) (20,507)
--------- --------- --------- ---------
$ 19,803 $ (58,248) $ (36,802) $ (74,753)
========= ========= ========= =========
Adjusted EBITDA (5):
Core (2) ............... $ 91,933 $ 81,506 $ 184,096 $ 157,857
Advanced Messaging...... (1,837) (11,086) (2,737) (19,264)
--------- --------- --------- ---------
$ 90,096 $ 70,420 $ 181,359 $ 138,593
========= ========= ========= =========
Free Cash Flow (6):
Core (2) ............... $ 36,994 $ 33,614 $ 76,823 $ 62,167
Advanced Messaging ..... (27,610) (36,653) (55,691) (102,026)
--------- --------- --------- ---------
$ 9,384 $ (3,039) $ 21,132 $ (39,859)
========= ========= ========= =========
</TABLE>
(1) Net Revenues are revenues from services, rent, and maintenance plus product
sales less the cost of products sold.
(2) The international operations of the Company currently consist entirely of
core services and accordingly are included in the Company's core business
segment.
(3) Operating loss for the core business segment for the first six months of
1998 includes a restructuring charge of $74 million. See Note 5.
(4) Operating loss for the core business segment for the first six months of
1999 includes a provision for asset impairment of $18 million. See Note 4.
(5) Adjusted EBITDA is earnings before interest, income taxes, depreciation,
amortization, minority interest, restructuring charge, provision for asset
impairment, and cumulative effect of a change in accounting principle.
(6) Free Cash Flow is Adjusted EBITDA less capital expenditures (excluding
payments for spectrum licenses) and debt service.
Adjusted EBITDA and Free Cash Flow are not measures defined in generally
accepted accounting principles and should not be considered in isolation or as
substitutes for measures of performance in accordance with generally accepted
accounting principles.
10
<PAGE> 11
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
The statements contained in this filing which are not historical facts,
including but not limited to future capital expenditures, future borrowings,
performance and market acceptance of new products and services, impact of Year
2000 issues on the Company's operations, anticipated costs and expenses related
to, and the timetable for, the remediation of Year 2000 issues, expected annual
recurring performance improvements and cost savings as a result of a
restructuring of the Company's domestic operations (the Restructuring), and
sales productivity increases and incremental annual increases in revenues
expected to result from the Restructuring together with associated price
increases, are forward-looking statements that are subject to risks and
uncertainties that could cause actual results to differ materially from those
set forth in the forward-looking statements. Among the factors that could cause
actual future results to differ materially are competitive pricing pressures,
growth rates, the introduction of products and services by competitors of the
Company, the performance of the Company's vendors and independent contractors,
third-party Year 2000 remediation plans, the introduction of competing
technologies, the transition of the Company's regional office operations into
centralized facilities (the Centers of Excellence) infrastructure, the
construction, testing and placement of the Company's advanced messaging network
into operation, and acceptance of the Company's products and services in the
marketplace.
INTRODUCTION
Throughout this section the Company makes reference to earnings before
interest, income taxes, depreciation, amortization, minority interest,
restructuring charge, provision for asset impairment, and cumulative effect of a
change in accounting principle (Adjusted EBITDA). EBITDA (earnings before
interest, income taxes, depreciation, and amortization) is a key performance
measure used in the wireless messaging industry and is one of the financial
measures by which the Company's covenants are calculated under the agreements
governing its debt obligations. EBITDA and Adjusted EBITDA are not measures
defined in generally accepted accounting principles and should not be considered
in isolation or as substitutes for measures of performance in accordance with
generally accepted accounting principles.
As of June 30, 1999, the Company has made significant progress toward
its previously announced goal of creating a platform for long-term profitable
growth. To achieve its objectives, the Company is aggressively implementing the
Restructuring, which includes eliminating redundant administrative operations by
consolidating certain key support functions. The Company also has made
significant progress in the build-out of its advanced wireless network, which,
when completed, will permit enhanced delivery of a broad portfolio of wireless
information products and services. In April 1999, the Company completed a
realignment of its sales and marketing organizations to more clearly align those
groups with customers' needs and the Company's overall strategic direction.
In June 1999, the Company announced the formation of a new wholly owned
subsidiary, VAST Wireless Solutions, Inc., to accelerate the development and
commercialization of business opportunities in three related areas: the
Company's Internet-based wireless information content; its business solutions
capabilities; and its wireless content gateway. Organizationally separating VAST
Wireless Solutions from the Company's other subsidiaries is expected to enhance
the groups' ability to focus on discrete opportunities and, potentially,
different business models.
RESULTS OF OPERATIONS
Revenues from services, rent and maintenance plus product sales less
the cost of products sold (Net Revenues) for the three-month period ended June
30, 1999, were $244 million, an increase of 1.1% over $241 million for the
corresponding period of 1998. Net Revenues for the six months ended June 30,
1999, were $491 million, an increase of 3.3% over $476 million for the same
period in 1998. Revenues from services, rent and
11
<PAGE> 12
maintenance, which the Company considers its primary business, decreased 1.5% to
$232 million for the three months ended June 30, 1999, compared to $235 million
for the three months ended June 30, 1998. Services, rent and maintenance
revenues for the six months ended June 30, 1999 increased 1.8% to $474 million,
compared to $465 million for the six months ended June 30, 1998. Increases in
average revenue per unit resulting from pricing initiatives and the changing mix
of the Company's subscriber base toward higher revenue products and services
were offset by the decrease in revenues associated with the net decrease in
units in service during both the three and six months ended June 30, 1999 as
described below.
In an effort to increase the overall profitability of its services, the
Company has increased its focus toward higher value products and services such
as alphanumeric and nationwide paging. In addition, in an effort to reduce the
number of customers using unprofitable services, the Company has instituted
certain price initiatives, including setting appropriate minimum pricing levels
for new business and selectively increasing pricing to existing customers using
certain services. The Company expects these initiatives, along with sales
productivity increases associated with the Company's Restructuring which will
allow field sales personnel to focus solely on sales, to result in incremental
annual revenues during 1999 and beyond. However, as a result of these actions,
the Company experienced a net decrease in units in service during the first six
months of 1999, a trend that began during the second half of 1998, and that the
Company expects to continue throughout the third quarter of 1999. The number of
units in service with subscribers at June 30, 1999 was 9,766,000, compared to
10,110,000 and 10,604,000 units in service with subscribers at December 31, 1998
and June 30, 1998, respectively. The average revenue per unit for the Company's
core domestic operations increased to $7.84 and $7.94, respectively, for the
three and six months ended June 30, 1999, compared to $7.44 and $7.40,
respectively, for the corresponding periods of 1998. The Company is continuing
to review its pricing structure for all of its services.
Product sales decreased 21.8% to $23 million for the three months ended
June 30, 1999, compared to $29 million for the same period in 1998. Product
sales decreased 19.2% to $45 million for the six months ended June 30, 1999,
compared to $55 million for the corresponding period of 1998. The decreases in
product sales and corresponding decreases in cost of products sold from 1998 to
1999 resulted primarily from the Company's efforts to reduce the number of
customers using unprofitable services through certain pricing initiatives, which
resulted in a substantial decrease in sales through the Company's reseller
channel. In addition, the decreases in cost of products sold from 1998 to 1999
also resulted from the decrease in the depreciable lives of the Company's
subscriber devices from three years to two years, effective April 1, 1999. This
change had the effect of increasing depreciation expense and thereby reducing
the net book values of sold subscriber devices.
Services, rent and maintenance expenses increased 19.1% to $64 million
for the three months ended June 30, 1999, compared to $54 million for the three
months ended June 30, 1998. Services, rent and maintenance expenses increased
24.0% to $131 million for the six months ended June 30, 1999, compared to $105
million for the six months ended June 30, 1998. The increases in services, rent
and maintenance expenses were primarily attributable to the adoption of
Statement of Position 98-5, Reporting on the Costs of Start-up Activities (SOP
98-5), effective January 1, 1999, which required the expensing of certain costs
previously capitalized, increased contracted dispatch costs related to advanced
messaging units placed in service during 1998 and the first six months of 1999,
increased pager parts and repairs expense, and expenses associated with an
increase in transmitter sites. The increases were partially offset by the
decline in the Company's reserve for non-recoverable subscriber devices
resulting from the change in the depreciable lives of its subscriber devices
from three years to two years.
Selling expenses decreased 6.7% to $22 million for the second quarter
of 1999, compared to $24 million for the same period in 1998. Selling expenses
increased 2.1% to $46 million for the first six months of 1999, compared to $45
million for the corresponding period of 1998. The decrease in selling expenses
for the three months ended June 30, 1999 resulted primarily from a one-time
adjustment to sales commissions expense during the second quarter of 1999 to
better reflect the period in which the sales commissions were earned. As a
result of this change, selling expenses decreased by $2 million during the
three months ended June 30, 1999. In addition, the decrease in selling expenses
for the second quarter of 1999 resulted from a lower amount of sales
commissions incurred in conjunction with the net decrease in units in service
with subscribers for the three month period ended June 30, 1999, as compared to
the same period of 1998. The increase in selling expenses for the six months
ended June 30, 1999 was primarily due to the initiation of marketing research,
continued market development, and advertising expenses associated with the
Company's promotion of its core and advanced messaging operations, including
such costs related to its SurePage and Two-Way services. Marketing research,
development costs, and advertising expenses associated with the Company's core
and advanced messaging operations are expected to grow in future periods due to
expanded promotion of these services. Partially offsetting the
12
<PAGE> 13
increase in advertising costs for the six months ended June 30, 1999 was the
decrease in sales commission expense as previously discussed.
General and administrative expenses increased 18.6% to $88 million for
the second quarter of 1999, compared to $74 million for the second quarter of
1998. General and administrative expenses increased 22.2% to $176 million for
the first six months of 1999, compared to $144 million for the first six months
of 1998. The increases in general and administrative expenses were primarily
related to expenses associated with establishing the Company's Centers of
Excellence, redundant operating costs associated with operating both its new
Centers of Excellence infrastructure and its traditional decentralized
infrastructure, and increased levels of contract labor utilized during the
transition to the Centers of Excellence infrastructure. Such costs are expected
to decrease in the fourth quarter of 1999 and in 2000 as the Company completes
the transition to its Centers of Excellence.
Depreciation and amortization expense increased 83.0% to $129 million
for the three months ended June 30, 1999, compared to $70 million for the three
months ended June 30, 1998. Depreciation and amortization expenses increased
35.6% to $196 million for the six months ended June 30, 1999, compared to $144
million for the six months ended June 30, 1998. The increases in depreciation
and amortization expense resulted primarily from the Company's change in the
depreciable lives of its subscriber devices and certain of its network
equipment, effective April 1, 1999. The Company changed the depreciable lives of
its subscriber devices from three years to two years and the depreciable life of
certain of its network equipment from seven years to ten years. The changes
resulted from a review by the Company of the historical usage periods of its
subscriber devices and its network equipment and the Company's expectations
regarding future usage periods for subscriber devices considering current and
projected technological advances. As a result of these changes, depreciation
expense increased by approximately $69 million during the three months ended
June 30, 1999 and is expected to increase by approximately $10 million during
the remainder of 1999. Depreciation and amortization expense was reduced during
the three and six months ended June 30, 1999 by certain property and equipment
becoming fully depreciated, certain non-current assets becoming fully
amortized, and the write-off of start-up costs upon the adoption of SOP 98-5.
The Company expects to commence depreciation and amortization on a majority of
the assets related to its Centers of Excellence during the third quarter of
1999 and its advanced messaging operations towards the end of 1999, which
together are expected to increase depreciation and amortization expense during
the remainder of 1999 by approximately $7 million.
The Company recorded a provision of $18 million during the quarter
ended March 31, 1999, for the impairment of the assets of the Company's
majority-owned Spanish subsidiaries. See further discussion in Note 4 to the
Consolidated Financial Statements.
The Company recorded a restructuring charge of $74 million during the
quarter ended March 31, 1998, as a result of a Restructuring approved by the
Company's Board of Directors in February 1998. See further discussion in Note 5
to the Consolidated Financial Statements.
As a result of the above factors, Adjusted EBITDA decreased 21.8% to
$70 million for the second quarter of 1999, compared to $90 million for the
corresponding period of 1998. Adjusted EBITDA decreased 23.6% to $139 million
for the first six months of 1999, compared to $181 million for the same period
in 1998. Adjusted EBITDA and Adjusted EBITDA as a percentage of Net Revenues
were negatively impacted by the Company's advanced messaging operations, the
development and implementation of its Centers of Excellence, its international
operations, and the adoption of SOP 98-5. Adjusted EBITDA and Adjusted EBITDA as
a percentage of Net Revenues for the three and six months ended June 30, 1999
were positively impacted by $3 million as a result of the change in depreciable
lives of subscriber devices as previously discussed.
Interest expense, net of amounts capitalized, was relatively flat for
the three and six months ended June 30, 1999, compared to the same periods in
1998. Interest expense, net of amounts capitalized, was $38 million for the
second quarter of 1999, compared to $37 million for the second quarter of 1998.
Interest expense, net of amounts capitalized, was $74 million for the six months
ended June 30, 1999 and 1998.
13
<PAGE> 14
The Company adopted the provisions of SOP 98-5 effective January 1,
1999 and recorded a charge of $37 million as a cumulative effect of a change in
accounting principle to write-off all unamortized start-up costs as of January
1, 1999.
LIQUIDITY AND CAPITAL RESOURCES
The Company's operations and expansion into new markets and product
lines have required substantial capital investment for the development and
installation of wireless communications systems and for the procurement of
subscriber devices and related equipment. Furthermore, the Company is currently
in the process of building an advanced messaging network over which it can
deploy new enhanced messaging services and customized wireless information and
completing the formation of its Centers of Excellence. Capital expenditures
(excluding payments for spectrum licenses) were $106 million for the six months
ended June 30, 1999, compared to $88 million for the corresponding period of
1998. The increase in capital expenditures in 1999 was primarily related to the
Company's advanced messaging network and its Centers of Excellence. Capital
expenditures related to the Company's buildout of its advanced messaging network
were $32 million for the six months ended June 30, 1999, compared to $17 million
for the corresponding period of 1998. Capital expenditures related to
establishing the Company's Centers of Excellence, including new system
implementations, were $17 million for the six months ended June 30, 1999,
compared to $14 million for the same period of 1998.
The amount of capital expenditures may fluctuate from quarter to
quarter and on an annual basis due to several factors, including the variability
of units in service with subscribers. Based on current expectations, the Company
anticipates the total amount of capital expenditures to be approximately $200
million to $225 million in 1999. The Company expects during 1999 to
substantially complete capital expenditures made in connection with the
Company's expansion of its advanced messaging network and the establishment of
its Centers of Excellence. With the substantial completion of these capital
expenditures in 1999, the Company expects aggregate capital expenditures in 2000
to decrease as compared to 1999.
For the first six months of 1999, capital expenditures were funded by
net cash provided by operating activities of $73 million, as well as incremental
borrowings. Net cash provided by operating activities decreased $45 million for
the six months ended June 30, 1999, as compared to the same period of 1998. The
decrease resulted primarily from an increase in net loss before restructuring
charge, the provision for asset impairment, and the cumulative effect of a
change in accounting principle.
As of June 30, 1999, the Company had $612 million of borrowings under
its $1.0 billion domestic revolving credit agreement (the Credit Agreement). As
of August 2, 1999, this amount had increased to $664 million. Under the
Company's debt agreements, the Company is able to borrow, provided it meets
certain financial covenants, the lesser of $1 billion or an amount based
primarily upon the Company's domestic EBITDA for the most recent fiscal quarter.
For purpose of determining available borrowings under the Credit Agreement,
domestic EBITDA is based on generally accepted accounting principles in
existence as of December 31, 1995. As a result, certain items now expensed as a
period cost under the provisions of SOP 98-5 and Emerging Issues Task Force
Consensus 97-13 are added back to net loss in determining EBITDA, as defined in
the Credit Agreement. Such add backs aggregated $9 million for the second
quarter of 1999. As of June 30, 1999, based on certain provisions of the
Company's senior notes, approximately $135 million was available for additional
borrowings as of that date based on the Company's domestic EBITDA for the second
quarter of 1999. The availability of additional borrowings in periods subsequent
to June 30, 1999 is based upon the Company's domestic EBITDA for such future
periods. The Company anticipates that, similar to the second quarter of 1999,
domestic EBITDA will be negatively impacted during the third quarter of 1999 by
(i.) expenses associated with establishing the Company's Centers of Excellence
infrastructure while at the same time maintaining its traditional decentralized
infrastructure, and (ii.) expenses related to the completion of the Company's
advanced messaging network. The Company was in compliance with the covenants of
its Credit Agreement at the end of the second quarter of 1999, and has
implemented expense-control measures aimed at maintaining continued compliance.
While no assurances can be given, the Company believes that, based on continuing
expense control and stable sales levels, it will remain in compliance with the
covenants of its Credit Agreement and have sufficient capital resources to
complete the Centers of Excellence infrastructure and advanced messaging network
and to make other planned capital expenditures.
14
<PAGE> 15
The two credit agreements of the Company's Canadian subsidiaries, as
amended on August 5, 1999, provide for total borrowings of approximately $75
million. As of June 30, 1999, approximately $50 million of borrowings were
outstanding under the Canadian credit facilities. Additional borrowings are
available under these facilities, provided such borrowings are either
collateralized or certain financial covenants are met.
The deficiency in Free Cash Flow, defined as Adjusted EBITDA less
capital expenditures (excluding payments for spectrum licenses) and debt
service, for the Company's consolidated operations for the three and six months
ended June 30, 1999 was $3 million and $40 million, respectively. Free Cash Flow
for the Company's consolidated operations for the three and six months ended
June 30, 1998 was $9 million and $21 million, respectively. Free Cash Flow is
not a measure defined in generally accepted accounting principles and should not
be considered in isolation or as a substitute for a measure of performance in
accordance with generally accepted accounting principles. The decline in Free
Cash Flow for the three and six months ended June 30, 1999 was primarily the
result of an increase in capital expenditures and a decrease in Adjusted EBITDA,
as previously noted.
YEAR 2000 READINESS DISCLOSURE
Year 2000 issues affect virtually all companies and organizations
throughout the world. Many existing computer programs were designed and
developed to use and store only two digits to identify a calendar year, without
considering the capability of properly recognizing the upcoming change in the
century. If not corrected by January 1, 2000, the Company could potentially
experience system failures or interruptions, such as a temporary inability to
deliver paging transmissions, system generation of erroneous data, or other
disruptions of normal business operations.
The Company implemented a task force and developed a comprehensive plan
to address Year 2000 issues, and continues to utilize both internal and external
resources to evaluate and test its systems. The Company has developed an
approach to address Year 2000 issues that includes phases for inventory of
business processes and systems, assessment of Year 2000 risk, remediation,
testing, implementation and evaluation. The Company has completed these phases
for all critical business processes. The Company is in the process of evaluating
the project documentation that represents the Year 2000 readiness of its
application systems and embedded systems, such as its paging terminals and
paging network. Furthermore, in connection with the Restructuring, the Company
is currently in the process of replacing all of its core systems for its new
Centers of Excellence. The Company has completed Year 2000 readiness assessment
and testing on these systems.
The Company anticipates its total cost associated with correcting Year
2000 problems, including the expenses necessary to remediate the Company's
existing systems and costs related to the collection of third-party Year 2000
readiness information, to be approximately $4 million, of which approximately $3
million has been incurred as of June 30, 1999. In addition, in connection with
the Restructuring, the Company is currently in the process of replacing all of
its core systems for its new Centers of Excellence at an estimated cost of
approximately $80 million to $100 million.
The Company continues to work with Motorola, Inc., Glenayre
Technologies, Inc., and other primary vendors that currently supply the Company
with subscriber devices, wireless messaging terminals, and network facilities,
to assess their Year 2000 readiness. The Company's primary vendors are making
the preparations necessary for their products and services to be ready for the
Year 2000. However, there can be no assurance that third parties, on which the
Company's business relies, will successfully remediate their systems on a timely
basis. The Company also relies on the provision of electrical power and
telecommunications transmission services in the operation of its business. The
Company has queried its primary electrical and telecommunications suppliers
regarding Year 2000 compliance. Each supplier queried believes that it will be
Year 2000 ready by the end of 1999. The Company has no means of confirming these
statements, nor any ability to ensure Year 2000 compliance by these suppliers.
The Company believes that although it may experience power and/or transmission
outages
15
<PAGE> 16
related to Year 2000 noncompliance, these outages will be limited in both scope
and duration and will not have a material adverse effect on the Company's
ability to operate nor on its results of operations. In addition, the
possibility of power and/or transmission outages is being addressed in the
contingency planning process described below.
The Company is working with a globally recognized consulting firm to
develop contingency plans to mitigate the impact of its potential system
failures related to Year 2000 issues. The contingency plans will address the
risk of potential failures related to internal software applications, embedded
systems, infrastructure, and third-party systems (including electrical power and
telecommunications transmission services). The contingency plans are in the
final stages of completion and selected failure scenarios will be practiced
during the third and fourth quarters of 1999 to validate the thoroughness of
these plans.
The Company believes it has met all project deliverables according to
schedule based on management's review and verification of the project
documentation. However, in particular due to the potential impact of third-party
modification plans, there can be no assurance that these estimates and this
timetable will be achieved, and actual results could differ materially from
those anticipated. The Company's business, financial position, or results of
operations could be materially adversely affected by the failure of its computer
systems and applications, or those operated by third parties, to properly
operate or manage dates beyond 1999. In addition, disruptions in the economy
generally resulting from Year 2000 issues could materially adversely affect the
Company. The amount of any potential liability or lost revenue cannot be
estimated at this time.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK.
There have been no material changes from the information provided in
Item 7A of the Company's Annual Report on Form 10-K for the year ended December
31, 1998.
16
<PAGE> 17
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
The Company is involved in various lawsuits arising in the normal
course of business. In management's opinion, the ultimate outcome of these
lawsuits will not have a material adverse effect on the Company's business,
financial position, or results of operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
On May 19, 1999, the Company held its Annual Meeting of Shareowners, at
which all of the matters listed below were approved.
Mr. Jeffrey M. Cunningham was elected as a Class II Director for a
three year term to expire in 2002 (94,612,017 voting for and 680,410
withholding authority). Mr. Robert J. Miller was elected as a Class II
Director for a three year term to expire in 2002 (94,589,965 voting for
and 702,462 withholding authority). Mr. Carl D. Thoma was elected as a
Class II Director for a three year term to expire in 2002 (94,726,298
voting for and 566,129 withholding authority).
As of the record date of March 19, 1999, there were 103,959,140 shares
of the Company's Common Stock issued and outstanding and entitled to vote.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits.
The exhibits listed on the accompanying index to exhibits are
filed as part of this quarterly report.
(b) Reports on Form 8-K.
None.
17
<PAGE> 18
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
PAGING NETWORK, INC.
Date: August 12, 1999 By: /s/ John P. Frazee, Jr.
-------------------------------------
John P. Frazee, Jr.
Chairman of the Board of Directors,
President and Chief Executive Officer
(Principal Executive Officer)
Date: August 12, 1999 By: /s/ Julian B. Castelli
-------------------------------------
Julian B. Castelli
Senior Vice President and Chief
Financial Officer (Principal Financial
Officer and Principal Accounting Officer)
18
<PAGE> 19
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<S> <C>
3.1 Restated Certificate of Incorporation of the Registrant, as
amended (1)
3.3 By-laws of the Registrant, as amended (11)
4.1 Articles Sixth, Seventh, Eighth, Twelfth, and Thirteenth of the
Restated Certificate of Incorporation of the Registrant, as
amended (1)
4.2 Articles II, III, and VII and Section I of Article VIII of the
Registrant's By-laws, as amended (11)
4.3 Form of Indenture (2)
4.4 Shareholder Rights Agreement (3)
4.5 First Amendment to the Shareholder Rights Agreement (11)
10.1 1982 Incentive Stock Option Plan, as amended and restated (1)
10.2 Form of Stock Option Agreement executed by recipients of options
granted under the 1982 Incentive Stock Option Plan (1)
10.3 Form of Management Agreement executed by recipients of options
granted under the 1982 Incentive Stock Option Plan (1)
10.4 Form of Vesting Agreement executed by recipients of options
granted under the 1982 Incentive Stock Option Plan (1)
10.5 Form of Indemnification Agreement executed by recipients of
options granted under the 1991 Stock Option Plan (1)
10.6 Form of First Amendment to Vesting Agreement executed by
recipients of options granted under the 1982 Incentive Stock
Option Plan (1)
10.7 Form of First Amendment to Management Agreement executed by
recipients of options granted under the 1982 Incentive Stock
Option Plan (1)
10.8 Amended and Restated Credit Agreement dated as of May 2, 1995
among the Registrant, NationsBank of Texas, N.A., Toronto
Dominion (Texas), Inc., The First National Bank of Boston, and
certain other lenders (4)
10.9 Amendment No. 1 dated as of December 12, 1995 to the Amended and
Restated Credit Agreement dated as of May 2, 1995 among the
Registrant, NationsBank of Texas, N.A., Toronto Dominion (Texas),
Inc., The First National Bank of Boston, and certain other
lenders (5)
</TABLE>
19
<PAGE> 20
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<S> <C>
10.10 Second Amended and Restated Credit Agreement dated as of June 5,
1996, among the Registrant, NationsBank of Texas, N.A., Toronto
Dominion (Texas), Inc., The First National Bank of Boston, Chase
Securities Inc., and certain other lenders (6)
10.11 Loan Agreement dated as of June 5, 1996 among Paging Network of
Canada Inc., The Toronto-Dominion Bank, and such other financial
institutions as become banks (6)
10.12 Loan Agreement dated as of June 5, 1996 among Madison
Telecommunications Holdings, Inc., The Toronto-Dominion Bank, and
such other financial institutions as become banks (6)
10.13 1997 Restricted Stock Plan, as approved by shareowners on May 22,
1997 (7)
10.14 Employment Agreement dated as of August 4, 1997 among the
Registrant and John P. Frazee, Jr. (8)
10.15 First Amendment dated April 18, 1997 to the Loan Agreement dated
as of June 5, 1996 among Paging Network of Canada Inc., The
Toronto-Dominion Bank, and such other financial institutions as
become banks (9)
10.16 First Amendment dated April 18, 1997 to the Loan Agreement dated
as of June 5, 1996 among Madison Telecommunications Holdings,
Inc., The Toronto-Dominion Bank, and such other financial
institutions as become banks (9)
10.17 1992 Director Compensation Plan, as amended and restated on April
22, 1998 (10)
10.18 Amended and Restated 1991 Stock Option Plan, as approved by
shareowners on May 21, 1998 (10)
10.19 Letter dated May 26, 1998 regarding Second Amendments effective
March 31, 1998 to the Loan Agreements dated as of June 5, 1996:
(1) among Paging Network of Canada Inc., The Toronto-Dominion
Bank, and such other financial institutions as become banks (2)
among Madison Telecommunications Holdings, Inc., The
Toronto-Dominion Bank, and such other financial institutions as
become banks (10)
10.20 Forms of Stock Option Agreement executed by recipients of options
granted under the 1991 Stock Option Plan (11)
10.21 Employee Stock Purchase Plan, as amended on December 16, 1998
(11)
10.22 Severance Pay Plan dated as of January 20, 1999 (11)
10.23 Form of Stock Option Agreement executed by recipients of options
granted under the 1992 Director Compensation Plan (11)
10.24 Amended and Restated Loan Agreement dated August 5, 1999 among
Paging Network of Canada Inc., The Toronto-Dominion Bank,
Canadian Imperial Bank of Commerce, National Bank of Canada, and
such other financial institutions as become banks (12)
10.25 Amended and Restated Loan Agreement dated August 5, 1999 among
Madison Telecommunications Holdings, Inc., The Toronto-Dominion
Bank, Canadian Imperial Bank of Commerce, National Bank of
Canada, and such other financial institutions as become banks
(12)
</TABLE>
20
<PAGE> 21
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<S> <C>
12 Ratio of Earnings to Fixed Charges for the three and six months
ended June 30, 1998 and 1999 (12)
27 Financial Data Schedule (12)
</TABLE>
-------------------
(1) Previously filed as an exhibit to Registration Statement No.
33-42253 on Form S-1 and Incorporated herein by reference.
(2) Previously filed as an exhibit to Registration Statement No.
33-46803 on Form S-1 and Incorporated herein by reference.
(3) Previously filed as an exhibit to the Registrant's Report on Form
8-K on September 15, 1994.
(4) Previously filed as an exhibit to the Registrant's Quarterly
Report on Form 10-Q for the quarterly period ended June 30, 1995.
(5) Previously filed as an exhibit to the Registrant's Annual Report
on Form 10-K for the fiscal ended December 31, 1995.
(6) Previously filed as an exhibit to the Registrant's Quarterly
Report on Form 10-Q for the quarterly period ended June 30, 1996.
(7) Previously filed as an exhibit to the Registrant's Quarterly
Report on Form 10-Q for the quarterly period ended June 30, 1997.
(8) Previously filed as an exhibit to the Registrant's Quarterly
Report on Form 10-Q for the quartley period ended September 30,
1997.
(9) Previously filed as an exhibit to the Registrant's Annual Report
on Form 10-K for the fiscal year ended December 31, 1997.
(10) Previously filed as an exhibit to the Registrant's Quarterly
Report on Form 10-Q for the quarterly period ended June 30, 1998.
(11) Previously filed as an exhibit to the Registrant's Annual Report
on Form 10-K for the fiscal year ended December 31, 1998.
(12) Filed herewith.
<PAGE> 1
EXHIBIT 10.24
AMENDED AND RESTATED LOAN AGREEMENT
AMONG
PAGING NETWORK OF CANADA INC. (THE "BORROWER");
THE TORONTO-DOMINION BANK, CANADIAN IMPERIAL BANK
OF COMMERCE, NATIONAL BANK OF CANADA AND
SUCH OTHER FINANCIAL INSTITUTIONS AS BECOME
"BANKS" HEREUNDER (COLLECTIVELY, THE "BANKS"); AND
THE TORONTO-DOMINION BANK, AS BOOKRUNNER, ARRANGER AND ADMINISTRATION AGENT
FOR THE BANKS (THE "AGENT")
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE 1 DEFINITIONS .......................................................................................2
ARTICLE 2 CREDIT FACILITY...................................................................................20
SECTION 2.1 COMMITMENT.....................................................................................20
SECTION 2.2 UNCOLLATERALIZED PRIME RATE ADVANCES...........................................................20
SECTION 2.3 COLLATERALIZED ADVANCES........................................................................21
SECTION 2.4 NOTIFICATION OF BANKS; DISBURSEMENT............................................................23
SECTION 2.5 BANKERS' ACCEPTANCES...........................................................................24
SECTION 2.6 INTEREST; FEES.................................................................................27
SECTION 2.7 FEES...........................................................................................28
SECTION 2.8 MANDATORY COMMITMENT REDUCTIONS................................................................29
SECTION 2.9 OPTIONAL PREPAYMENTS; COMMITMENT REDUCTIONS...................................................30
SECTION 2.10 MANDATORY REPAYMENTS...........................................................................30
SECTION 2.11 EVIDENCE OF OBLIGATIONS; ACCOMMODATION ACCOUNTS................................................31
SECTION 2.12 MANNER OF PAYMENT..............................................................................31
SECTION 2.13 REIMBURSEMENT..................................................................................32
SECTION 2.14 PRO RATA TREATMENT.............................................................................33
ARTICLE 3 CONDITIONS PRECEDENT..............................................................................34
SECTION 3.1 CONDITIONS PRECEDENT TO AGREEMENT..............................................................34
SECTION 3.2 CONDITIONS PRECEDENT TO ALL ACCOMMODATIONS.....................................................36
ARTICLE 4 REPRESENTATIONS AND WARRANTIES....................................................................37
SECTION 4.1 REPRESENTATIONS AND WARRANTIES.................................................................37
SECTION 4.2 SURVIVAL OF REPRESENTATIONS AND WARRANTIES, ETC................................................45
SECTION 4.3 NO REPRESENTATIONS BY BANKS....................................................................45
ARTICLE 5 GENERAL COVENANTS.................................................................................45
SECTION 5.1 PRESERVATION OF EXISTENCE AND SIMILAR MATTERS..................................................45
SECTION 5.2 BUSINESS; COMPLIANCE WITH APPLICABLE LAW.......................................................46
SECTION 5.3 MAINTENANCE OF PROPERTIES......................................................................46
SECTION 5.4 ACCOUNTING METHODS AND FINANCIAL RECORDS.......................................................46
SECTION 5.5 INSURANCE......................................................................................46
</TABLE>
<PAGE> 2
- 2 -
<TABLE>
<S> <C>
SECTION 5.6 PAYMENT OF TAXES AND CLAIMS....................................................................46
SECTION 5.7 COMPLIANCE WITH ERISA..........................................................................47
SECTION 5.8 VISITS AND INSPECTIONS.........................................................................48
SECTION 5.9 PAYMENT OF INDEBTEDNESS; ACCOMMODATIONS........................................................49
SECTION 5.10 USE OF PROCEEDS................................................................................49
SECTION 5.11 PROTECT SECURITY INTERESTS.....................................................................49
SECTION 5.12 ENVIRONMENTAL AUDITS...........................................................................49
SECTION 5.13 FURTHER ASSURANCES.............................................................................50
ARTICLE 6 INFORMATION COVENANTS.............................................................................50
SECTION 6.1 QUARTERLY FINANCIAL STATEMENTS AND INFORMATION.................................................50
SECTION 6.2 ANNUAL FINANCIAL STATEMENTS AND INFORMATION....................................................51
SECTION 6.3 PERFORMANCE CERTIFICATES.......................................................................51
SECTION 6.4 COPIES OF OTHER REPORTS........................................................................52
SECTION 6.5 NOTICE OF LITIGATION AND OTHER MATTERS.........................................................52
SECTION 6.6 ENVIRONMENTAL REPORTING........................................................................53
ARTICLE 7 NEGATIVE COVENANTS................................................................................54
SECTION 7.1 INDEBTEDNESS OF THE BORROWER AND ITS SUBSIDIARIES..............................................54
SECTION 7.2 LIMITATION ON LIENS............................................................................55
SECTION 7.3 AMENDMENT AND WAIVER...........................................................................55
SECTION 7.4 LIQUIDATION, MERGER, OR DISPOSITION OF ASSETS..................................................55
SECTION 7.5 LIMITATION ON GUARANTIES.......................................................................56
SECTION 7.6 INVESTMENTS AND ACQUISITIONS...................................................................56
SECTION 7.7 RESTRICTED PAYMENTS AND PURCHASES..............................................................56
SECTION 7.8 LEVERAGE RATIO.................................................................................56
SECTION 7.9 ANNUALIZED OPERATING CASH FLOW TO INTEREST EXPENSE.............................................57
SECTION 7.10 TOTAL DEBT PER SUBSCRIBER......................................................................57
SECTION 7.11 CAPITAL EXPENDITURES...........................................................................57
SECTION 7.12 MINIMUM REVENUE TEST...........................................................................58
SECTION 7.13 MINIMUM UNITS IN SERVICE.......................................................................58
SECTION 7.14 MINIMUM OPERATING CASH FLOW TEST...............................................................58
SECTION 7.15 AFFILIATE TRANSACTIONS.........................................................................59
SECTION 7.16 REAL ESTATE....................................................................................59
SECTION 7.17 ERISA LIABILITIES..............................................................................59
ARTICLE 8 DEFAULT ..........................................................................................59
SECTION 8.1 EVENTS OF DEFAULT..............................................................................59
SECTION 8.2 REMEDIES.......................................................................................62
ARTICLE 9 THE AGENT ........................................................................................63
SECTION 9.1 APPOINTMENT AND AUTHORIZATION..................................................................63
SECTION 9.2 INTEREST HOLDERS...............................................................................63
SECTION 9.3 CONSULTATION WITH COUNSEL......................................................................64
SECTION 9.4 DOCUMENTS......................................................................................64
SECTION 9.5 AGENT AND AFFILIATES...........................................................................64
SECTION 9.6 RESPONSIBILITY OF THE AGENT....................................................................64
SECTION 9.7 SECURITY DOCUMENTS.............................................................................64
SECTION 9.8 ACTION BY THE AGENT............................................................................65
SECTION 9.9 NOTICE OF DEFAULT OR EVENT OF DEFAULT..........................................................65
</TABLE>
<PAGE> 3
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<TABLE>
<S> <C>
SECTION 9.10 RESPONSIBILITY DISCLAIMED......................................................................66
SECTION 9.11 INDEMNIFICATION................................................................................66
SECTION 9.12 CREDIT DECISION................................................................................66
SECTION 9.13 SUCCESSOR AGENT................................................................................67
SECTION 9.14 DELEGATION OF DUTIES...........................................................................67
SECTION 9.15 DETERMINATION BY AGENT CONCLUSIVE AND BINDING..................................................67
ARTICLE 10 COMPUTATIONS AND INDEMNITIES......................................................................67
SECTION 10.1 INDEMNITY FOR CHANGE IN CIRCUMSTANCES..........................................................67
SECTION 10.2 INDEMNITY FOR TRANSACTIONAL AND ENVIRONMENTAL LIABILITY........................................68
SECTION 10.3 TAXATION ON PAYMENTS...........................................................................69
SECTION 10.4 JUDGMENT CURRENCY..............................................................................70
SECTION 10.5 CLAIMS FOR INCREASED COSTS AND TAXES...........................................................71
ARTICLE 11 MISCELLANEOUS.....................................................................................71
SECTION 11.1 NOTICES........................................................................................71
SECTION 11.2 EXPENSES.......................................................................................73
SECTION 11.3 WAIVERS........................................................................................74
SECTION 11.4 RIGHT TO COMBINE AND SET-OFF...................................................................74
SECTION 11.5 ASSIGNMENT.....................................................................................75
SECTION 11.6 ACCOUNTING PRINCIPLES..........................................................................76
SECTION 11.7 COUNTERPARTS...................................................................................76
SECTION 11.8 GOVERNING LAW..................................................................................76
SECTION 11.9 SEVERABILITY...................................................................................77
SECTION 11.10 INTEREST.......................................................................................77
SECTION 11.11 TABLE OF CONTENTS AND HEADINGS.................................................................77
SECTION 11.12 AMENDMENT AND WAIVER...........................................................................78
SECTION 11.13 NON-MERGER.....................................................................................78
SECTION 11.14 OTHER RELATIONSHIPS............................................................................78
SECTION 11.15 DIRECTLY OR INDIRECTLY.........................................................................79
SECTION 11.16 RELIANCE ON AND SURVIVAL OF VARIOUS PROVISIONS.................................................79
SECTION 11.17 SENIOR DEBT....................................................................................79
SECTION 11.18 OBLIGATIONS SEVERAL............................................................................79
SECTION 11.19 CONFIDENTIALITY................................................................................79
SECTION 11.20 TIME OF THE ESSENCE............................................................................80
SECTION 11.21 THIRD PARTY BENEFICIARIES......................................................................80
SECTION 11.22 ENUREMENT......................................................................................80
</TABLE>
EXHIBITS
Exhibit A - Commitment Ratio
Exhibit B - Form of Accommodation Notice
Exhibit C - Form of Repayment Notice
Exhibit D - Form of Borrower's Loan Certificate
Exhibit E - Form of Subsidiary Loan Certificate
Exhibit F - Form of Performance Certificate
Exhibit G - Form of Assignment and Assumption Agreement
<PAGE> 4
- 4 -
SCHEDULES
Schedule 1 - Licenses
Schedule 2 - Security Documents
Schedule 3 - Subsidiaries
Schedule 4 - Agreements with Affiliates
Schedule 5 - Year 2000 Plan
<PAGE> 5
AMENDED AND RESTATED LOAN AGREEMENT
DATED the 5th day of June, 1996, as AMENDED AND RESTATED as of the 5th
day of August, 1999.
A M O N G:
PAGING NETWORK OF CANADA INC.
(the "Borrower")
- and -
THE TORONTO-DOMINION BANK, CANADIAN IMPERIAL
BANK OF COMMERCE, NATIONAL BANK OF CANADA
and such other financial institutions as
become "Banks" hereunder
(collectively, the "Banks")
- and -
THE TORONTO-DOMINION BANK, AS BOOKRUNNER,
ARRANGER AND ADMINISTRATION
AGENT
(the "Agent")
WHEREAS:
A. The Borrower, The Toronto-Dominion Bank, as a Bank, and the Agent,
entered into a loan agreement made as of the 5th day of June, 1996;
B. The loan agreement was amended pursuant to a first amendment to the
loan agreement dated as of the 18th day of April, 1997;
C. The Borrower, the Agent and the Banks wish to enter into this Agreement
to incorporate the provisions of the amendment referred to in Recital B
above, document certain additional amendments agreed upon among them,
and restate the loan agreement, all upon the terms and conditions more
particularly specified herein;
NOW THEREFORE, the parties agree as follows:
<PAGE> 6
- 2 -
ARTICLE 1
DEFINITIONS
For the purposes of this Agreement:
"ACCOMMODATION" shall mean (i) an Advance made by the Banks or
any one or more of them on the occasion of any Borrowing; and (ii) a Bankers'
Acceptance created by any Bank on the occasion of any Drawing.
"ACCOMMODATION NOTICE" shall mean a notice substantially in
the form of Exhibit B.
"AGENT" shall mean The Toronto-Dominion Bank, in its capacity
as Agent for the Banks or any successor Agent appointed pursuant to Section 9.13
of this Agreement.
"AGENT'S OFFICE" shall mean the office of the Agent located at
International Office Centre Toronto, Toronto Dominion Bank Tower, Toronto
Dominion Centre, Toronto, Ontario M5K 1A2, 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 Section 2.2 and Section 2.3 hereof on the occasion of any
Borrowing and shall include, as designated by the Borrower in accordance with
the terms of this Agreement, a Collateralized Advance and an Uncollateralized
Prime Rate Advance; 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 Amended and Restated Loan
Agreement, together with all Exhibits and Schedules hereto.
"AGREEMENT DATE" shall mean June 5, 1996.
"ANNUALIZED OPERATING CASH FLOW" shall mean, as of any date,
the product of (a) the aggregate Operating Cash Flow for the Borrower Group on a
combined basis for the fiscal quarter end being tested or the most recently
completed fiscal quarter, as the case may be, times (b) four (4).
"APPLICABLE LAW" shall mean, in respect of any Person, all
provisions of constitutions, statutes, codes, ordinances, rules, regulations,
municipal by-laws, judicial, arbitral, administrative, ministerial, departmental
or regulatory judgments, orders, decisions, rulings or awards, policies and
guidelines of any Governmental Entity, or any provisions of the foregoing,
<PAGE> 7
- 3 -
including general principles of common and civil law and equity, applicable to
such Person, including, without limiting the foregoing, the Licenses, 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 or fee margin
applicable to Advances and Bankers' Acceptances, as the case may be, in each
case determined in accordance with Section 2.6(d) hereof.
"ASSETS" means, with respect to any Person, all property and
assets of such Person, both real and personal, of every kind and wheresoever
situate, whether now owned or hereafter acquired.
"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.
"AVAILABLE COMMITMENT" shall mean, as of any date, the
greater of:
(a) the Equivalent Canadian Dollar Amount of the aggregate amount
of Permitted Collateral held on such date by the Agent
pursuant to the Deposit Agreement; and
(b) $61,000,000, but only to the extent that the Minimum Permitted
Collateral Amount is held on such date by the Agent pursuant
to the Deposit Agreement and, in any event, the Available
Commitment under this clause (b), less the Minimum Permitted
Collateral Amount, shall not exceed $19,500,000; or
(c) $67,500,000, but only to the extent that (i) the Minimum
Permitted Collateral Amount is held on such date by the Agent
pursuant to the Deposit Agreement, and (ii) as of the end of
the most recently completed fiscal quarter for which financial
statements have been delivered pursuant to Sections 6.1 or
6.2, as applicable, hereof, either (A) for the two (2) most
recently completed fiscal quarters, the Leverage Ratio is less
than 6.0 to 1, or (B) (i) the aggregate number of Units in
Service is greater than or equal to 245,000, and (ii) Gross
Revenue for the Borrower Group on a combined basis is greater
than or equal to $5,000,000 and, in any event, the Available
Commitment under this clause (c), less the Minimum Permitted
Collateral Amount, shall not exceed $26,000,000; or
(d) $74,500,000, but only to the extent that (i) the Minimum
Permitted Collateral Amount is held on such date by the Agent
pursuant to the Deposit Agreement, and (ii) as of the end of
the most recently completed fiscal quarter for which financial
statements have been delivered pursuant to Sections 6.1 or
6.2, as applicable, hereof, either (A) for the two (2) most
recently completed fiscal quarters, the Leverage Ratio is less
than 5.0 to 1, or (B) (i) the aggregate number of Units in
Service is greater than or equal to 287,500, and (ii) Gross
Revenue for the Borrower Group on a combined basis is greater
than or equal to $5,500,000
<PAGE> 8
- 4 -
and, in any event, the Available Commitment under this clause
(d), less the Minimum Permitted Collateral Amount, shall not
exceed $33,000,000; or
(e) $80,500,000, but only to the extent that (i) the Minimum
Permitted Collateral Amount is held on such date by the Agent
pursuant to the Deposit Agreement, and (ii) as of the end of
the most recently completed fiscal quarter for which financial
statements have been delivered pursuant to Sections 6.1 or
6.2, as applicable, hereof, either (A) for the two (2) most
recently completed fiscal quarters, the Leverage Ratio is less
than 4.0 to 1, or (B) (i) the aggregate number of Units in
Service is greater than or equal to 325,000, and (ii) Gross
Revenue for the Borrower Group on a combined basis is greater
than or equal to $7,250,000 and, in any event, the Available
Commitment under this clause (e), less the Minimum Permitted
Collateral Amount, shall not exceed $39,000,000;
provided, however, that the Available Commitment shall not at
anytime exceed the Commitment on such date; and provided,
further, however, that from and after the date of any event
which, with respect to the Licenses, results in a violation of
the Canadian ownership and control rules promulgated under the
Radiocommunication Act (Canada), the Telecommunications Act
(Canada) and any replacement act or any regulations made under
any such act, the Available Commitment shall be as set forth
in clause (a) of this definition.
"BANKERS' ACCEPTANCE" shall have the meaning set forth in
Section 2.5 hereof and shall include, as designated by the Borrower in
accordance with the terms of this Agreement, a Collateralized Bankers'
Acceptance and an Uncollateralized Bankers' Acceptance.
"BANKERS' ACCEPTANCE FEE RATE" shall mean the Applicable
Margin for Bankers' Acceptances as determined in accordance with Section 2.6(d)
hereof.
"BANKERS' ACCEPTANCE PERMITTED COLLATERAL RATE" shall mean,
with respect to any Bankers' Acceptance to be purchased by a Bank pursuant to
Section 2.5, the sum of (a) the discount rate per annum based on a year of 365
days which is equivalent to the rate quoted to the Borrower by such Bank as the
such Bank's Canadian Dollar bankers' acceptance rate for bankers' acceptances
having the same term to maturity as such Bankers' Acceptance, plus (b) 0.500%.
"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.
"BORROWER" shall mean Paging Network of Canada Inc., a
corporation incorporated under the laws of Canada.
"BORROWER GROUP" shall mean, collectively, the Borrower and
its Subsidiaries and MadTel Holdings and its Subsidiaries.
"BORROWING" shall mean a borrowing consisting of one or more
Advances.
<PAGE> 9
- 5 -
"BUSINESS" shall have the meaning specified in Section 4.1(e)
hereof.
"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 Toronto, Canada, as relevant to the determination to be made or the
action to be taken.
"CAPITAL EXPENDITURES" shall mean, for any Person for any
period, 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; provided, however, that Capital Expenditures for any period shall be
reduced by the net book value of Units in Service sold during such period, which
had been reflected in the determination of Capital Expenditures for any prior
periods' Capital Expenditures.
"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 sheet of such Person in accordance
with GAAP.
"CHANGE EVENT" shall mean the occurrence of any of the
following events or the existence of any of the following conditions: (i) Paging
Network, Inc. shall cease to own, directly or indirectly, 100% of the Capital
Stock of the Borrower; or (ii) the Borrower shall fail to own, directly or
indirectly through one or more wholly-owned Subsidiaries all of the issued and
outstanding Capital Stock of each of its Subsidiaries.
"CLAIM" shall mean any claim of any nature whatsoever,
including any demand, liability (whether accrued or accruing, actual or
contingent), obligation, debt, cause of action, suit, proceeding, judgment,
award, assessment and reassessment.
"CODE" shall mean the Internal Revenue Code of 1986, as
amended from time to time.
"COLLATERAL" shall mean any property of any kind constituting
or intended to constitute collateral for the Obligations under any of the Loan
Documents and shall include, without limitation, the Permitted Collateral.
"COLLATERALIZED ADVANCE" shall mean a Collateralized Prime
Rate Advance; provided, however, that the Borrower may not request a
Collateralized Advance (and no Collateralized Advance shall be made) if on the
date of such Collateralized Advance the Equivalent Canadian Dollar Amount of the
Permitted Collateral held under the Deposit Agreement does not equal or exceed
the sum of the principal amount of all Collateralized Advances and the Face
Amount of all Collateralized Bankers' Acceptances then outstanding plus the
principal amount of the Collateralized Advance so requested.
<PAGE> 10
- 6 -
"COLLATERALIZED BANKERS' ACCEPTANCE" shall mean a Drawing
which the Borrower requests to be made as a Collateralized Bankers' Acceptance
or is continued as or converted into a Collateralized Bankers' Acceptance in
accordance with the provisions of Section 2.5 hereof; provided, however, that
the Borrower may not request a Collateralized Bankers' Acceptance (and no such
Bankers' Acceptance shall be issued) if on the date of such Drawing the
aggregate amount of the Equivalent Canadian Dollar Amount of the Permitted
Collateral held pursuant to the Deposit Agreement does not equal or exceed the
sum of the principal amount of all Collateralized Advances and the Face Amount
of all Collateralized Bankers' Acceptances outstanding on such date plus the
amount of the Face Amount of all Collateralized Bankers' Acceptance so
requested.
"COLLATERALIZED PRIME RATE ADVANCE" shall mean a
Collateralized Advance which bears interest at the Prime Rate Basis and which
the Borrower requests to be made as a Collateralized Prime Rate Advance or is
continued as or converted into a Collateralized Prime Rate Advance, in
accordance with the provisions of this Agreement, and which shall be in a
principal amount of at least $500,000 and in an integral multiple of $500,000.
"COMMITMENT" shall mean the several obligations of the Banks
to make Accommodations to the Borrower pro rata, in accordance with their
respective Commitment Ratios, in an aggregate amount of up to $80,500,000
pursuant to the terms hereof, as such obligations may be reduced from time to
time pursuant to the terms hereof.
"COMMITMENT RATIO" shall mean, with respect to any Bank, the
percentage equivalent of the ratio which such Bank's pro rata portion of the
total Commitment bears to the aggregate amount of the Commitment (as each may be
adjusted from time to time as provided herein); and "Commitment Ratios" shall
mean the Commitment Ratios of all of the Banks with respect to the Commitment.
As of the Restatement Date, the Commitment Ratio of each Bank is set forth on
Exhibit A.
"DEFAULT" shall mean any Event of Default, and any of the
events specified in Section 8.1 hereof, regardless of whether there shall have
occurred any passage of time or giving of notice, or both, that would be
necessary in order to constitute such event an Event of Default.
"DEFAULT RATE" shall mean a simple per annum interest rate
equal to the sum of (a) the Prime Rate, plus (b) the Applicable Margin for
Uncollateralized Prime Rate Advances, plus (c) two percent (2%).
"DEPOSIT AGREEMENT" shall mean that certain Deposit Agreement
dated as of April 18, 1997 between PNCHI and the Agent for the benefit of the
Banks.
"DEPOSIT AGREEMENT GUARANTY" shall mean that certain Guaranty
in favour of the Agent for the benefit of the Banks, given by PNCHI on April 18,
1997.
"DOLLAR" or "$" shall mean (except where specifically
designated otherwise) lawful money of Canada.
<PAGE> 11
- 7 -
"DRAFT" shall mean, at any time, a blank depository bill
within the meaning of the Depository Bills and Notes Act (Canada) or a blank
bill of exchange within the meaning of the Bills of Exchange Act (Canada) drawn
by the Borrower on a Bank and bearing such distinguishing letters and numbers as
such Bank may determine, but which at such time, except as otherwise provided
herein, has not been completed or accepted by such Bank.
"DRAWING" shall mean the creation of a Bankers' Acceptance by
a Bank.
"DRAWING DATE" shall mean the requested date for a Drawing set
forth in an Accommodation Notice.
"DRAWING FEE" shall mean, with respect to each Draft drawn by
the Borrower hereunder and accepted by a Bank on any Drawing Date, an amount
equal to the Bankers' Acceptance Fee Rate multiplied by the aggregate Face
Amount of such Draft, calculated daily on the basis of the term to maturity of
such Draft and a year of 365 days.
"EMPLOYEE PENSION PLAN" shall mean any Plan subject to the
minimum funding requirement of Section 302 of ERISA or Section 412 of the Code.
"ENVIRONMENTAL AUDITOR" shall mean a qualified environmental
auditor at arm's length from the Borrower and acceptable to the Agent.
"ENVIRONMENTAL LAWS" shall mean all Applicable Laws in force
from time to time relating to the environment, Hazardous Substances, pollution
or protection of the environment, including Laws relating to: (i) on site or
off-site contamination; (ii) occupational health and safety; (iii) chemical
substances or products; (iv) Releases of pollutants, contaminants, chemicals or
other industrial, toxic or radioactive substances or Hazardous Substances into
the environment; and (v) the manufacture, processing, distribution, use,
treatment, storage, transport or handling of Hazardous Substances.
"ENVIRONMENTAL LIABILITIES AND COSTS" shall mean all Losses
and Claims, whether known or unknown, current or potential, past, present or
future, imposed by, under or pursuant to Environmental Laws, including all
Losses and Claims related to Remedial Actions and all reasonable fees,
disbursements and expenses of counsel, experts, personnel and consultants, where
such Losses and Claims are based on, arise out of or are otherwise in respect
of: (i) the ownership or operation of the Business or any Assets related to the
Business; (ii) the conditions on, under, above or about any real property,
assets, equipment or facilities currently or previously owned, leased or
operated by the Borrower or its Subsidiaries; (iii) expenditures necessary to
cause the operations of the Business or Assets either related to the Business or
owned, leased or operated by the Borrower or its Subsidiaries to comply
materially with any and all requirements, including expenditures necessary to
effect the closure, decommissioning or rehabilitation of any of the operations
of the business or Assets either related to the Business or owned, leased or
operated by the Borrower or its Subsidiaries; (iv) the use, generation,
manufacture, refining, treatment, transportation, storage, handling, recycling,
disposal, depositing, transferring, producing or processing of Hazardous
Substances; (v) liability for personal injury or property damage, including
damages assessed for the maintenance of a public
<PAGE> 12
- 8 -
or private nuisance; and (vi) any other matter affecting the Real Estate or
other Assets within the jurisdiction of any Governmental Entity administering
any Environmental Law.
"ENVIRONMENTAL NOTICE" shall mean any written claim, citation,
directive, request for information, statement of claim, notice of investigation,
letter or other communication from any Person given pursuant to Environmental
Laws.
"ENVIRONMENTAL PERMITS" shall mean all permits, certificates,
approvals, registrations and licenses issued by any Governmental Entity to the
Borrower, its Subsidiaries or to the Business pursuant to Environmental Laws and
relating to or required for the operation of the Business or the use of the Real
Estate or other Assets of the Borrower or its Subsidiaries.
"EQUIVALENT CANADIAN DOLLAR AMOUNT" shall mean, on any day (a)
with respect to Permitted Collateral denominated in Dollars, the principal or
face amount of such Permitted Collateral, and (b) with respect to Permitted
Collateral denominated in U.S. Dollars, the equivalent amount of Dollars
determined using the quoted spot rate at which the Agent's principal office in
Toronto offers to provide Dollars in exchange for U.S. Dollars in Toronto at
12:00 noon (Toronto time) on such day.
"EQUIVALENT U.S. DOLLAR AMOUNT" shall mean, on any day, with
respect to any amount of Dollars, the equivalent amount of U.S. Dollars
determined by using the quoted spot rate at which the Agent's principal office
in Toronto offers to provide U.S. Dollars in exchange for Dollars in Toronto at
12:00 noon (Toronto time) on such day.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as in effect from time to time.
"ERISA AFFILIATE" shall mean any Person, including a
Subsidiary or an Affiliate of the Borrower, that is treated as a single employer
with the Borrower pursuant to Section 414(b), (c), (m) or (o) of the Code.
"EVENT OF DEFAULT" shall mean any of the events specified in
Section 8.1 hereof, provided that any requirement for notice or lapse of time
has been satisfied.
"FACE AMOUNT" shall mean, in respect of a Bankers' Acceptance,
the amount payable to the holder thereof on its maturity.
"FREE CASH FLOW" shall mean, with respect to any Person and
its Subsidiaries, on a consolidated basis, at the end of the most recently
completed fiscal year, as determined in accordance with GAAP, Operating Cash
Flow, less (i) the amounts actually paid during such period in respect of (A)
Interest Expense, (B) income taxes, (C) payments on any Indebtedness for Money
Borrowed falling within the definition of Total Debt (including any amounts
actually paid in connection with reductions of the Commitment pursuant to
Section 2.8(a)), (D) Capital Expenditures, and (ii) to the extent not included
in the amounts calculated pursuant to (i) above, the amount of any automatic
reduction in the Commitment made during such fiscal year in accordance with the
provisions of Section 2.8(a).
<PAGE> 13
- 9 -
"GAAP" shall mean accounting principles generally accepted in
Canada as recommended in the Handbook of the Canadian Institute of Chartered
Accountants as in effect on the Restatement Date.
"GOVERNMENT LIST" shall mean a list maintained by any
Governmental Entity of sites identified for investigation or clean-up pursuant
to any Environmental Law.
"GOVERNMENTAL ENTITY" shall mean any: (i) multinational,
federal, provincial, state, municipal, local or other government, governmental
or public department, central bank, court, commission, board, bureau, agency or
instrumentality, domestic or foreign; (ii) any subdivision, agent, commission,
board, or authority of any of the foregoing; or (iii) any quasi-governmental or
private body exercising any regulatory, expropriation or taxing authority under
or for the account of any of the foregoing.
"GROSS REVENUE" shall mean, with respect to any Person and its
Subsidiaries on a consolidated basis, for the most recently completed fiscal
quarter, gross revenues determined in accordance with GAAP.
"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 with respect to
outstanding letters of credit or capital call requirements.
"HAZARDOUS SUBSTANCE" shall mean any Substance which is or is
deemed to be, alone or in any combination, hazardous, hazardous waste, toxic, a
pollutant, a deleterious substance, a contaminant or a source of pollution or
contamination under any Environmental Law, whether or not such Substance is
defined as hazardous under the Environmental Law.
"IMMATERIAL SITE SPECIFIC LICENSES" shall mean, at any time,
the aggregate Site Specific Licenses, the termination or cancellation of which,
without contemporaneous replacement, would not reasonably be expected to have a
Materially Adverse Effect.
"INDEBTEDNESS" shall mean, with respect to any Person, and
without duplication, (a) all items 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 (except (i) items of shareholders' and partners'
equity or capital stock, (ii) items of surplus or general contingency or
deferred tax reserves incurred in the ordinary course of business, (iii)
accounts incurred and payable in the ordinary course of business, (iv) dividends
payable, or (v) deferred pension costs), (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, whether or not the obligation secured thereby shall have
been assumed, (c) 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, bankers' acceptances or
<PAGE> 14
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similar instruments, (e) all obligations, contingent or otherwise, arising under
Guaranties issued by such Person, 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, bankers' acceptances or similar instruments, all
Indebtedness issued or assumed as full or partial payment for property or
services, 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.
"INTEREST EXPENSE" shall mean, for any Person for any period,
all interest expense (including imputed interest with respect to Capitalized
Lease Obligations) with respect to any Indebtedness for Money Borrowed of such
Person 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 to the extent not already included in cash interest paid, all as
calculated in accordance with GAAP.
"INTEREST PERIOD" shall mean (a) in connection with any Prime
Rate Advance, the period beginning on the date such Advance is made and ending
on the last day of the calendar month in which such Advance is made, provided,
however, that if a Prime Rate Advance is made on the last day of any calendar
month, it shall have an Interest Period ending on, and its Payment Date shall
be, the last day of the following calendar month, and (b) in connection with any
Bankers' Acceptance, the term of such Bankers' Acceptance selected by the
Borrower or otherwise determined in accordance with this Agreement.
"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.
"KNOWN TO THE BORROWER" or "TO THE KNOWLEDGE OF THE BORROWER"
shall mean known by the executive officers of the Borrower or any Subsidiary
(which shall mean the chairman/president, the chief executive officer, the chief
financial officer, the chief operating officer, the treasurer, and any in-house
general counsel or other Persons performing like functions) or, based upon the
reasonable inquiry that an executive officer would make, should have been known
by such executive officer.
<PAGE> 15
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"LEASEHOLD REAL ESTATE" shall mean the land and premises of
the Borrower and its Subsidiaries held under agreement to lease or other right
of occupation.
"LEVERAGE RATIO" shall mean, as of any date, the ratio of (a)
Total Debt for the Borrower Group on a combined basis to (b) Annualized
Operating Cash Flow.
"LICENSES" shall mean any radio, telephone, microwave,
wireless messaging or other license (excluding Immaterial Site Specific
Licenses), authorization, certificate of compliance or convenience, franchise,
approval or permit, granted or issued by any Governmental Entity and held by the
Borrower, MadTel Holdings or any of their Subsidiaries, all of which (other than
Immaterial Site Specific Licenses) are listed as of the Restatement 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 Security
Documents, all subordination agreements entered into by creditors of the
Borrower or any of its Subsidiaries with respect to Indebtedness for Money
Borrowed of the Borrower or any of its Subsidiaries, all legal opinions or
reliance letters issued by counsel to the Borrower or any of its Subsidiaries,
all fee letters, all Requests for Advance, all Interest Rate Hedge Agreements
between the Borrower, on the one hand, and the 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.
"LOSS" means any loss whatsoever, whether direct or indirect,
including expenses, costs, damages, judgments, penalties, fines, charges,
claims, demands, liabilities, loss of profits, debts, interest, any and all
legal fees and disbursements, on a solicitor and own client basis.
"MADTEL HOLDINGS" shall mean Madison Telecommunications
Holdings Inc., a corporation incorporated under the laws of Canada.
"MADTEL HOLDINGS AGREEMENT" shall mean that certain Amended
and Restated Loan Agreement dated as of even date herewith by and among MadTel
Holdings, the Banks and the Agent.
"MADTEL HOLDINGS OBLIGATIONS" shall mean the indebtedness,
liabilities and obligations of MadTel Holdings to the Agent and the Banks under,
or in connection with, the MadTel Holdings Agreement.
"MAJORITY BANKS" shall mean (i) at any time that no
Accommodations are outstanding hereunder, Banks, the total of whose Commitment
Ratios equals or exceeds sixty-six and two-thirds percent (66-2/3%) of the
aggregate Commitment Ratios of all Banks entitled to vote hereunder or (ii) at
any time that there are Accommodations outstanding hereunder, Banks
<PAGE> 16
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the total of whose Accommodations outstanding equals or exceeds sixty-six and
two thirds percent (66-2/3%) of the total principal amount of the Accommodations
then outstanding of all Banks hereunder (excluding from such calculation the
Accommodations of any Banks who fail to provide Accommodations as provided in
Section 2.4(b) hereof).
"MATERIALLY ADVERSE EFFECT" shall mean (a) any material
adverse effect upon the business, assets, liabilities, financial condition,
results of operations, properties, or business of the Borrower and its
Subsidiaries on a consolidated basis, or (b) except as a result of the action or
inaction of the Agent or any Bank, a material adverse effect upon the validity
or enforceability of this Agreement or any of the Loan Documents, or upon the
ability of the Borrower or any of its Subsidiaries to perform the payment
obligations or other 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 Accommodations or the rights of the 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 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 Commitment to zero or otherwise).
"MINIMUM PERMITTED COLLATERAL AMOUNT" shall mean, as of any
date:
(a) $32,500,000 (or the Equivalent U.S. Dollar Amount),
when the Available Commitment is $52,000,000; and
(b) $37,500,000 (or the Equivalent U.S. Dollar Amount),
when the Available Commitment is $57,000,000 or more,
in each case plus $375,000 to be provided by, or on behalf of, the Borrower to
the Agent quarterly in arrears on or prior to the last Business Day of each
fiscal quarter to be held by or on deposit by the Agent as Permitted Collateral,
commencing with the fiscal quarter beginning on July 1, 1999 and ending with the
fiscal quarter beginning October 1, 2001, such that on January 1, 2002, if the
Available Commitment is $60,750,000 or more, the Minimum Permitted Collateral
Amount shall be no less than $41,250,000.
"MULTIEMPLOYER PLAN" shall mean an Employee Pension Plan which
is a "multiemployer plan" within the meaning set forth in Section 4001(a)(3) of
ERISA.
"NECESSARY AUTHORIZATIONS" shall mean all approvals and
licenses from, and all filings and registrations with, any Governmental Entity
or other regulatory authority, including, without limiting the foregoing, the
Licenses and all approvals, licenses, filings and registrations under Applicable
Law, necessary in order to enable the Borrower and its Subsidiaries to own,
construct, maintain, and operate wireless messaging systems currently being
constructed, maintained or operated and to invest in other Persons who own,
construct, maintain, and operate wireless messaging systems.
<PAGE> 17
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"NET INCOME" shall mean, for any Person and its Subsidiaries
on a consolidated basis, for any period, net income determined in accordance
with GAAP for such Person and its Subsidiaries.
"NETWORK AND EQUIPMENT AGREEMENT" shall mean that certain
Network Co-ordination and Equipment Supply Agreement dated as of October 28,
1994 between PageNet and Madison Telecommunications Inc., as amended by
Amendment No. 1 dated as of October 26, 1995.
"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 Agent, or any of them,
under this Agreement and the other Loan Documents (including any interest, fees
and other charges on the Accommodations 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 Agent or any of the
Banks under any Interest Rate Hedge Agreements) as they may be amended, restated
or supplemented from time to time and all extensions or renewals, or as a result
of making the Accommodations, whether such obligations are direct or indirect,
absolute or contingent, due or not due, contractual or tortious, liquidated or
unliquidated, arising by operation of Applicable Law or otherwise, now existing
or hereafter arising.
"OPERATING CASH FLOW" shall mean, with respect to any Person
and its Subsidiaries, on a consolidated basis, at the end of the most recently
completed fiscal quarter, as determined in accordance with GAAP, the sum of (a)
Net Income for such period (after eliminating any extraordinary gains and
losses, including gains and losses from the sale of assets), 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 and
(iii) income tax expense and (iv) all other non-cash items which will not
require cash payment in the future. Operating Cash Flow attributable to any
acquisition will be included in the determination of Operating Cash Flow as if
the Assets so acquired had been acquired on the first day of such fiscal period,
and the operating results of any acquired Assets for that portion of any fiscal
period in which they were not owned by the Borrower or any of its Subsidiaries
shall be determined by reference to financial information prepared by the prior
owners thereof, subject to such adjustments as the Agent may reasonably require.
Operating Cash Flow attributable to any assets disposed of will be excluded in
the determination of Operating Cash Flow as if the Assets so disposed of had
been disposed of on the first day of such fiscal quarter.
"PAGENET" shall mean Paging Network, Inc., a corporation
incorporated under the laws of the State of Delaware.
"PAYMENT DATE" shall mean the last day of any Interest Period.
"PBGC" shall mean the Pension Benefit Guaranty Corporation, or
any successor thereto.
<PAGE> 18
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"PERMITTED ASSET SALE" shall mean the sale by the Borrower or
any of its Subsidiaries of all or any part of its Assets as permitted under
Section 7.4 hereof.
"PERMITTED COLLATERAL" shall mean (a) U.S. Dollars, (b)
marketable, direct obligations of the United States of America maturing within
ninety (90) days of the date of purchase, or (c) other collateral acceptable to
the Banks at any time and from time to time held by or on deposit with the Agent
pursuant to the Deposit Agreement as collateral for the Deposit Agreement
Guaranty.
"PERMITTED INVESTMENTS" shall mean: (a) negotiable instruments
or securities in bearer or registered form which are not held for more than 30
days and which evidence: (i) obligations of or guaranteed by the Government of
Canada so long as they have the Permitted Rating; (ii) obligations of or
guaranteed by a province or municipality of Canada so long as they have the
Permitted Rating; (iii) deposits or bankers' acceptances issued or accepted by
any Schedule I Canadian chartered bank so long as they have the Permitted
Rating; (iv) commercial paper of Canadian corporations or other Canadian issuers
so long as it has the Permitted Rating; (v) other similar negotiable instruments
or securities which are issued or guaranteed by Persons which have the Permitted
Rating; or (b) demand deposits in any Schedule I Canadian chartered bank so long
as they have the Permitted Rating or (c) investments in any wholly-owned
Subsidiary of the Borrower so long as the corresponding debt instruments, if
any, are pledged to the Agent as security for the Obligations.
"PERMITTED LIENS" shall mean, as applied to any Person:
(a) Any Lien in favour of the 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, labourers and
materialmen incurred in the ordinary course of business for
sums not yet more than sixty (60) days past due or being
diligently contested in good faith, if adequate reserves shall
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;
(d) Liens incurred in the ordinary course of business in
connection with worker's compensation and unemployment
insurance;
(e) Restrictions on the transfer of the Licenses or assets of the
Borrower or its Subsidiaries imposed by any of the Licenses as
presently in effect;
<PAGE> 19
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(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) The reservations, limitations, provisos and conditions, if
any, expressed in any original grants of real property from
the Crown;
(h) Purchase money security interests to the extent incurred in
connection with the acquisition of any property or assets by
the Borrower or any of its Subsidiaries permitted hereunder;
provided, that
(1) such Lien shall attach only to the property or asset
acquired in such transaction and shall not extend to
or cover any other assets or properties of the
Borrower or any of its Subsidiaries;
(2) the Indebtedness secured or covered by such Lien
shall not exceed the cost of the asset or property
acquired and shall not be increased; and
(3) all such Indebtedness secured or covered by such
Liens shall not exceed $500,000 in the aggregate at
anytime outstanding;
(i) Undetermined and inchoate Liens, rights of distress and
charges incurred in the ordinary course of business which have
not been filed or exercised or which relate to obligations not
due or payable, or if due or payable, the validity of which is
being contested diligently and in good faith by appropriate
proceedings, but only so long as no foreclosure, distraint,
sale or similar proceedings have been commenced with respect
thereto;
(j) Title defects or irregularities in respect of real property
which are of a minor nature and which in the aggregate do not
materially impair the use of such property for the purpose for
which it is used or the conduct of the business of such
Person;
(k) The rights reserved to or vested in any Governmental Entity by
the terms of any lease, License, franchise, grant or permit or
by any statutory provision, to terminate any such lease,
license, franchise, grant or permit, or to require annual or
other payments as a condition to the continuance thereof; and
(l) Any Liens resulting from the deposit of cash or securities in
connection with contracts, tenders or expropriation
proceedings, or to secure surety or appeal bonds, costs of
litigation when required by law and public, statutory and
other like obligations incurred in the ordinary course of
business.
"PERMITTED RATING" shall mean, with respect to any Permitted
Investment, a rating for short-term indebtedness of R-1 (Middle) or better from
Dominion Bond Rating Service Limited or A-1+ from CBRS Inc. or a rating for
long-term indebtedness of A (High) or better from Dominion Bond Rating Service
Limited or A (High) from CBRS Inc.
<PAGE> 20
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"PERSON" shall mean an individual, corporation, limited
liability company, association, partnership, joint venture, trust or estate, an
unincorporated organization, any Governmental Entity or any other entity.
"PLAN" shall mean an employee benefit plan within the meaning
of Section 3(3) of ERISA.
"PNCHI" shall mean Paging Network Canadian Holdings, Inc., a
corporation incorporated under the laws of the State of Delaware.
"PNII" shall mean Paging Network International, Inc., a
corporation incorporated under the laws of the State of Delaware.
"PNNV" shall mean Paging Network International Inc., N.V., a
corporation incorporated under the laws of the Netherlands.
"PRIME RATE" shall mean, for any particular day, a per annum
interest rate equal to the higher of (a) the variable rate of interest per
annum, calculated on the basis of a year of 365 days or 366 days (in the case of
a leap year), equal to the rate of interest per annum established and reported
by The Toronto-Dominion Bank to the Bank of Canada for such day as the variable
rate of interest per annum for determination of interest rates that The
Toronto-Dominion Bank charges to its customers of varying degrees of
creditworthiness in Canada for Canadian Dollar loans made by it in Canada, and
(b) the sum of the simple average of the rates per annum for Canadian Dollar
bankers' acceptances having a term of 30 days that appears on the Reuters Screen
CDOR Page as of 10:00 a.m. (Toronto time) for such day plus one percent (1%).
The Prime Rate is not necessarily the lowest rate of interest charged to
customers of The Toronto-Dominion Bank.
"PRIME RATE ADVANCE" shall mean a Collateralized Prime Rate
Advance or an Uncollateralized Prime Rate Advance.
"PRIME RATE BASIS" shall mean a simple interest rate equal to
the sum of (i) the Prime Rate and (ii) the Applicable Margin for Prime Rate
Advances which are Collateralized Advances or Uncollateralized Prime Rate
Advances, as the case may be. The Prime Rate Basis shall be adjusted
automatically as of the opening of business on the effective date of each change
in the Prime Rate to account for such change, and shall also be changed to
reflect changes in the Applicable Margin for Prime Rate Advances in accordance
with Section 2.6(d).
"REAL ESTATE" shall mean the real estate of the Borrower and
its Subsidiaries held in fee simple (or an interest analogous to a fee simple
interest as it relates to real estate situate in the Province of Quebec).
"RELEASE" when used as a verb includes release, spill, leak,
emit, deposit, discharge, leach, migrate or dispose into the environment and
"Release" when used as a noun has a correlative meaning.
<PAGE> 21
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"REMEDIAL ACTION" shall mean any action, whether voluntary or
compelled, that is reasonably necessary to: (i) clean up, remove, treat or in
any other way deal with Hazardous Substances in the environment; (ii) prevent
any Release of Hazardous Substances where such Release would violate any
Environmental Laws or would endanger or threaten to endanger public health or
welfare or the environment; or (iii) perform remedial studies, investigations,
restoration and post-remedial studies, investigations and monitoring on, about
or in connection with the business or any of the Real Estate or other Assets
(including the Collateral).
"REPAYMENT NOTICE" means a notice substantially in the form
of Exhibit C.
"REPORTABLE EVENT" shall mean, with respect to any Employee
Pension Plan subject to Title IV of ERISA, an event described in Section 4043(b)
of ERISA as to which the requirement of advance notice has not been waived or an
event described in Sections 2615.11, 2615.12, 2615.13, 2615.15 or 2615.19 of
PBGC regulations.
"RESTATEMENT DATE" shall mean August 5, 1999.
"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 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 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; (c) any payment of
principal of, or interest on, Indebtedness referred to in Section 7.1(g) or
7.1(h) hereof; and (d) any management, consulting or similar fees, or any
interest thereon, payable by the Borrower or any of its Subsidiaries to any
partner, shareholder or Affiliate of any such Person.
"RESTRICTED PURCHASE" shall mean any payment (including,
without limitation, any sinking fund payment, prepayment or instalment payment)
on account of the purchase, redemption 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 (other than to the Borrower or any wholly-owned Subsidiary of the
Borrower), 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.
"SALES AND DISTRIBUTION AGREEMENT" shall mean that certain
Sales and Distribution Agreement dated as of October 28, 1994 between the
Borrower and Madison Telecommunications Inc. as amended by Amendment No.
1 dated as of October 26, 1995.
<PAGE> 22
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"SECURITY DOCUMENTS" means those agreements and other
documents in favour of the Agent for the benefit of itself and the Banks
described in Schedule 2, as such documents may be amended or supplemented from
time to time, and any other agreement or instrument which may from time to time
be held by the Agent for the benefit of itself and the Banks, or by the Banks
themselves, as security for all or any portion of the Obligations.
"SECURITY INTEREST" shall mean all Liens in favour of the
Agent, for the benefit of itself and the Banks, or in favour of the Banks
themselves, created or intended to be created hereunder or under any of the
Security Documents to secure the Obligations.
"SITE SPECIFIC LICENSES" shall mean all licenses or other
authorizations granted in respect of the use of specific transmitter locations
pursuant to the Licenses listed on Schedule 1.
"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 under the current facts 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. The Subsidiaries of the Borrower as
of the Restatement Date are set forth on Schedule 3 attached hereto.
"SUBSTANCE" shall mean any substance, waste, liquid, gaseous
or solid matter, fuel, micro-organism, sound, vibration, ray, heat, odour,
radiation, energy vector, plasma, and organic or inorganic matter.
"TAXES" shall mean all taxes imposed by any Governmental
Entity, including income, profits, real property, personal property, goods and
services, sales, transfer, purchase, stumpage, registration, capital, excise,
payroll, unemployment, disability, employee's income withholding, social
security or withholding.
"THIRD PARTIES" shall mean third party suppliers and others on
whom the operations of the business of the Borrower and/or its Subsidiaries is
partly dependent for ordinary course operations which may affect the Borrower's
or its Subsidiaries' ability to be Year 2000 Ready at and after January 1, 2000.
"THIRD PARTY FACTORS" shall mean those factors beyond the
control of the Borrower or its Subsidiaries and within the control of Third
Parties.
"TOTAL DEBT" shall mean, as of any date with respect of any
Person and its Subsidiaries on a consolidated basis, the difference between (a)
the aggregate amount of Indebtedness for Money Borrowed, determined in
accordance with GAAP, minus (b) the aggregate of: (i) the aggregate principal
amount of Collateralized Advances and Face Amount of
<PAGE> 23
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Collateralized Bankers' Acceptances outstanding on such date, and (ii) the
aggregate amount of Indebtedness permitted to be incurred in accordance with
Sections 7.1(g) and 7.1(h) hereof outstanding on such date.
"TOTAL SUBSCRIBERS" shall mean, as of any date, the aggregate
number of subscribers for the Units in Service of the Borrower Group on a
combined basis.
"TRANSPONDER LEASE AGREEMENT" shall mean any agreement by and
between the Borrower or any of its 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.
"U.S. DOLLARS" and "U.S. $" shall mean lawful money of the
United States of America.
"UNCOLLATERALIZED BANKERS' ACCEPTANCE" shall mean a Drawing
which the Borrower requests to be made as an Uncollateralized Bankers'
Acceptance or is continued as or converted into an Uncollateralized Bankers'
Acceptance in accordance with the provisions of Section 2.5 hereof.
"UNCOLLATERALIZED PORTION OF THE COMMITMENT" shall mean, as of
any date, that portion of the Available Commitment in excess of the Minimum
Permitted Collateral Amount.
"UNCOLLATERALIZED PRIME RATE ADVANCE" shall mean an
Uncollateralized Advance which bears interest at the Prime Rate Basis and which
the Borrower requests to be made as an Uncollateralized Prime Rate Advance or is
continued or converted as an Uncollateralized Prime Rate Advance, in accordance
with the provisions of this Agreement, and which shall be in a principal amount
of at least $500,000 and in an integral multiple of $500,000.
"UNITS IN SERVICE" shall mean, as of any date, for the
Borrower Group on a combined basis, the aggregate number of wireless messaging
units that are operating pursuant to valid and binding agreements with
customers, in respect of which the customer is obligated to make payments at
regular intervals in amounts consistent with standard industry practice, where
the customer is delinquent less than sixty (60) days (unless the amount for such
customer which is delinquent sixty (60) days or more constitutes less than
thirty-five (35) percent of such customer's current monthly billing), except for
governmental or corporate customers delinquent less than ninety (90) days that
(a) have been serviced by such Person for at least six (6) months and have a
consistent prior payment history and in which the customer has made a payment
within the last forty-five (45) days equal to or greater than the amount of the
current monthly billing for such customer, or (b) have a regular history of
paying on their accounts amounts equal to or greater than the amount of the
current monthly billing for such customer and whose total account receivable is
(i) no older and (ii) no greater in dollar amount, than such account receivable
was on the date ninety (90) days prior.
"YEAR 2000 READY" shall mean that, except as would not have
individually or in the aggregate, a Materially Adverse Effect, the Year 2000
Systems used or relied upon by the Borrower or its Subsidiaries will function
accurately and without material delay or interruption at
<PAGE> 24
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all times before, on and after January 1, 2000 (including through February 29,
2000), without any change in the operations of such Year 2000 Systems associated
with the advent of 2000 or the 21st century.
"YEAR 2000 PLAN" shall mean the plan of the Borrower to ensure
that the Year 2000 Systems are Year 2000 Ready in the form delivered to the
Agent prior to the date hereof.
"YEAR 2000 SYSTEMS" shall mean all computer hardware, software
and files (including all operating systems, application software and related
supporting data) and files owned, used, sold, leased or licensed by the Borrower
or its Subsidiaries in connection with the operation of its business and all
process controls, environmental controls, communications systems and any other
support systems or equipment owned, used, sold, leased or licensed by the
Borrower or its Subsidiaries, in the operation of its business which employs,
stores or processes date/time information in electronic form.
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 FACILITY
SECTION 2.1 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 make available to the Borrower such
Accommodations as may be requested by the Borrower, prior to the Maturity Date,
in an amount not exceeding, in the aggregate, the Available Commitment. Each of
the Banks shall, on the terms and conditions of this Agreement, make its pro
rata share of Advances, and Bankers' Acceptances on the occasion of any
Borrowing or Drawing, as applicable, available to the Borrower under the
Commitment. All Advances and Bankers' Acceptances requested hereunder shall be
made available to the Borrower in accordance with Section 2.2, Section 2.3 and
Section 2.5 hereof, respectively. Any notice given to the Agent in connection
with a requested Accommodation hereunder shall be given to the Agent prior to
12:00 noon (Toronto time) in the case of Advances and 1:00 p.m. (Toronto time)
in the case of Bankers' Acceptances in order for such Business Day to count
toward the minimum number of Business Days required.
SECTION 2.2 UNCOLLATERALIZED PRIME RATE ADVANCES.
(a) Choice of Interest Rate, Etc. Any Uncollateralized Prime Rate
Advance shall be made as an Uncollateralized Prime Rate
Advance.
(b) Manner of Borrowing.
(i) Uncollateralized Prime Rate Advances. The Borrower
shall give the Agent irrevocable written notice not
later than 12:00 noon (Toronto time) at least one (1)
Business Day prior to the date of any requested
<PAGE> 25
- 21 -
Uncollateralized Prime Rate Advance in the form of an
Accommodation Notice, or telephonic notice followed
immediately by an Accommodation Notice; provided,
however, that the Borrower's failure to confirm any
telephonic notice with an Accommodation Notice shall
not invalidate any notice so given if acted upon by
the Agent. Upon receipt of such notice from the
Borrower, the Agent shall promptly notify each Bank
in writing of the contents thereof.
(ii) Conversions of Uncollateralized Prime Rate Advances.
On any Business Day, the Borrower may, subject to the
provisions of this Agreement, convert the outstanding
principal amount of an Uncollateralized Prime Rate
Advance, in whole or in part, to (A) Bankers'
Acceptances, by giving an Accommodation Notice in
accordance with Section 2.5 hereof (including in
accordance with the period for notice set forth in
Section 2.5(b) hereof), and (B) Collateralized Prime
Rate Advances by giving the Accommodation Notice in
accordance with Section 2.3(b) hereof (including in
accordance with the period for notice set forth in
Section 2.3(b) hereof). The Borrower may convert the
Uncollateralized Prime Rate Advance on any Business
Day. If the Uncollateralized Prime Rate Advance to be
converted cannot be converted to an aggregate Face
Amount of Bankers' Acceptances in an amount which may
be drawn as Bankers' Acceptances under this
Agreement, then the amount which cannot be so
converted shall, subject to the other terms and
conditions of this Agreement, thereafter continue to
be outstanding as an Uncollateralized Prime Rate
Advance. When any Uncollateralized Prime Rate
Advances are to be converted, in whole or in part, to
Bankers' Acceptances, the Borrower shall repay and
there shall become due and payable on the Drawing
Date, the principal amount of such Uncollateralized
Prime Rate Advances which are to be so converted.
Upon such Payment Date such Uncollateralized Prime
Rate Advance will, subject to the provisions hereof,
be so repaid and, as applicable, reborrowed.
SECTION 2.3 COLLATERALIZED ADVANCES.
(a) Choice of Interest Rate, Etc. Any Collateralized Advance shall
be made as a Collateralized Prime Rate Advance.
(b) Collateralized Prime Rate Advances.
(i) Advances. The Borrower shall give the Agent
irrevocable written notice not later than 12:00 noon
(Toronto time) at least one (1) Business Day prior to
the date of any requested Collateralized Prime Rate
Advance in the form of an Accommodation Notice, or
telephonic notice followed immediately by an
Accommodation Notice; provided, however, that the
Borrower's failure to confirm any telephonic notice
with an
<PAGE> 26
- 22 -
Accommodation Notice shall not invalidate any notice
so given if acted upon by the Agent. Upon receipt of
such notice from the Borrower, the Agent shall
promptly notify each Bank in writing of the contents
thereof.
(ii) Conversions of Collateralized Prime Rate Advances. On
any Business Day, the Borrower may, subject to the
provisions of this Agreement, convert the outstanding
principal amount of a Collateralized Prime Rate
Advance, in whole or in part, to (A) Bankers'
Acceptances, by giving an Accommodation Notice in
accordance with Section 2.5 hereof (including in
accordance with the period for notice set forth in
Section 2.5(b) hereof), and (B) Uncollateralized
Prime Rate Advances by giving the Accommodation
Notice in accordance with Section 2.2(b) hereof
(including in accordance with the period for notice
set forth in Section 2.2(b) hereof). In the case of
any such conversion, the Borrower shall notify the
Agent of the amount of any Collateralized Prime Rate
Advance to be converted. The Borrower may convert a
Collateralized Prime Rate Advance on any Business
Day. If the Collateralized Prime Rate Advance to be
converted to Bankers' Acceptances cannot be converted
to an aggregate Face Amount of Bankers' Acceptances
in an amount which may be drawn as Bankers'
Acceptances under this Agreement, then the amount
which cannot be so converted shall, subject to the
other terms and conditions of this Agreement,
thereafter continue to be outstanding as a
Collateralized Prime Rate Advance. When any
Collateralized Prime Rate Advances are to be
converted, in whole or in part, to Bankers'
Acceptances the Borrower shall repay and there shall
become due and payable on the Drawing Date, the
principal amount of such Collateralized Prime Rate
Advances which are to be so converted. Upon such
Payment Date such Collateralized Prime Rate Advance
will, subject to the provisions hereof, be so repaid
and, as applicable, reborrowed.
(c) Automatic Conversion of Collateralized Advances and
Collateralized Bankers' Acceptances. If, on any date, the sum
of the principal amount of Collateralized Advances and the
Face Amount of Collateralized Bankers' Acceptances then
outstanding exceeds the Equivalent Canadian Dollar Amount of
the amount of Permitted Collateral held by the Agent pursuant
to the Deposit Agreement on such date, (i) an amount of
Collateralized Advances up to the amount of such excess shall
automatically be converted to an Uncollateralized Prime Rate
Advance, and (ii) if after such conversions of, or adjustments
to, all Collateralized Advances there remains an excess, the
Borrower shall on such date pay to the Agent for the benefit
of the Banks an amount equal to the increased Drawing Fee
which would be payable for Uncollateralized Bankers'
Acceptances from such date until the Payment Date for the Face
Amount of Collateralized Bankers' Acceptances equal to such
excess.
<PAGE> 27
- 23 -
SECTION 2.4 NOTIFICATION OF BANKS; DISBURSEMENT.
(a) Notification of Banks. Upon receipt of an Accommodation
Notice, or a notice from the Borrower with respect to any
outstanding Advance prior to the Payment Date for such
Advance, the Agent shall promptly notify each Bank in writing
of the contents thereof and the amount of such Bank's pro rata
portion of the Advance. Each Bank shall, not later than 11:00
a.m. (Toronto time) on the date of borrowing specified in such
notice, make available to the Agent at the Agent's Office, or
at such account as the Agent shall designate, the amount of
its pro rata portion of any Advance which represents an
additional borrowing hereunder in immediately available funds.
(b) Disbursement.
(i) Prior to 2:00 p.m. (Toronto time) on the date of an
Advance hereunder, the Agent shall, subject to the
satisfaction of the conditions set forth in Article 3
hereof, disburse the amounts made available to the
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 Toronto-Dominion Bank.
(ii) Unless the Agent shall have received notice from a
Bank prior to 11:00 a.m. (Toronto time) on the date
of any Advance that such Bank will not make available
to the Agent such Bank's pro rata portion of such
Advance, the Agent may assume that such Bank has made
or will make such pro rata portion available to the
Agent on the date of such Advance and the 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 pro rata portion available to
the Agent, such Bank agrees to repay to the 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 Agent, at the Prime
Rate.
(iii) If such Bank shall repay to the Agent such
corresponding amount, such amount so repaid shall
constitute such Bank's pro rata portion of the
applicable Advance for purposes of this Agreement. If
such Bank does not repay such corresponding amount
immediately upon the Agent's demand therefor, the
Agent shall notify the Borrower and the Borrower
shall immediately pay such corresponding amount to
the Agent, with interest at the Prime Rate. The
failure of any Bank to fund its pro rata portion of
any Advance shall not relieve any other Bank of its
obligation, if any, hereunder to fund its respective
pro rata portion of the Advance on the date of such
borrowing, but no Bank shall be responsible for any
such failure of any other Bank;
<PAGE> 28
- 24 -
(iv) In the event that, at any time when the Borrower is
not in Default and has otherwise satisfied each of
the conditions in Article 3 hereof, a Bank for any
reason fails or refuses to fund its pro rata portion
of such Advance, then, until such time as such Bank
has funded its pro rata 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
pro rata portion of the Accommodations 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 pro rata portion of the
Accommodations.
SECTION 2.5 BANKERS' ACCEPTANCES.
(a) Acceptances and Drafts. The Banks agree subject to the terms
and conditions of this Agreement to create acceptances
("Bankers' Acceptances") by accepting Drafts of the Borrower
under the Available Commitment from time to time, on any
Business Day prior to the Maturity Date, which Drafts have an
aggregate Face Amount equal to such Bank's pro rata share of
the total Accommodations being made by way of Bankers'
Acceptances, except that, if the face amount of a Bankers'
Acceptance would not be equal to an integral multiple of
$100,000, the face amount shall be increased or reduced by the
Agent in its sole discretion, even if as a result of any such
increase a Bank's Commitment Ratio would be exceeded. Bankers'
Acceptances shall be created by Banks' acceptance of Drafts.
Each Drawing shall be in an aggregate amount of not less than
$1,000,000 and in an integral amount of $100,000.
(b) Procedure for Drawing. The Borrower shall give the Agent
irrevocable written notice not later than 1:00 p.m. (Toronto
time) at least two (2) Business Days prior to the date of the
proposed Drawing in the form of an Accommodation Notice, or
telephonic notice followed immediately by an Accommodation
Notice; provided, however, that the Borrower's failure to
confirm any telephonic notice with an Accommodation Notice
shall not invalidate any notice so given if acted upon by the
Agent. Upon receipt of an Accommodation Notice, the Agent
shall be responsible for making all necessary arrangements
with each of the Banks with respect to the stamping of
Bankers' Acceptances in the manner contemplated in this
Section 2.5. The Borrower shall not in any Accommodation
Notice select an Interest Period for a Draft which ends after
the Maturity Date or which conflicts with the repayments
provided for in Section 2.8 or Section 2.10(b) hereof.
(c) Form of Drafts. Each Draft presented by the Borrower for
acceptance by a Bank: (i) shall be in a Face Amount of not
less than $1,000,000 and in an integral
<PAGE> 29
- 25 -
multiple of $100,000; (ii) shall be dated the date of the
Drawing; and (iii) shall mature and be payable by the Borrower
on a Business Day which occurs one (1), two (2), three (3) or
six (6) months (nine (9) or twelve (12) months subject to
availability) after the Drawing Date. The Borrower hereby
renounces, and shall not claim, any days of grace for the
payment of any Bankers' Acceptances.
(d) Acceptance of Drafts. Not later than 12:00 noon (Toronto time)
on the Drawing Date specified for a relevant Drawing, a Bank:
(i) shall complete one or more Drafts dated the date of such
Drawing in an aggregate Face Amount equal to such Bank's pro
rata portion of the amount of such Drawing and with the
Interest Period specified by the Borrower in its
Accommodation; (ii) shall accept the Drafts; and (iii) shall
purchase the Bankers' Acceptance thereby created in the manner
provided in Section 2.5(e) hereof.
(e) Purchase of Bankers' Acceptances. The Borrower shall request a
quotation from the Agent of the purchase price of all Bankers'
Acceptances created hereunder on the Drawing Date for such
Bankers' Acceptances. The Agent, after consultation with the
Banks, shall notify the Borrower of the purchase price for the
Bankers' Acceptance in the Face Amount and for the Interest
Period specified by the Borrower. The purchase price shall be
calculated by reference to a discount rate which is an
arithmetic average (rounded up to the nearest 0.01%) of the
discount rates of the Banks determined in accordance with
normal market practice at or about 10:00 a.m. (Toronto time)
on the applicable Drawing Date for Bankers' Acceptances of
each Bank having a comparable Face Amount and comparable
maturity date as such Bankers' Acceptances. Each Bank shall
purchase all Bankers' Acceptances created by such Bank
hereunder at the purchase price quoted by such Bank to the
Agent and advised by the Agent to the Borrower and such
purchase price shall be paid and satisfied by such Bank making
payment to the Agent in the amount of such purchase price less
the applicable Drawing Fee. The Agent shall disburse the
amounts made available to the 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 Agent. Bankers' Acceptances purchased by a Bank hereunder
may be held by it for its own account until maturity or sold
by it at any time prior thereto in the relevant market
therefor in Canada, in the Bank's sole discretion.
(f) Reimbursement at Payment Date. Subject to Section 2.5(g)
hereof, the Borrower shall pay to the Agent on behalf of a
Bank in same day funds, and there shall become due and payable
at 11:00 a.m. (Toronto time) on the Payment Date for each
Bankers' Acceptance, an amount in Canadian Dollars equal to
the Face Amount of such Bankers' Acceptance accepted by such
Bank. The Borrower shall make each payment hereunder in
respect of Bankers' Acceptances by deposit of the required
funds in accordance with Section 2.12 hereof. If the Borrower
fails to pay the Bank pursuant to this Section 2.5(f), or to
convert or renew the
<PAGE> 30
- 26 -
Face Amount of such Bankers' Acceptance pursuant to Section
2.5(g) hereof, the unpaid amount due and payable to such Bank
in respect of such Bankers' Acceptance shall automatically be
converted to a Prime Rate Advance on the Payment Date, and
shall bear interest: (i) for the first three (3) days from the
date on which such amount is converted, or until such earlier
date as an Accommodation Notice is given in accordance with
Section 2.2 or Section 2.3 hereof, as the case may be, at a
per annum rate of interest equal to 115% of the Prime Rate
Basis; and (ii) thereafter, at a rate per annum equal to the
Prime Rate Basis, in each case, until such amount is paid in
full.
(g) Renewal or Conversion of Bankers' Acceptances. For effect on
the Payment Date of a Bankers' Acceptance, the Borrower may
elect: (i) to renew all or a portion of the Face Amount of
such Bankers' Acceptance by giving an Accommodation Notice in
accordance with this Section 2.5 (including in accordance with
the period for notice set forth in Section 2.5(b) hereof); or
(ii) to have all or a portion of the Face Amount of such
Bankers' Acceptance converted to an Advance, by giving an
Accommodation Notice in accordance with Section 2.2 or Section
2.3 hereof (including in accordance with the period for notice
set forth in Section 2.2 or Section 2.3 hereof, as the case
may be). If the Bankers' Acceptance to be converted cannot be
converted into an Advance in an amount which may be
outstanding as an Advance under this Agreement, then the
amount which cannot be so converted shall be repaid to the
Agent on behalf of a Bank on the date of such conversion in
accordance with Section 2.5(f) hereof.
(h) Prepayments. Except as required by Section 2.9 or Section 2.10
hereof, no repayment of Bankers' Acceptances shall be made by
the Borrower to a Bank prior to the Payment Dates of such
Bankers' Acceptances as have been created by the Borrower. If
the Borrower shall prepay any Bankers' Acceptances accepted by
a Bank as required by Section 2.9 or Section 2.10 hereof then
(unless such prepayment has been rescinded or otherwise is
required to be returned by such Bank for any reason), as
between the Borrower and such Bank, such Bank shall thereafter
be solely responsible for the payment of the Face Amount of
such Bankers' Acceptances as have been created by the Borrower
to the holder or holders thereof in accordance with the terms
thereof.
(i) Circumstances Making Bankers' Acceptances Unavailable. If the
Banks or any one or more of them determine in good faith that
by reason of circumstances affecting the money market there is
no market for Bankers' Acceptances and advises the Agent and
the Borrower to such effect, in writing, then the right of the
Borrower to request a Drawing shall be suspended until the
Banks determine that the circumstances causing such suspension
no longer exist and the Agent so notifies the Borrower. Any
Accommodation Notice which is outstanding at the time of such
notice by the Banks or any one or more of them shall be deemed
to be a Accommodation Notice requesting a Prime Rate Advance
in the principal amount equal to the requested Face Amount in
such Accommodation Notice.
<PAGE> 31
- 27 -
(j) Draft Forms.
(i) Authorization Regarding Drafts. In order to
facilitate the issuance of Bankers' Acceptances
pursuant to this Agreement, the Borrower hereby
authorizes each of the Banks to complete, sign and
endorse Drafts on its behalf in hand-written form or
by facsimile or mechanical signature or otherwise
and, once completed, signed and endorsed to accept
them as Bankers' Acceptances under this Agreement.
Drafts so completed, signed, endorsed and negotiated
on behalf of the Borrower by the Banks shall bind the
Borrower as fully and effectively as if those acts
were performed by an authorized officer of the
Borrower.
(ii) Safekeeping of Drafts. Any executed Drafts to be used
for Bankers' Acceptances which are held by any Bank
need only be held in safekeeping with the same degree
of care as if they were that Bank's own property and
that Bank was keeping them at a place at which they
are to be held. The Borrower shall, by written notice
to the Agent, designate the Persons authorized to
give the Agent and each Bank instructions regarding
the manner in which the Bankers' Acceptances are to
be completed and the times at which they are to be
issued. Neither the Agent nor the Banks or any of
their respective directors, officers, employees or
representatives shall be liable for any action taken
or omitted to be taken by any of them under this
Section except for their own gross negligence or
wilful misconduct.
SECTION 2.6 INTEREST; FEES.
(a) Interest on Uncollateralized Prime Rate Advances. Interest on
each Uncollateralized Prime Rate Advance shall be computed
daily and shall be payable at the Prime Rate Basis for such
Advance, in arrears on the applicable Payment Date. Interest
on Uncollateralized Prime Rate Advances then outstanding shall
also be due and payable on the Maturity Date.
(b) Interest on Collateralized Advances. Interest on each
Collateralized Prime Rate Advance shall be computed daily and
shall be payable at the Prime Rate Basis for such Advance, in
arrears on the applicable Payment Date. Interest on
Collateralized Prime Rate Advances then outstanding shall also
be due and payable on the Maturity Date.
(c) Interest Upon Default. Immediately upon the occurrence and
during the continuance of an Event of Default under (1)
Section 8.1(b) hereof, or (2) resulting from a failure to
comply with any provision of Article 7 hereof, 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
<PAGE> 32
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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.
(d) Applicable Margin. With respect to any Accommodation, the
Applicable Margin shall be determined by the Agent based upon
the 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
Section 6.2 hereof, as the case may be, are furnished to the
Agent and each Bank for such fiscal quarter, as follows:
<TABLE>
<CAPTION>
COLLATERALIZED UNCOLLATERALIZED
COLLATERALIZED PRIME RATE UNCOLLATERALIZED BANKERS'
BANKERS' ACCEPTANCES ADVANCES PRIME RATE ADVANCE ACCEPTANCES
LEVERAGE RATIO APPLICABLE MARGIN APPLICABLE MARGIN APPLICABLE MARGIN APPLICABLE MARGIN
- -------------------------------- -------------------- ----------------- ------------------ -----------------
<S> <C> <C> <C> <C>
A. Greater than or equal to 0.500% 0.00% 2.500% 4.000%
6.00:1
B. Greater than or equal to 0.500% 0.00% 1.500% 3.000%
4.00:1, but less than 6.00:1
C. Less than 4.00:1 0.500% 0.00% 0.500% 2.000%
</TABLE>
Notwithstanding the foregoing, if the Borrower shall fail to
timely deliver to the Agent the financial statements required for the
calculation of the 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 Leverage Ratio for such period shall be conclusively
presumed to be, and the Applicable Margin shall be calculated based upon, the
Leverage Ratio which is one level greater than the Leverage Ratio in effect for
the immediately preceding fiscal quarter for which financial statements were
delivered or were due to be delivered. If, for any reason, the Leverage Ratio
cannot be calculated or determined, the Applicable Margin shall be based upon
the Leverage Ratio set forth for level A above.
SECTION 2.7 FEES.
(a) Commitment Fees. The Borrower agrees to pay each of the Banks,
in accordance with their respective Commitment Ratios,
commitment fees as follows: (i) a commitment fee on the
aggregate unborrowed available balance of the Commitment, for
each day from the Restatement Date until the Maturity Date at
the rate of one percent (1.000%) per annum, and (ii) a
commitment fee on the aggregate unborrowed unavailable balance
of the Commitment, for each day from the Restatement Date
until the Maturity Date at the rate of three-eighths of one
percent (0.375%) per annum. Such commitment fees shall be
computed daily on the basis of a year of 365 or 366 days (in
the case of a leap year), shall be payable
<PAGE> 33
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quarterly in arrears on the last day of each 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.
(b) Drawing Fees. Drawing Fees for Bankers' Acceptances hereunder
shall be payable in advance on the date of its respective
Drawing, and shall be fully earned when due and non-refundable
when paid.
SECTION 2.8 MANDATORY COMMITMENT REDUCTIONS.
(a) Commencing March 31, 2002 and at the end of each fiscal
quarter thereafter, the Uncollateralized Portion of the
Commitment as in effect on March 30, 2002, shall be
automatically and permanently reduced by the amounts set forth
below:
<TABLE>
<CAPTION>
QUARTERLY REDUCTION OF THE
UNCOLLATERALIZED PORTION OF THE
DATES OF COMMITMENT REDUCTION COMMITMENT IN EFFECT ON MARCH 30, 2002
------------------------------------------------------ --------------------------------------
<S> <C>
March 31, 2002, June 30, 2002, September 30, 2002
and December 31, 2002 $ 195,000.00
March 31, 2003, June 30, 2003, September 30, 2003 and
December 31, 2003 $1,170,000.00
March 31, 2004, June 30, 2004 and September 30, 2004 $2,340,000.00
December 31, 2004 remainder
</TABLE>
(b) Commencing with the fiscal year ending December 31, 1999, and
for each fiscal year thereafter, concurrently with the
delivery of the financial statements referred to in Section
6.1(b) in respect of the final quarter of each such fiscal
year, the Uncollateralized Portion of the Commitment as in
effect at the end of such fiscal year, shall be automatically
and permanently reduced by an amount equal to 50% of the
Borrower's Free Cash Flow for the immediately preceding fiscal
year (provided that any such reduction shall be subject to
adjustment based on the financial statements delivered in
accordance with Section 6.2). The amount of any such reduction
of the Uncollateralized Portion of the Commitment shall be
applied to the reductions required under Section 2.8(a) in
inverse order of maturity.
The Borrower shall make a repayment of the Accommodations outstanding under the
Commitment, together with accrued interest thereon, on or before the effective
date of each reduction in the Commitment under this Section 2.8, such that the
aggregate principal amount of the Accommodations outstanding at no time exceeds
the Commitment as so reduced. In
<PAGE> 34
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addition, any remaining unpaid principal and interest under the Commitment shall
be due and payable in full on the Maturity Date.
SECTION 2.9 OPTIONAL PREPAYMENTS; COMMITMENT REDUCTIONS.
(a) Prepayment of Accommodations. The Borrower may without penalty
(but subject to Section 2.13 hereof) at any time prepay in
full or in part the principal amount of any Advance prior to
the Payment Date for such Advance by giving the Agent at least
three (3) Business Days' prior written notice of such
prepayment, such notice to be in the form of a Repayment
Notice. Partial prepayments shall be in a principal amount of
not less than $1,000,000.00, and in an integral multiple of
$500,000.00.
(b) Commitment Reduction. The Borrower may without penalty (but
subject to Section 2.13 hereof) at any time terminate or
permanently reduce all or any part of the Commitment by giving
the Agent and the Banks at least three (3) Business Days'
prior written notice thereof, such notice to be in the form of
a Repayment Notice; provided, however, that any reduction
shall reduce the Commitment in a principal amount of at least
$3,500,000.00 and in an integral multiple of $500,000.00, and
provided, further, that no such reduction shall be permitted
if it would require a prepayment of a Bankers' Acceptance. The
Borrower shall make any required repayment or prepayment of
Accommodations outstanding under the Commitment, plus accrued
interest on such portion of the Accommodations and any accrued
fees in respect thereof, on or before the effective date of
the reduction of the Commitment, so that the principal amount
of the Accommodations outstanding after such repayment or
prepayment does not exceed the Commitment as so reduced. The
Borrower shall not have any right to rescind any termination
or reduction pursuant to this Section 2.9(b). Any reduction of
the Commitment effected pursuant to this Section 2.9(b) shall
be applied pro rata as between the Uncollateralized Portion of
the Commitment and the remaining portion of the Commitment.
SECTION 2.10 MANDATORY REPAYMENTS.
In addition to the scheduled Commitment reductions provided
for in Section 2.8 hereof, the Borrower shall repay the Obligations as follows:
(a) Accommodations in Excess of Available Commitment. If, at any
time, the amount of the Accommodations then outstanding under
the Commitment shall exceed the Available Commitment, the
Borrower shall, on such date and subject to Section 2.13
hereof, provide the Agent with a Repayment Notice and make a
repayment of the principal amount of the Accommodations in an
amount equal to such excess, together with any accrued
interest and fees with respect thereto. If any such repayment
would require a prepayment of any Bankers' Acceptance, the
Borrower shall make an interest-bearing deposit with the Agent
in the Face Amount of such Bankers' Acceptances and hereby
irrevocably authorizes and
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directs the Agent to apply such payment to the Borrower's
reimbursement obligations in respect of such Drawing on the
Payment Date therefor.
(b) 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 2.11 EVIDENCE OF OBLIGATIONS; ACCOMMODATION ACCOUNTS.
(a) The indebtedness of the Borrower in respect of all Obligations
(other than Accommodations and interest) hereunder shall be
prima facie evidenced by the account records maintained by the
Agent. The failure of the Agent to correctly record any amount
or date shall not, however, affect the obligation of the
Borrower to pay amounts due hereunder to the Agent or any of
the Banks in accordance with this Agreement.
(b) Each Bank may open and maintain on its books in the name of
the Borrower a loan account with respect to its pro rata
portion of the Accommodations and interest thereon. Each Bank
which opens such a loan account shall debit such loan account
for the principal amount of its pro rata 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 Accommodations. The records of
a Bank with respect to the loan account maintained by it shall
be prima facie evidence of its pro rata portion of the
Accommodations 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
Accommodations.
SECTION 2.12 MANNER OF PAYMENT.
(a) Each payment (including any prepayment) by the Borrower on
account of the principal of or interest on the Accommodations,
commitment fees and any other amount owed to the Banks or the
Agent or any of them under this Agreement or the other Loan
Documents shall be made not later than 1:00 p.m. (Toronto
time) on the date specified for payment under this Agreement
to the Agent at the Agent's Office, for the account of the
Banks or the Agent, as the case may be, in lawful Canadian
currency in immediately available funds. Any payment received
by the Agent after 1:00 p.m. (Toronto time) shall be deemed
received on the next Business Day. Receipt by the Agent of any
payment intended for any Bank or Banks hereunder prior to 1:00
p.m. (Toronto 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 Agent
will promptly thereafter distribute the amount so received in
like funds to such Bank. If the Agent shall not have received
any payment from the Borrower as and when due, the Agent will
promptly notify the Banks accordingly.
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(b) 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 Agent with respect to the
Obligations, the Agent shall distribute such amounts in the
following order of priority, all on a pro rata basis to the
Banks: (i) to the payment on a pro rata basis of any fees or
expenses then due and payable to the Agent and the Banks, or
any of them; (ii) to the payment of interest then due and
payable on the Accommodations; (iii) to the payment of all
other amounts not otherwise referred to in this Section
2.12(b) then due and payable to the Agent and the Banks, or
any of them, hereunder or under any other Loan Document; and
(iv) to the payment of principal then due and payable on the
Accommodations.
(c) 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.
(d) On the date of any Accommodation or the maturity thereof,
including the date of any extension or conversation of any
Accommodation (the "Transaction Date"), the Agent shall be
entitled to net amounts payable in one currency on such
Transaction Date by the Agent to a Bank against amounts
payable in the same currency on such Transaction Date by such
Bank to the Agent for the account of the Borrower. Similarly,
on any Transaction Date, the Borrower hereby authorizes each
Bank to net amounts payable in one currency on such date by
such Bank to the Agent, for the account of the Borrower,
against amounts payable in the same currency on such date by
the Borrower to the Agent, for the account of such Bank, in
accordance with the Agent's calculations made in accordance
with the provisions of this Agreement.
SECTION 2.13 REIMBURSEMENT.
(a) Upon the earlier of demand or the Maturity Date, the Borrower
shall pay to the Agent or the Banks such amount or amounts as
will compensate the Agent or the Banks for any loss, cost or
expense incurred by them with respect to any Bankers'
Acceptance arising from any Claim, including legal fees and
disbursements, respecting the collection of amounts owing by
the Borrower hereunder in respect of such Bankers' Acceptance
or the enforcement of the Agent's or Banks' rights hereunder
in respect of such Bankers' Acceptance, including legal
proceedings attempting to restrain the Agent or the Banks from
paying any amount under such Bankers' Acceptance, except for
any loss, cost or expense resulting from the gross negligence
or wilful misconduct of the Agent or such Bank, as applicable,
as determined by a final, non-appealable judicial order of a
court of competent jurisdiction. 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 prima facie evidence of such losses or
expenses 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 2.14 PRO RATA TREATMENT.
(a) Advances. Each Advance from the Banks hereunder shall be made
pro rata on the basis of the respective Commitment Ratios of
the Banks.
(b) Payments Prior to Declaration of Event of Default. Except as
provided in Section 2.5(f) hereof and Article 10 hereof, each
payment and prepayment of principal of the Accommodations and
each payment of interest on the Accommodations, shall be made
to the Banks pro rata on the basis of their respective unpaid
principal amounts outstanding hereunder 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
Accommodations in excess of its pro rata share of the
Accommodations under its Commitment Ratio, such Bank shall
forthwith purchase from the other Banks such participations in
the portion of the Accommodations made by them as shall be
necessary to cause such purchasing Bank to share the excess
payment rateably 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
2.14(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.
(c) Payments Subsequent to Declaration of Event of Default.
Subsequent to the acceleration of the Accommodations under
Section 8.2 hereof, payments and prepayments made to the Agent
or the Banks or otherwise received by any of them (from
realization on Collateral for the Obligations or otherwise) on
account of the Accommodations shall be distributed as follows:
first, to the 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 in connection with the sale or disposition of
any Collateral for the Obligations; second, to the payment of
fees then due and payable to the Agent and the Banks and any
reasonable costs and expenses, if any, incurred by any of the
Banks under Section 11.2 hereof, pro rata on the basis of the
amount of such Obligations; third, to any unpaid interest
which may have accrued on the Obligations, pro rata on the
basis of the amount of such Obligations; fourth, to any unpaid
principal or the Face Amount of the Obligations and
Obligations
<PAGE> 38
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under Interest Rate Hedge Agreements, pro rata on the basis of
the amount of such Obligations; fifth, to damages incurred by
the Agent or any Bank by reason of any breach hereof or of any
other Loan Document, pro rata on the basis of the amount of
such Obligations; and sixth, upon satisfaction in full of all
remaining Obligations, to the Borrower or as otherwise
required by Applicable Law.
ARTICLE 3
CONDITIONS PRECEDENT
SECTION 3.1 CONDITIONS PRECEDENT TO AGREEMENT.
The effectiveness of this Agreement and the obligation of the
Banks to make Accommodations hereunder are subject to the prior or
contemporaneous fulfilment of each of the following conditions:
(a) The Agent and the Banks shall have completed their due
diligence investigation and examination of the Borrower's
operation and affairs and shall have determined, in their sole
discretion, acting reasonably, that the results of such
investigation and examination are satisfactory, including,
without limitation, in respect of matters relating to (i)
current business plans, (ii) financial projections, and (iii)
the operations of the Borrower Group on a consolidated basis;
(b) The Agent and the Banks shall have received each of the
following:
(i) the loan certificate of the Borrower dated as of the
Restatement Date, in substantially the form attached
hereto as Exhibit D, including a certificate of
incumbency with respect to each Authorized Signatory
of such Person, together with the following items:
(A) a true, complete and correct copy of the
Certificate and Articles of Incorporation and by-laws
of the Borrower as in effect on the Restatement Date,
or confirmation that there have been no amendments to
such articles and by-laws since the Agreement Date,
(B) certificates of status, compliance or good
standing for the Borrower issued by the appropriate
government officials of the jurisdiction of
incorporation of the Borrower and for each
jurisdiction in which the Borrower carries on
business, (C) a true, complete and correct copy of
the corporate resolutions of the Borrower authorizing
the Borrower to execute, deliver and perform this
Agreement and the other Loan Documents to which it is
a party and the transactions contemplated hereby and
thereby, and (D) a true, complete and correct copy of
any shareholders' agreements or voting trust
agreements in effect with respect to the Capital
Stock of the Borrower;
(ii) a loan certificate of each Subsidiary of the Borrower
dated as of the Restatement Date, in substantially
the form attached hereto as Exhibit E, including a
certificate of incumbency with respect to each
Authorized Signatory of such Person, together with
the following items: (A) a true,
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complete and correct copy of the Certificate and
Articles of Incorporation and by-laws of such Person
as in effect on the Restatement Date, or confirmation
that there have been no amendments to such articles
and by-laws since the Agreement Date, (B)
certificates of status, compliance or good standing
for such Person issued by the appropriate government
officials of the jurisdiction of incorporation or
formation, as applicable, of such Person and for each
jurisdiction in which such Person is required to
qualify to do business, (C) a true, complete and
correct copy of the corporate resolutions of such
Person authorizing such Person to execute, deliver
and perform the Loan Documents to which it is party
and the transactions contemplated thereby, and (D) a
true, complete and correct copy of any shareholders'
agreements or voting trust agreements in effect with
respect to the Capital Stock of such Person;
(iii) duly executed acknowledgements and confirmations from
the Borrower and any of its Affiliates that had
previously granted security in connection with this
Agreement prior to its amendment and restatement,
that such security (A) remains in full force and
effect, unamended, and (B) secures the obligations of
the Borrower under this Agreement (it being
acknowledged that no such document is required from
Paging Network, Inc. because it has been released
from any obligations it had in connection with
security it previously delivered);
(iv) evidence of the registration and continued perfection
of the Security Documents in all offices where such
registration, filing or recording is necessary or
desirable to protect any rights or remedies of the
Agent and the Banks thereunder;
(v) copies of insurance binders or certificates covering
the assets of the Borrower and its Subsidiaries, and
otherwise meeting the requirements of Section 5.5
hereof, together with copies of the underlying
insurance policies;
(vi) a legal opinion of Blake Cassels & Graydon, Canadian
counsel to the Borrower and its Subsidiaries,
addressed to each Bank and the Agent, and dated as of
the Restatement Date;
(vii) audited year-end financial statements of the Borrower
and its Subsidiaries on a consolidated basis for the
fiscal year ending December 31, 1998, and unaudited
financial statements for the Borrower Group on a
combined basis for the fiscal year ending December
31, 1998 and the fiscal quarter ending March 31,
1999, certified by (A) in the case of the audited
statements, an independent auditor acceptable to the
Agent, and (B) in the case of the unaudited
statements, the Chief Financial Officer or the Chief
Executive Officer of the Borrower;
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(viii) lien search results with respect to the Borrower and
its Subsidiaries from appropriate jurisdictions; and
(ix) all such other documents as the Agent or any Bank may
reasonably request, certified by an appropriate
governmental official or an Authorized Signatory if
so requested.
(c) The Agent and the Banks shall have received evidence
satisfactory to them that all Necessary Authorizations,
including any consent or authorization of Industry Canada and
all other necessary consents to the closing of this Agreement
and the other Loan Documents, have been obtained or made, are
in full force and effect and are not subject to any pending
or, to the knowledge of the Borrower, threatened reversal or
cancellation, and the Agent and the Banks shall have received
a certificate of an Authorized Signatory so stating.
(d) The Borrower shall certify to the Agent and the Banks that
each of the representations and warranties in Article 4 hereof
are true and correct as of the Agreement Date and that no
Default or Event of Default then exists or is continuing.
(e) There shall not exist as of the Restatement 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, which, in the judgment of
the Agent, could be expected to have a Materially Adverse
Effect.
(f) No event shall have occurred and no condition shall exist
which, in the judgment of the Agent, has had or could be
expected to have a Materially Adverse Effect.
(g) The Agent and the Banks shall have received evidence
satisfactory to them of the simultaneous closing of the MadTel
Holdings Agreement dated as of even date hereof.
(h) The Agent and the Banks shall have received all agreements
entered into, in connection with the Business, by PageNet and
Madison Venture Corporation and their respective Subsidiaries,
which agreements shall be in form and substance satisfactory
to the Agent and the Banks and shall each be collaterally
assigned to the Agent for the benefit of the Banks.
(i) The Agent and the Banks and their counsel shall have received
payment of all fees due and payable on the Restatement Date.
SECTOPM 3.2 CONDITIONS PRECEDENT TO ALL ACCOMMODATIONS.
The obligation of the Banks to make any Accommodation
hereunder is subject to the fulfilment of each of the following conditions
immediately prior to or contemporaneously with such Accommodation satisfactory
to the Majority Banks:
<PAGE> 41
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(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 or otherwise, are made at and as of the
time of such Accommodation, 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
Accommodation, 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
aggregate principal amount of Accommodations outstanding
hereunder, the Agent shall have received a duly executed
Accommodation Notice;
(c) Each of the 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 Agent or any Bank may reasonably
request;
(d) No event shall have occurred and no condition shall exist
which has had or which could reasonably be expected to have a
Materially Adverse Effect; and
(e) No Applicable Law, proposed Applicable Law, change in any
Applicable Law, or the interpretation or enforcement of any
Applicable Law shall have been enacted (including the
enactment of any Applicable Law respecting Taxes or
environmental matters or any change therein or in the
interpretation or enforcement thereof), the effect of which
will be to prohibit the Agent or any of the Banks from making
such Accommodation or to increase materially the cost thereof
to the Banks.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
SECTOPM 4.1 REPRESENTATIONS AND WARRANTIES.
To induce each of the Banks to make Accommodations available
hereunder, the Borrower hereby agrees, represents and warrants, upon the
Restatement Date, and at all times thereafter as required pursuant to Section
3.2 and Section 4.2 hereof, in favour of the Agent and each Bank that:
(a) Organization; Ownership; Power; Qualification. The Borrower is
a corporation duly incorporated or amalgamated, as the case
may be, and organized, validly subsisting and in good standing
under the laws of its jurisdiction of incorporation. 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 and to borrow monies and to
enter into agreements therefor. Each Subsidiary of the
<PAGE> 42
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Borrower is a corporation or partnership duly organized,
validly existing and in good standing under the laws of its
jurisdiction of 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, licensed or registered to carry on business as an
extra-provincial corporation in the jurisdictions in which the
nature of its properties or the business carried on by it make
such qualification necessary.
(b) Authorization; Enforceability. The Borrower has the corporate
power and has taken all necessary corporate action to
authorize it to obtain Accommodations 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 only to their enforceability against the other parties
thereto and to any limitation under Applicable Laws relating
to: (i) bankruptcy, insolvency, reorganization, moratorium or
creditors' rights generally; and (ii) the discretion that a
court may exercise in the granting of equitable remedies
(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 Restatement Date are as set forth on
Schedule 3 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 only to their enforceability against the other
parties thereto and to any limitation under Applicable Laws
relating to: (i) bankruptcy, insolvency, reorganization,
moratorium or creditors' rights generally; and (ii) the
discretion that a court may exercise in the granting of
equitable remedies (insofar as any such law relates to the
bankruptcy, insolvency or similar event of any such
Subsidiary). The Borrower's ownership interest in each of its
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.
<PAGE> 43
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(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 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 of incorporation, constating
documents or by-laws or partnership agreements, 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, managing, operating,
investing in, the marketing and distribution of wireless
messaging services and communications businesses incidental or
directly relating thereto.
(f) Licenses, etc. The Licenses have been duly issued and are in
full force and effect. The Borrower and its Subsidiaries are
in compliance in all material respects with all of the
provisions thereof. The Borrower and its 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.
(g) Compliance with Law. The Borrower and its Subsidiaries are in
compliance in all material respects with all material
Applicable Law, including, without limitation, all
Environmental Laws.
(h) Title to Assets. Each of the Borrower and its Subsidiaries is
the sole beneficial owner of, and has a good and marketable
title to, and will be lawfully possessed of its Assets,
including the Collateral, free and clear of all Liens, except
Permitted Liens, and each of the Borrower and the Subsidiaries
has full legal right to mortgage, pledge, charge and assign to
the Agent for the benefit of itself and the Banks the
Collateral to the Agent pursuant to the Security Documents as
contemplated herein. No Person has any written or oral
agreement, option, understanding or commitment, or any right
or privilege capable of becoming any agreement, option,
understanding or commitment, for the purchase from the
Borrower or the Subsidiaries of any of the Collateral.
(i) Litigation. There is no action, suit, proceeding or
investigation pending against, or, to the knowledge of the
Borrower, threatened against or in any other manner
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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 Entity in Canada
or elsewhere, nor is there any such material action, suit or
proceeding which would prevent the Borrower from proceeding
with any Accommodations. None of the Borrower or any of its
Subsidiaries is in default with respect to any judgment,
order, writ, injunction, decree or award of any court or
Governmental Entity or any arbitrator or board in Canada or
elsewhere, nor is there any judgment, order, writ, injunction,
decree or award which would prevent the Borrower from
proceeding with any Accommodations. 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. Each of the Borrower and its Subsidiaries has in a
timely manner filed all tax returns, elections, filings and
reports with respect to Taxes required by, and in accordance
with, Applicable Law to be filed by it. Each of the Borrower
and its Subsidiaries has paid, or reserved in the financial
statements, all Taxes which are due and payable, and has paid
all assessments and reassessments and all other Taxes,
governmental charges penalties, interest and fines due and
payable by it on or before the date hereof. Each of the
Borrower and its Subsidiaries has no liability, contingent or
otherwise, for Taxes, except Taxes not now due and payable
with respect to ordinary operations during the current fiscal
period adequate provision for the payment of which has been
made. Each of the Borrower and its Subsidiaries has paid as
and when due all applicable Taxes and remitted as required by
Applicable Law all applicable Taxes and deductions and any
interest or penalties related thereto, except any such taxes
(i) the payment of which the Borrower or any Subsidiary is
diligently contesting in good faith by appropriate
proceedings, (ii) for which adequate reserves to the extent
required by GAAP have been provided on the books of the
Borrower or the Subsidiary involved, and (iii) as to which no
Lien other than a Permitted Lien has attached and no
foreclosure, distraint, sale or similar proceedings have been
commenced.
(k) Financial Statements. The Borrower has furnished or caused to
be furnished to the Agent and the Banks financial information
for the Borrower and its Subsidiaries, and the Borrower Group,
all of which, together with other financial statements
furnished to the Banks subsequent to the Restatement Date have
been prepared in accordance with GAAP and present fairly in
all material respects the financial position of the Borrower
and its Subsidiaries on a consolidated and consolidating
(unconsolidated) basis, or the Borrower Group, on a combined
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 its
Subsidiaries has any material liabilities, contingent or
otherwise, other than as
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disclosed in the financial statements referred to in the
preceding sentence or as set forth or referred to in this
Agreement.
(l) No Material Adverse Change. Since December 31, 1998, 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 ERISA Affiliate of the Borrower
and each of their respective Plans are in compliance with
ERISA and the Code (except for instances of non-compliance
which, individually and in the aggregate, would not have a
Materially Adverse Effect) and neither the Borrower nor any of
its ERISA Affiliates has incurred any accumulated funding
deficiency with respect to any such Employee Pension Plan
within the meaning of ERISA or the Code. The Borrower and each
other ERISA Affiliate have complied with all requirements of
COBRA (except for instances of non-compliance which,
individually and in the aggregate, would not have a Materially
Adverse Effect). Neither the Borrower nor any of its ERISA
Affiliates 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 except for
promises which, individually or in the aggregate, would not
have a Materially Adverse Effect. Neither the Borrower nor any
of its ERISA Affiliates has incurred any material liability to
PBGC in connection with any Plan. The assets of each Plan of
the Borrower and its ERISA Affiliates 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 Plan. No 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 non-exempt "prohibited transaction" (as such term is
defined in Section 406 of ERISA or Section 4975 of the Code)
which would subject the Borrower or any of its ERISA
Affiliates to the tax or penalty on "prohibited transactions"
imposed by Section 502 of ERISA or Section 4975 of the Code,
which tax or penalty, individually or in the aggregate, would
have a Materially Adverse Effect. Neither the Borrower nor any
of its ERISA Affiliates is obligated to make any contribution
to a Multiemployer Plan.
(n) No Margin Stock. The Borrower and its Subsidiaries do not own
or have any present intention of acquiring any "margin stock"
as defined in Regulation U (12 CFR Part 221, as amended) of
the Board of Governors of the Federal Reserve System (herein
called "Margin Stock"). None of the proceeds of any
Accommodation will be used, directly or indirectly, for the
purpose of purchasing or carrying any Margin Stock or
maintaining, reducing or retiring any indebtedness which was
originally incurred to purchase or carry any Margin Stock, or
to extend credit to others for the purpose of purchasing or
carrying any
<PAGE> 46
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Margin Stock, or for any other purpose which might constitute
this transaction a "purpose credit" within the meaning of such
Regulation (12 CFR Part 207, as amended). Neither the Borrower
nor any agent acting on its behalf has taken or will take any
action which might cause this Agreement or any of the Loan
Documents to violate, or be inconsistent with, Regulation G,
Regulation U or Regulation X (12 CFR Part 224, as amended) or
any other regulation of the Board of Governors of the Federal
Reserve System or to violate, or be inconsistent with, the
Securities Exchange Act of 1934, as amended, in each case as
in effect now or as the same may hereafter be in effect.
(o) Governmental Regulation. Neither the Borrower nor any of its
Subsidiaries is required to obtain any consent, approval,
authorization, permit or license (excluding Immaterial Site
Specific Licenses) which has not already been obtained from,
or effect any filing or registration which has not already
been effected with, any Governmental Entity 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 (excluding Immaterial Site Specific
Licenses) which has not already been obtained from, or effect
any filing or registration which has not already been effected
with, any Governmental Entity in connection with the
performance, in accordance with their respective terms, of
this Agreement or any other Loan Document.
(p) Absence of Default, Etc. Neither the Borrower nor any of its
Subsidiaries is subject to, or a party to, any charter or
by-law restriction, any Applicable Law, any Claim, any
contract or instrument, a Lien or any other restriction of any
kind or character which would prevent the consummation of the
transactions contemplated by this Agreement or compliance by
the Borrower or such Subsidiary with the terms, conditions and
provisions hereof or of any Loan Document to which it is a
party or the continued operation of the business on or after
the date hereof on substantially the same basis as operated to
the date hereof in each case. Neither the Borrower nor any of
its Subsidiaries is a party to or bound by any contract or
agreement continuing after the Restatement 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.
(q) Accuracy and Completeness of Information. None of: (i) this
Agreement, (ii) any of the Loan Documents, or (iii) any
certificate or statement in writing which has been supplied by
or on behalf of the Borrower or its Subsidiaries or by any of
the directors, officers or employees of the Borrower or its
Subsidiaries in connection with the transactions contemplated
hereby or by any of the Loan Documents contained any untrue
statement of a material fact, or omitted any statement of a
material fact, necessary in order to make the statements
contained herein or therein not materially misleading at the
time it was furnished. There is no material fact known to the
Borrower or its Subsidiaries or any of their directors,
<PAGE> 47
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officers or employees which the Borrower has not disclosed to
the Agent in writing and which could be expected to have a
Materially Adverse Effect.
(r) Agreements with Affiliates. Except for (1) agreements or
arrangements set forth on Schedule 4 and (2) agreements or
arrangements with Affiliates wherein the Borrower or one or
more of its Subsidiaries provides services to such Affiliates
on terms no less advantageous to the Borrower or such
Subsidiary than would be the case if such transaction had been
effected with a non-Affiliate, neither the Borrower nor any of
its 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.
(s) Priority. Except as a result of the action or inaction of the
Agent or any Bank, the Security Interest is a valid and
perfected first priority security interest in the Collateral
in favour of the 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).
(t) Indebtedness. Neither the Borrower nor any of its Subsidiaries
has outstanding, as of the Restatement Date, any Indebtedness
for Money Borrowed other than the Obligations hereunder.
(u) Solvency. As of the Restatement Date after the closing of the
MadTel Holdings Agreement, and after giving effect to the
transactions contemplated by the Loan Documents, the Borrower
and its Subsidiaries were and continue to be able to pay their
liabilities as they become due.
(v) Books and Records. All books and records of the Borrower and
its Subsidiaries have been fully, properly and accurately kept
and completed in accordance with GAAP and there are no
material inaccuracies or discrepancies of any kind contained
or reflected therein.
(w) Environmental Liabilities. Neither the Borrower nor any of its
Subsidiaries has incurred or is incurring any material
liability pursuant to any Environmental Law, including any
material Environmental Liabilities and Costs. To the best
knowledge of the Borrower, there is no past or present fact,
condition or
<PAGE> 48
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circumstance relating to the Business, or the Real Estate, the
Leasehold Real Estate and the Assets currently or formerly
owned or leased by or under the charge, management or control
of the Borrower or any of its Subsidiaries (the "Affected
Properties") that could reasonably be expected to result in
any material liability or material potential liability under
any Environmental Laws. Neither the Borrower nor any of its
Subsidiaries has received an Environmental Notice pursuant to,
or raising concerns in respect of, any material liability
pursuant to any Environmental Laws and to the best of the
knowledge of the Borrower, there are no reasonable grounds
which would give rise to the issuance of any Environmental
Notice concerning material liability pursuant to any
Environmental Law. To the best knowledge of the Borrower,
there are no Hazardous Substances at, in, or under the
Affected Properties at levels or concentrations in excess of
levels or concentrations set out in Environmental Laws.
Neither the Borrower nor, to the best of the knowledge of the
Borrower, any of its directors or officers has ever: (i) been
convicted of any offense for non-compliance with any
Environmental Laws; (ii) been fined or otherwise penalized for
non-compliance with Environmental Laws; or (iii) settled any
prosecution in respect thereof short of conviction.
(x) Material Agreements. The Transponder Lease Agreement, the
Network and Equipment Agreement and the Sales and Distribution
Agreement represent the only material agreements of the
Borrower and its Subsidiaries.
(y) Year 2000 Warranty.
(i) The Borrower and its Subsidiaries have reviewed and
assessed the potential impact of the Year 2000 issue
on all areas of their critical businesses and
operations (including those areas that may be
affected by, or interfaced with, third party
suppliers and clients);
(ii) The Borrower and its Subsidiaries have prepared and
are implementing a Year 2000 Plan, the particulars of
which are appended hereto at Schedule 5, which
schedule also accurately sets out the current status
of activities under the Year 2000 Plan;
(iii) Subject to Third Party Factors, the Year 2000 Systems
of the Borrower and its Subsidiaries shall be Year
2000 Ready prior to December 31, 1999;
(iv) The cost to the Borrower (on a consolidated basis) of
completing the steps necessary for the Year 2000
Systems of the Borrower and its Subsidiaries to be
Year 2000 Complaint will not result in a Default, and
are not expected, in the reasonable opinion of the
Borrower, to have a Materially Adverse Effect on the
Borrower and its Subsidiaries, taken as a whole;
provided that this representation and warranty shall
not extend to any costs relating to steps to be taken
by Third Parties to deal effectively with Third Party
Factors; and
<PAGE> 49
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(v) The Borrower and its Subsidiaries have taken
reasonable commercial efforts, consistent with the
importance of succeeding therein to the continued
operation of the business of the Borrower and its
Subsidiaries in the ordinary course, to assess,
monitor and respond to the Third Party Factors in
order to minimize the impact of Third Party Factors
on the ability of the Borrower and its Subsidiaries
to have their Year 2000 Systems Year 2000 Ready prior
to December 31, 1999.
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 Restatement Date and on the date of each Accommodation
except to the extent previously fulfilled in accordance with the terms hereof
and to the extent relating specifically to the Restatement 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 Agent, any investigation or inquiry by any Bank or the Agent, or the
making of any Advance under this Agreement.
SECTION 4.3 NO REPRESENTATIONS BY BANKS.
No representation, warranty or other statement made by the
Agent or any one or more of the Banks in respect of the Commitment or any
Accommodation made hereunder shall be binding on such Person unless made by it
in writing.
ARTICLE 5
GENERAL COVENANTS
So long as any of the Obligations is outstanding and unpaid or
the Banks have any Commitment 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.
The Borrower will, and will cause each of its Subsidiaries to:
(a) preserve and maintain its existence, and its material rights,
franchises, licenses and privileges in the jurisdiction of its
incorporation, including, without limiting the foregoing, the
Licenses and all other Necessary Authorizations; and
(b) 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.
<PAGE> 50
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SECTION 5.2 BUSINESS; COMPLIANCE WITH APPLICABLE LAW.
The Borrower will, and will cause each of its Subsidiaries to,
(a) comply in all material respects with the requirements of all material
Applicable Law, including, without limitation, all Environmental Laws, and (b)
engage solely in the Business.
SECTION 5.3 MAINTENANCE OF PROPERTIES.
The Borrower will, and will cause each of its 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.
SECTION 5.4 ACCOUNTING METHODS AND FINANCIAL RECORDS.
The Borrower will, and will cause each of its 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 its Subsidiaries will maintain a fiscal year ending on December 31.
SECTION 5.5 INSURANCE.
The Borrower will, and will cause each of its Subsidiaries to:
(a) Maintain in respect of itself, and each of its Subsidiaries,
or cause each of its Subsidiaries to maintain directly: (i) in
respect of the Collateral, adequate insurance coverage at all
times with financially sound and reputable insurers in such
forms and amounts and against such risks acceptable to the
Agent and the Banks, showing the Agent as an additional named
insured and loss payee; and (ii) in respect of itself and its
Assets (other than the Collateral), adequate insurance
coverage at all times with financially sound and reputable
insurers in such forms and amounts and against such risks as
are reasonable for the business operations that are carried on
by it from time to time.
(b) Require that each insurance policy provide for at least thirty
(30) days' prior written notice to the Agent of any
termination of or proposed cancellation or nonrenewal of such
policy.
SECTION 5.6 PAYMENT OF TAXES AND CLAIMS.
The Borrower will, and will cause each of its Subsidiaries to,
pay and discharge, before the same shall become delinquent: (i) all Taxes,
assessments and governmental charges or levies or Claims imposed upon it or upon
any of its Assets; and (ii) all lawful Claims which, if
<PAGE> 51
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unpaid, might by Applicable Law become a Lien upon its Assets, in each case
except for any such Tax, assessment, charge, levy or Claim which would result in
a Lien which is a Permitted Lien. The Borrower will, and will cause each of its
Subsidiaries to, timely file all information returns required by any
Governmental Entity.
SECTION 5.7 COMPLIANCE WITH ERISA.
(a) The Borrower shall, and shall cause its Subsidiaries to avoid
any "accumulated funding deficiency" within the meaning of
Section 412(a) of the Code with respect to any Employee
Pension Plan, 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 furnish to the 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, which could
subject the Borrower or any of its ERISA Affiliates to the tax
or penalty on "prohibited transactions" imposed by Section 502
of ERISA or Section 4975 of the Code which tax or penalty,
individually or in the aggregate, would have a Materially
Adverse Effect, that any Reportable Event has occurred with
respect to any Employee Pension Plan of the Borrower or any of
its ERISA Affiliates or that PBGC has instituted or will
institute proceedings under Title IV of ERISA to terminate any
Employee Pension Plan of the Borrower or any of its ERISA
Affiliates or to appoint a trustee to administer any Employee
Pension Plan of the Borrower or any of its ERISA Affiliates, 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 Labour which sets forth or proposes any
action or determination with respect to such Plan which could
have a Materially Adverse Effect, (iii) promptly upon the
Agent's request therefor, any annual report filed pursuant to
ERISA in connection with each Employee Pension Plan maintained
by the Borrower or any of its ERISA Affiliates, including the
Subsidiaries, and (iv) promptly upon the Agent's request
therefor, such additional information concerning any such
Employee Pension Plan as may be reasonably requested by the
Agent or any Bank.
(c) The Borrower will promptly notify the 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,
<PAGE> 52
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any of its Subsidiaries or any of its ERISA Affiliates by the
Internal Revenue Service or the Department of Labour with
respect to any Plan of the Borrower or its ERISA Affiliates,
including its Subsidiaries which, individually or in the
aggregate, could have a Materially Adverse Effect.
(d) Within the time required for notice to the PBGC under Section
302(f)(4)(A) of ERISA, the Borrower will notify the Agent and
the Banks of any lien arising under Section 302(f) of ERISA in
favour of any Plan of the Borrower or its ERISA Affiliates,
including its Subsidiaries.
(e) 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 would have a Materially
Adverse Effect:
(i) engage in any transaction in connection with which
the Borrower or any of its Subsidiaries would 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 would result in any
liability of the Borrower, any of its Subsidiaries or
any ERISA Affiliate to the PBGC, other than for
payment of PBGC premiums;
(iii) fail to make full payment when due of all amounts
which, under the provisions of any Employee Pension
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 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
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respective principal officers their respective businesses, assets, liabilities,
financial positions, results of operations and business prospects. The Borrower
and each of its Subsidiaries will also permit representatives of the 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; ACCOMMODATIONS.
Subject to any provisions herein or in any other Loan
Document, the Borrower will, and will cause each of its Subsidiaries to, pay any
and all of their respective Indebtedness prior to its becoming delinquent or
having any late fees assessed or to the extent of trade payables of such Persons
otherwise in accordance with ordinary business practices customary for the
wireless messaging 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 Accommodations directly or indirectly:
(a) to fund Capital Expenditures associated with the Business and
the ongoing need for wireless messaging units for its Canadian
wireless messaging system;
(b) for working capital needs and other general corporate purposes
of the Borrower 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 payments permitted under Section 7.7 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.
SECTION 5.11 PROTECT SECURITY INTERESTS.
Except for the filing of renewal statements and the making of
other filings by the Agent as a secured party or assignee, at all times take all
action and supply the Agent with all information necessary to maintain the Liens
provided for under the Security Documents and confer upon the Agent the security
interests intended to be created thereby.
SECTION 5.12 ENVIRONMENTAL AUDITS.
Promptly if requested by the Agent: (i) if a Default has
occurred and is continuing or the Agent or the Majority Banks have a reasonable
good faith commercial concern as to the financial condition of the Borrower,
conduct environmental audits having a scope acceptable to the Agent with respect
to the potential liability under applicable Environmental Laws of the Borrower
and its Subsidiaries, their respective Real Estate or other Assets, and the
Business, such environmental audits to be conducted by the Environmental
Auditor, and provide copies of
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such environmental audits to the Agent; (ii) if the Agent or the Majority Banks
have a good faith concern that there is a material non-compliance by the
Borrower or any of its Subsidiaries with Environmental Laws, conduct such
environmental audit concerning alleged material non-compliance as the Agent or
such Majority Banks may require, such audits to be conducted by the
Environmental Auditor, and provide copies of such environmental audits to the
Agent; and (iii) diligently remedy any material non-compliance with
Environmental Laws revealed by any such audit.
SECTION 5.13 FURTHER ASSURANCES.
At its cost and expense, upon request of the Agent, the
Borrower will duly execute and deliver or cause to be duly executed and
delivered to the Agent such further instruments and do and cause to be done such
further acts as may be necessary or proper in the reasonable opinion of the
Agent to carry out more effectively the provisions and purposes of the Loan
Documents.
ARTICLE 6
INFORMATION COVENANTS
So long as any of the Obligations is outstanding and unpaid or
the Banks have any Commitment 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 Agent, at their respective offices:
SECTION 6.1 QUARTERLY FINANCIAL STATEMENTS AND INFORMATION.
Within forty-five (45) days after the last day of each fiscal
quarter of the Borrower during any fiscal year:
(a) a copy of the balance sheets of (i) the Borrower on a
consolidated and consolidating (unconsolidated) basis with its
Subsidiaries, and (ii) the Borrower Group on a combined basis,
in each case as at the end of such quarter and as of the end
of the preceding fiscal year; and
(b) the related statements of operations and the related
statements of cash flows of (i) the Borrower on a consolidated
basis with its Subsidiaries, and (ii) the Borrower Group on a
combined basis, in each case for such quarter and for the
elapsed portion of the year ended with the last day of such
quarter,
all of 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 (unconsolidated) figures with respect to any acquisitions
consummated during such quarter, 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 (x) the
Borrower on a consolidated and consolidating (unconsolidated) basis with its
Subsidiaries, and (y) the Borrower Group on a combined basis, in each case as at
the end of such quarter and the results of
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operations for such quarter, and for the elapsed portion of the year ended with
the last day of such quarter, subject only to normal year-end and audit
adjustments and the absence of footnotes.
SECTION 6.2 ANNUAL FINANCIAL STATEMENTS AND INFORMATION.
Within ninety (90) days after the end of each fiscal year of
the Borrower:
(a) a copy of the audited consolidated and consolidating
(unconsolidated) balance sheets of the Borrower and its
Subsidiaries as of the end of such fiscal year and for the
previous fiscal year and the related audited consolidated and
consolidating (unconsolidated) statements of operations for
such fiscal year and for the previous fiscal year, the related
audited consolidated and consolidating (unconsolidated)
statements of cash flow and stockholders' equity for such
fiscal year and for the previous fiscal year, which shall be
accompanied by an opinion of Ernst & Young or such other
independent auditor acceptable to the Agent, certified 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 (unconsolidated) basis
with its Subsidiaries as at the end of such fiscal year; and
(b) for the Borrower Group on a combined basis, a balance sheet as
of the end of such fiscal year and for the previous fiscal
year and the related statement of operations for such fiscal
year and for the previous fiscal year, the related statements
of cash flow and stockholders' equity for such fiscal year and
for the previous fiscal year, which may be prepared on an
unaudited basis, but must 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 Group as at the end of such
fiscal year and the results of operations for such fiscal
year, subject only to normal year-end and audit adjustments
and the absence of footnotes.
SECTION 6.3 PERFORMANCE CERTIFICATES.
At the time the financial statements are furnished pursuant to
Section 6.1 and Section 6.2, a certificate of the president or chief financial
officer of the Borrower as to its financial performance, in substantially the
form of Exhibit F hereto:
(a) setting forth as and at the end of such quarter 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 2.6(d) hereof, and (ii)
whether or not the Borrower was in compliance with the
requirements of Section 7.8, Section 7.9, Section 7.10,
Section 7.11, Section 7.12, Section 7.13 and Section 7.14
hereof; and
(b) stating that no Default has occurred as at the end of such
quarter or fiscal year, as the case may be, or, if a Default
has occurred, disclosing each such Default and its
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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 material reports,
if any, submitted to the Borrower by the Borrower's
independent auditors regarding the Borrower, including,
without limitation, any management report prepared in
connection with the annual audit referred to in Section 6.2
hereof.
(b) Promptly upon receipt thereof, copies of any material adverse
notice or report regarding any License from any Governmental
Entity.
(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,
as the Agent or any Bank may reasonably request.
(d) Promptly upon request but not more frequently than 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) Within sixty (60) days after each fiscal year end, the annual
budget for the Borrower and its Subsidiaries, including
forecasts of the income statement and a cash flow statement
for such fiscal year, on a quarter by quarter basis.
(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 Ontario Securities Commission or
any other securities commission or stock exchange.
SECTION 6.5 NOTICE OF LITIGATION AND OTHER MATTERS.
(i) 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:
(ii) the commencement of all material proceedings and
investigations by or before any Governmental Entity
particular to the Borrower and/or any of its
Subsidiaries 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, or any of their
respective properties, assets or businesses or any
License;
<PAGE> 57
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(iii) 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;
(iv) any material amendment or change to the financial
projections or annual budget provided to the Banks by
the Borrower;
(v) 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 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; and
(vi) 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 ERISA Affiliates 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, to the extent any
of the foregoing would have, individually or in the
aggregate, a Materially Adverse Effect.
SECTION 6.6 ENVIRONMENTAL REPORTING.
Promptly, and in any event within fifteen (15) days of
becoming aware of its existence, notify the Agent in writing of any notice or
other state of affairs (providing details of any actions taken by the Borrower
in response) which could reasonably be expected to give rise to: (i)
Environmental Liabilities and Costs of $500,000 or more; or (ii) any violation
of Environmental Laws involving the possible imposition of a fine of $500,000 or
more or the shutting down of any facility forming part of the Business for a
period in excess of 24 hours; and (iii) any facts or circumstances which could
reasonably be expected to give rise to (x) Environmental Liabilities and Costs
of $500,000 or more, or (y) any violation of Environmental Laws involving the
possible imposition of a fine of $500,000 or more or the shutting down of any
facility forming part of the Assets for a period in excess of 24 hours.
<PAGE> 58
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ARTICLE 7
NEGATIVE COVENANTS
So long as any of the Obligations is outstanding and unpaid or
the Banks have any Commitment 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 its
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(c) below);
(b) Indebtedness secured by Permitted Liens;
(c) obligations under Interest Rate Hedge Agreements having a
notional principal amount of not more than fifty percent (50%)
of the Accommodations in the aggregate outstanding at any
time;
(d) Indebtedness of the Borrower or any of its wholly-owned
Subsidiaries to any other wholly-owned Subsidiary of the
Borrower so long as the corresponding debt instruments are
pledged to the Agent as security for the Obligations;
(e) Indebtedness of any of wholly-owned Subsidiaries of the
Borrower to the Borrower so long as the corresponding debt
instruments are pledged to the Agent as security for the
Obligations;
(f) Capitalized Lease Obligations in an aggregate amount not to
exceed $500,000 at any time outstanding;
(g) Indebtedness of the Borrower to MadTel Holdings so long as (i)
the Indebtedness is not secured by any Lien, (ii) the
corresponding debt instruments are assigned to the Agent as
security for the MadTel Holdings Obligations, and (iii) any
such Indebtedness is fully postponed to the Obligations. In
this regard, prior to incurring any such Indebtedness, the
Agent shall receive a specific assignment of receivables from
MadTel Holdings, which will include a postponement from MadTel
Holdings, together with any additional documentation and
opinions required by the Agent, all in form and substance
satisfactory to the Agent, in its sole discretion; and
(h) Indebtedness of the Borrower to PNII, PNNV or PNCHI so long as
(i) the Borrower is a wholly-owned Subsidiary of PNII, PNNV or
PNCHI, as the case may be, (ii) the Indebtedness is not
secured by any Lien, (iii) the Agent receives a limited
recourse guaranty from PNII, PNNV or PNCHI, as the case may
be, (iv)
<PAGE> 59
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the corresponding debt instruments are assigned to the Agent
as security for the obligations of PNII, PNNV or PNCHI, as the
case may be, under their respective guaranties, (v) any such
Indebtedness is fully postponed to the Obligations, and (vi)
the Agent shall have received any additional documentation and
opinions which it deems appropriate in respect of, inter alia,
corporate existence, and due authorization, execution,
delivery and enforceability of the guaranties referred to in
this Section 7.1(h). In this regard, prior to incurring any
such Indebtedness, the Agent shall receive a limited recourse
guaranty from the creditors referred to in this Section
7.1(h), which will include an assignment and postponement from
such creditors, together with any additional documentation and
opinions required by the Agent, all in form and substance
satisfactory to the Agent, in its sole discretion.
SECTION 7.2 LIMITATION ON LIENS.
The Borrower shall not, and shall not permit any of its
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.
The Borrower shall not, and shall not permit any of its
Subsidiaries to, enter into any amendment of, or agree to or accept or consent
to any waiver of any of the provisions of 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 effect on the Agent or any Bank or any
of their rights or claims under any of the Loan Documents).
SECTION 7.4 LIQUIDATION, MERGER, OR DISPOSITION OF ASSETS.
(a) Disposition of Assets. The Borrower shall not, and shall not
permit any of its Subsidiaries to, at any time sell, exchange,
lease, abandon, or otherwise dispose of any Assets (other than
Assets disposed of in the ordinary course of business) without
the prior written consent of all the Banks.
(b) Liquidation or Merger. The Borrower shall not, and shall not
permit any of its 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 Subsidiaries, provided the Borrower is the surviving
corporation, or (ii) a merger between or among two or more
Subsidiaries of the Borrower, or (iii) in connection with an
acquisition permitted hereunder effected by a merger in which
the Borrower or, in a merger in which the Borrower is not a
party, a Subsidiary of the Borrower is the surviving
corporation.
<PAGE> 60
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SECTION 7.5 LIMITATION ON GUARANTIES.
The Borrower shall not, and shall not permit any of its
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, (b) obligations under agreements
of the Borrower or any of its 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 its Subsidiaries,
or (c) Guaranties of Indebtedness incurred as permitted pursuant to Section 7.1
hereof.
SECTION 7.6 INVESTMENTS AND ACQUISITIONS.
The Borrower shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, (a) 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 (i) assets
or property in the ordinary course of business or (ii) Permitted Investments; or
(b) except with the consent of the Majority Banks, make any acquisition.
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) distributions to PNII, PNNV
or PNCHI so long as the Leverage Ratio is below 4.00 to 1 (both before and after
giving effect to such distribution), and (b) payments of principal of any
Indebtedness referred to in Section 7.1(g) hereof.
SECTION 7.8 LEVERAGE RATIO.
Commencing January 1, 2001, the Borrower shall not permit the
Leverage Ratio to exceed the ratios set forth below during the periods
indicated:
<TABLE>
<CAPTION>
PERIOD RATIO
--------------------------------------------------------- ------
<S> <C>
January 1, 2001 through June 30, 2001 6.00:1
July 1, 2001 through September 30, 2001 5.00:1
October 1, 2001 through December 31, 2001 4.50:1
January 1, 2002 through March 31, 2002 4.00:1
April 1, 2002 and thereafter 3.50:1
</TABLE>
<PAGE> 61
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SECTION 7.9 ANNUALIZED OPERATING CASH FLOW TO INTEREST EXPENSE.
Commencing April 1, 2000, the Borrower shall not permit the
ratio of Annualized Operating Cash Flow to Interest Expense for the Borrower
Group on a combined basis to be less than the ratios set forth below for the
periods indicated:
<TABLE>
<CAPTION>
PERIOD RATIO
------------------------------------------- ------
<S> <C>
April 1, 2000 through June 30, 2001 1.00:1
July 1, 2001 through June 30, 2002 1.25:1
July 1, 2002 and thereafter 1.50:1
</TABLE>
Solely for purposes of calculating the ratio referred to in
this Section 7.9, Interest Expense shall not include, as of any date, interest
expense relating to that portion of the Commitment that is not the
Uncollateralized Portion of the Commitment.
SECTION 7.10 TOTAL DEBT PER SUBSCRIBER.
The Borrower shall not at any time permit the Total Debt for
the Borrower Group on a combined basis divided by Total Subscribers to be
greater than or equal to $150.00.
SECTION 7.11 CAPITAL EXPENDITURES.
The Borrower shall not permit the aggregate Capital
Expenditures for the Borrower Group on a combined basis to exceed the following
for the fiscal years indicated:
<TABLE>
<CAPTION>
PERIOD RATIO
------------------------------------ ------
<S> <C>
At December 31, 1999 $15,000,000.00
At December 31, 2000 $15,000,000.00
At December 31, 2001 $15,000,000.00
At December 31, 2002 and thereafter $10,000,000.00
</TABLE>
No amount of unused Total Capital Expenditure availability may
be carried forward from 1998 to 1999 or subsequent fiscal years. Commencing in
1999, to the extent not used in any fiscal year, an amount equal to the lesser
of (a) the unused Total Capital Expenditure availability (exclusive of any carry
forwards from prior periods) for such fiscal year, and (b) 15% of the Total
Capital Expenditure availability shown above (exclusive of any carry forwards
from prior periods) for such fiscal year, may be carried forward, in whole or in
part, to subsequent fiscal years until fully utilized.
<PAGE> 62
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SECTION 7.12 MINIMUM REVENUE TEST.
Commencing March 31, 1999 and continuing for each fiscal
quarter through the fiscal quarter ending December 31, 2001, the Borrower shall
not permit the aggregate Gross Revenue for the Borrower Group on a combined
basis to be less than the following for the fiscal quarters indicated:
<TABLE>
<CAPTION>
QUARTER ENDING MINIMUM REVENUE
------------------ -------------------
<S> <C>
03/31/99 $5,000,000
06/30/99 $5,000,000
09/30/99 $5,750,000
12/31/99 $6,250,000
03/31/00 $7,000,000
06/30/00 $7,000,000
09/30/00 $7,000,000
12/31/00 $7,000,000
03/31/01 $9,000,000
06/30/01 $9,000,000
09/30/01 $9,000,000
12/31/01 $9,000,000
</TABLE>
SECTION 7.13 MINIMUM UNITS IN SERVICE.
Commencing June 30, 1999 and continuing for each fiscal
quarter through the fiscal quarter ending December 31, 2001, the Borrower shall
not permit the minimum number of Units in Service to be less than the following
for the fiscal quarters indicated:
<TABLE>
<CAPTION>
MINIMUM UNITS
QUARTER ENDING IN SERVICE
------------------ -------------------
<S> <C>
06/30/99 245,000
09/30/99 260,000
12/31/99 260,000
03/31/00 275,000
06/30/00 275,000
09/30/00 300,000
12/31/00 300,000
03/31/01 350,000
06/30/01 350,000
09/30/01 400,000
12/31/01 400,000
</TABLE>
SECTION 7.14 MINIMUM OPERATING CASH FLOW TEST
Commencing September 30, 1999 and continuing for each fiscal
quarter through the fiscal quarter ending December 31, 2001, the Borrower shall
not permit the aggregate Operating Cash Flow for the Borrower Group on a
combined basis to be less than the following for the fiscal quarters indicated:
<PAGE> 63
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<TABLE>
<CAPTION>
MINIMUM OPERATING
QUARTER ENDING CASH FLOW
------------------ ---------------------
<S> <C>
09/30/99 $250,000
12/31/99 $575,000
03/31/00 $975,000
06/30/00 $975,000
09/30/00 $975,000
12/31/00 $975,000
03/31/01 $1,200,000
06/30/01 $1,200,000
09/30/01 $1,200,000
12/31/01 $1,200,000
</TABLE>
SECTION 7.15 AFFILIATE TRANSACTIONS.
Except for those agreements described in Schedule 4 hereto,
the Borrower shall not, and shall not permit any of its 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, 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 7.16 REAL ESTATE.
Neither the Borrower nor any of its Subsidiaries shall
purchase any Real Estate or enter into any sale/leaseback transaction.
SECTION 7.17 ERISA LIABILITIES.
The Borrower shall not, and shall cause each of its ERISA
Affiliates not to enter into any Multiemployer Plan.
ARTICLE 8
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 Applicable Law or pursuant to any
judgment or order of any court or any order, rule or regulation of any Person.
(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;
<PAGE> 64
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(b) The Borrower shall default in the payment of: (i) any interest
under any of the Loan Documents or fees or other amounts
payable to the Banks and the 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 Loan Documents
when due;
(c) The Borrower shall default in the performance or observance of
any agreement or covenant contained in Section 5.2 or Section
5.10 or in Article 6 or Article 7 hereof; provided however,
that on any date on which the aggregate of Accommodations
outstanding hereunder is less than the aggregate amount of the
Equivalent Canadian Dollar Amount of the Permitted Collateral
held by the Agent pursuant to the Deposit Agreement, the
failure to comply with Section 7.12, Section 7.13 or Section
7.14 hereof shall not constitute a default hereunder until any
such failure has continued for a period of two (2) consecutive
complete calendar quarters;
(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 or
there shall occur any default in the performance or observance
of any agreement or covenant contained in any of the Loan
Documents (other than this Agreement or as otherwise provided
in Section 8.1 of this Agreement) by the Borrower, any of its
Subsidiaries, or any other obligor thereunder, and such
default shall not be cured within a period of thirty (30) days
from the date on which the Borrower becomes aware of or
receives notice of such default;
(e) The Borrower or any of its Subsidiaries shall: (i) become
insolvent or generally not pay its debts as such debts become
due; (ii) admit in writing its inability to pay its debts
generally or shall make a general assignment for the benefit
of creditors; (iii) file a notice of intention to file a
proposal under any Applicable Law relating to bankruptcy,
insolvency or reorganization or relief of debtors; (iv) have
instituted against it any proceeding, which proceeding
continues undismissed or unstayed for a period of sixty (60)
consecutive days or any of the actions sought in such
proceeding (including the entry of an order for relief against
it or the appointment of a receiver, trustee, custodian or
other similar official for it or for any substantial part of
its Assets) shall occur, or institute any proceeding seeking:
(A) to adjudicate it a bankrupt or insolvent; (B) any
liquidation, winding-up, reorganization, arrangement,
adjustment, protection, relief or composition of it or its
debts under any Applicable Law relating to bankruptcy,
insolvency or reorganization or relief of debtors; or (C) the
entry of an order for relief or the appointment of a receiver,
trustee or other similar official for it or for any
substantial part of its Assets; or (v) take any corporate
action to authorize any of the foregoing actions;
(f) A notice is sent to or received by the Borrower or any of its
Subsidiaries from any creditor with respect to the intention
of such creditor to enforce security on: (i)
<PAGE> 65
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any of the Collateral; or (ii) any Assets of the Borrower or
any of its Subsidiaries (other than the Collateral) unless
such notice is being contested in good faith by appropriate
legal proceedings and such notice does not involve any
immediate danger of the sale, forfeiture or loss of any of the
Assets of the Borrower or any of its Subsidiaries (other than
the Collateral) that are the subject of such notice;
(g) A judgment or order for the payment of money 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,
commenced and not stayed, after the expiration of any such
stay, such judgment, warrant or process shall not have been
paid or discharged or removed to bond;
(h) There shall be at any time any "accumulated funding
deficiency," as defined in ERISA or in Section 412 of the
Code, with respect to any Plan maintained by the Borrower or
any ERISA Affiliate, or to which the Borrower 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 Employee Pension Plan; or
PBGC shall institute proceedings to terminate any Employee
Pension Plan; or the Borrower or any ERISA Affiliate shall
incur any liability to PBGC in connection with the termination
of any Employee Pension Plan; or any Plan or trust created
under any Plan of the Borrower 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 the Borrower or any Subsidiary to any tax or
penalty on "prohibited transactions" imposed by Section 502 of
ERISA or Section 4975 of the Code;
(i) There shall occur (i) any default which entitles the holders
to accelerate the maturity thereof under any document,
instrument or agreement relating to any Indebtedness of any
member of the Borrower Group having an aggregate principal
amount exceeding $1,000,000; or (ii) any default which
entitles the holders to terminate any Interest Rate Hedge
Agreement having a notional principal amount of $1,000,000 or
more;
(j) One or more Licenses shall be terminated or revoked,
substantially adversely modified or no longer available such
that the Borrower and its Subsidiaries are no longer able to
operate the related wireless messaging 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 such that the Borrower and its Subsidiaries
are no longer able to operate the related wireless messaging
system
<PAGE> 66
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or portions thereof and retain the revenue received therefrom,
if any, and, in either case, there shall be a loss of revenue
of the Borrower or any of its Subsidiaries as a direct or
indirect result thereof which loss of revenues could
reasonably be expected to have a Materially Adverse Effect;
(k) 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;
(l) Subject only to Permitted Liens, any Security Document shall
for any reason (other than as a result of the action or
inaction of the Agent or any Bank), fail or cease 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;
(m) Any Change Event shall occur or exist; or
(n) There shall occur any default by the Borrower or any
Subsidiary of the Borrower under or a cancellation of, in any
case without contemporaneous replacement, any Transponder
Lease Agreement, the Network and Equipment Agreement or the
Sales and Distribution Agreement which default is not cured
within any applicable cure period and which default would be
reasonably likely to have a Materially Adverse Effect.
SECTION 8.2 REMEDIES.
(a) If an Event of Default specified in Section 8.1 hereof (other
than an Event of Default under Section 8.1(e) hereof) shall
have occurred and shall be continuing, the Agent, at the
request of the Majority Banks subject to Section 9.8(a)
hereof, shall (i) terminate the Commitment, and/or (ii)
declare the principal of and interest on the Accommodations
and all other amounts owed to the Banks and the Agent under
this Agreement and any other Loan Documents to be forthwith
due and payable without presentment, demand, protest or other
notice of any kind, all of which are hereby expressly waived,
anything in this Agreement or any other Loan Document to the
contrary notwithstanding, and the Commitment shall thereupon
forthwith terminate, and/or (iii) the security constituted by
the Security Documents and any other security now or hereafter
held by the Agent shall become and be enforceable.
<PAGE> 67
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(b) Upon the occurrence and continuance of an Event of Default
specified in Section 8.1(e) hereof, all principal, interest
and other amounts due hereunder and under the Loan Documents,
and all other Obligations, shall thereupon and concurrently
therewith become due and payable and the Commitment shall
forthwith terminate and the principal amount of the
Accommodations outstanding hereunder shall bear interest at
the Default Rate, all without any action by the 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 Obligations, as provided in
subsection (a) or (b) of this Section 8.2, the 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) Upon acceleration of the Obligations, as provided in
subsection (a) or (b) of this Section 8.2, the 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 its Subsidiaries, and the Borrower, for itself
and on behalf of its 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 Agent on behalf
of the Banks, in connection therewith.
(e) The rights and remedies of the Agent and the Banks hereunder
shall be cumulative, and not exclusive.
ARTICLE 9
THE AGENT
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
pro rata portion of the Accommodations irrevocably to appoint and authorize, the
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 Agent nor any of its directors, officers, employees, agents
or counsel, shall be liable to the Banks 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 wilful misconduct as determined by a final,
non-appealable judicial order of a court of competent jurisdiction.
SECTION 9.2 INTEREST HOLDERS.
The Agent may treat each Bank, or the Person designated in the
last notice filed with the Agent, as the holder of all of the interests of such
Bank in its pro rata portion of the Accommodations until written notice of
transfer, signed by such Bank (or the Person designated
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in the last notice filed with the Agent) and by the Person designated in such
written notice of transfer, in form and substance satisfactory to the Agent,
shall have been filed with the Agent.
SECTION 9.3 CONSULTATION WITH COUNSEL.
The Agent may consult with legal counsel selected by it and
shall not be liable to the Banks for any action taken or suffered by it in good
faith in consultation with such counsel and in reasonable reliance on such
consultations.
SECTION 9.4 DOCUMENTS.
The Agent shall be under no duty to examine, inquire into, or
pass upon the validity, effectiveness or genuineness of this Agreement, any
other Loan Document, or any instrument, document or communication furnished
pursuant hereto or in connection herewith, and the 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 AGENT AND AFFILIATES.
With respect to the Commitment and the Accommodations, the
Bank which is the Agent shall have the same rights and powers hereunder as any
other Bank and the Agent and Affiliates of the 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 Agent and without any
obligation to account therefor.
SECTION 9.6 RESPONSIBILITY OF THE AGENT.
The duties and obligations of the Agent under this Agreement
are only those expressly set forth in this Agreement. The 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 Agent shall not be liable hereunder for any action taken or omitted to be
taken except for its own gross negligence or wilful misconduct as determined by
a final, non-appealable judicial order of a court of competent jurisdiction. The
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 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 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.
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SECTION 9.8 ACTION BY THE AGENT.
(a) The Agent shall be entitled to use its discretion with 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 or any
other Loan Document, unless the Agent shall have been
instructed by the Majority Banks (or, where expressly
required, all the Banks) to exercise or refrain from
exercising such rights or to take or refrain from taking such
action; provided that the 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 Agent shall incur no
liability to the Banks 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 wilful misconduct as
determined by a final, non-appealable judicial order of a
court of competent jurisdiction.
(b) The Agent shall not be liable to the Banks or to any Bank or
the Borrower or any of its 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 Agent shall not be
obligated to take any action which is contrary to Applicable
Law or which would in the Agent's reasonable opinion subject
the Agent to liability.
SECTION 9.9 NOTICE OF DEFAULT OR EVENT OF DEFAULT.
In the event that the Agent or any Bank shall acquire actual
knowledge, or shall have been notified, of any Default or Event of Default, the
Agent or such Bank shall promptly notify the Banks and the Agent, as applicable
(provided failure to give such notice shall not result in any liability on the
part of such Bank or the Agent), and the 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 Agent shall not be subject to any
liability by reason of its acting pursuant to any such request. If the Majority
Banks (or, where expressly required, all the Banks) shall fail to request the
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
Agent or any Bank, the Agent may, but shall not be required to, take such action
and assert such rights (other than rights under Section 8.2(a) or Section 11.12
of this Agreement) as it deems in its discretion to be advisable for the
protection of the Banks, except that, if the Majority Banks have instructed the
Agent not to take such action or assert such right, in no event shall the Agent
act contrary to such instructions.
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SECTION 9.10 RESPONSIBILITY DISCLAIMED.
The Agent shall not be under any liability or responsibility
whatsoever as 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 or any of the other Loan Documents;
(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 any other Loan
Document, or (ii) the Borrower, 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 Loan Document, or
any information provided pursuant to this Agreement or any
other Loan Document, or for the validity, effectiveness,
enforceability or sufficiency of this Agreement or any other
Loan Document; or
(d) To any Person for any act or omission other than that arising
from gross negligence or wilful misconduct of the 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 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 Agent in any way relating to or arising out of this Agreement or any
other Loan Document or any action taken or omitted by the Agent under this
Agreement or any other Loan Document, except that no Bank shall be liable to the
Agent for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses, or disbursements
resulting from the gross negligence or wilful misconduct of the Agent as
determined by a final, non-appealable judicial order of a court of competent
jurisdiction.
SECTION 9.12 CREDIT DECISION.
Each Bank represents and warrants to each other and to the
Agent that:
(a) In making its decision to enter into this Agreement and to
make its pro rata portion of the Accommodations 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 Agent or information provided by
the Agent (other than information provided to the Agent by the
Borrower and forwarded by the Agent to the Banks); and
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(b) So long as any portion of the Accommodations remains
outstanding or such Bank has an obligation to make its pro
rata 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 AGENT.
Subject to the appointment and acceptance of a successor Agent
as provided below, the Agent may resign at any time by giving fifteen (15) days
prior 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, and prior to the occurrence of a Default with the consent of
the Borrower not to be unreasonably withheld, shall have the right to appoint a
successor Agent. If no successor Agent shall have been so appointed by the
Majority Banks and shall have accepted such appointment within thirty (30) days
after the retiring Agent gave notice of resignation or the Majority Banks'
removal of the retiring Agent, then the retiring Agent may, on behalf of the
Banks, appoint a successor Agent which shall be any Person organized under the
laws of Canada which has combined capital and reserves in excess of
$250,000,000. Upon the acceptance of any appointment as Agent hereunder by a
successor Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges, duties and obligations of the
retiring Agent and the retiring Agent shall be discharged from its duties and
obligations hereunder and under the other Loan Documents. After any retiring
Agent's resignation or removal hereunder as 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 Agent.
SECTION 9.14 DELEGATION OF DUTIES.
The 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 rely upon advice of counsel concerning all
matters pertaining to such duties.
SECTION 9.15 DETERMINATION BY AGENT CONCLUSIVE AND BINDING.
Any determination to be made by the Agent on behalf of or with
the approval of the Banks or the Majority Banks under this Agreement shall be
made by the Agent in good faith and, if so made, shall be binding on the Banks,
absent manifest error.
ARTICLE 10
COMPUTATIONS AND INDEMNITIES
SECTION 10.1 INDEMNITY FOR CHANGE IN CIRCUMSTANCES.
If with respect to the Banks: (a) any change in Applicable
Law, or any change in the interpretation or application by any Governmental
Entity of any Applicable Law occurring or becoming effective after the date
hereof; or (b) any compliance by the Agent or any of the Banks with any
direction, request or requirement (whether or not having the force of Applicable
Law)
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of any Governmental Entity made or becoming effective after the date
hereof, in either case shall have the effect of causing Loss to the Agent or any
of the Banks by:
(i) increasing the cost to the Agent or any of the Banks
of performing its obligations under this Agreement or
in respect of any Advance or Bankers' Acceptance
(including the costs of maintaining any capital,
reserve or special deposit requirements in connection
therewith);
(ii) requiring the Agent or any of the Banks to maintain
or allocate any capital or additional capital or
affecting its allocation of capital in respect of its
obligations under this Agreement or in respect of any
Advances or Bankers' Acceptances;
(iii) reducing any amount payable to the Agent or any of
the Banks under this Agreement or in respect of any
Advance or Bankers' Acceptance by any amount it deems
material (other than a reduction resulting from a
higher rate of income tax or other special tax
relating to the Agent's or any Bank's income in
general); or
(iv) causing the Agent or any of the Banks to make any
payment or to forgo any return on, or calculated by
reference to, any amount received or receivable by
the Agent or any of the Banks under this Agreement in
respect of any Advance or Bankers' Acceptance;
then the Agent may give notice to the Borrower specifying the nature of the
event giving rise to such Loss and the Borrower shall, within thirty (30) days
or, if earlier, on the Maturity Date, pay such amounts as the Agent may specify
to be necessary to compensate the Agent or any of the Banks for any such Loss
incurred after the date of such notice. The Agent or any Bank claiming
compensation under this Section 10.1 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
Person may use any reasonable averaging and attribution methods which are
consistently applied to similarly situated borrowers of such Person.
SECTION 10.2 INDEMNITY FOR TRANSACTIONAL AND ENVIRONMENTAL LIABILITY.
(a) The Borrower hereby agrees to indemnify, exonerate and hold
the Agent and each Bank and each of their respective officers,
directors, employees, agents and other representatives
(collectively, the "Indemnified Parties") free and harmless
from and against any and all claims, demands, actions, causes
of action, suits, losses, costs (including all documentary,
recording, filing, mortgage or stamp taxes or duties),
charges, liabilities and damages, and expenses in connection
therewith (irrespective of whether such Indemnified Party is a
party to the action for which such indemnification hereunder
is sought), and including reasonable legal fees and
disbursements (collectively, in this Section 10.2(a), the
"Indemnified Liabilities") paid, incurred or suffered by, or
asserted against, the Indemnified
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Parties or any of them or, with respect to, or as a direct or
indirect result of: (i) any transaction financed or to be
financed in whole or in part, directly or indirectly, with the
proceeds of any Accommodation obtained hereunder; or (ii) the
execution, delivery, performance or enforcement of this
Agreement or any other Loan Document, except for such
Indemnified Liabilities that a court of competent jurisdiction
determines by a final non-appealable order are on account of
the relevant Indemnified Party's gross negligence or wilful
misconduct.
(b) Without limiting the generality of the indemnity set out in
Section 10.2(a) hereof, the Borrower hereby further agrees to
indemnify, exonerate and hold the Indemnified Parties free and
harmless from and against any and all claims, demands,
actions, causes of action, suits, losses, costs, charges,
liabilities and damages, and expenses in connection therewith,
including reasonable legal fees and disbursements
(collectively, in this Section 10.2(b), the "Indemnified
Liabilities") paid, incurred or suffered by, or asserted
against, the Indemnified Parties or any of them for, with
respect to, or as a direct or indirect result of any
Environmental Liabilities and Costs.
(c) All obligations provided for in this Section 10.2 shall not be
reduced or impaired by any investigation made by or on behalf
of the Agent or any of the Banks.
(d) The Borrower hereby agrees that, for the purposes of
effectively allocating the risk of loss placed on the Borrower
by this Section 10.2, the Agent and each of the Banks shall be
deemed to be acting as the agent or trustee on behalf of and
for the benefit of its officers, directors and agents.
(f) If, for any reason, the obligations of the Borrower pursuant
to this Section 10.2 shall be unenforceable, the Borrower
agrees to make the maximum contribution to the payment and
satisfaction of each obligation that is permissible under
Applicable Law, except to the extent that a court of competent
jurisdiction determines by a final non-appealable order such
obligations arose on account of the gross negligence or wilful
misconduct of any Indemnified Party.
SECTION 10.3 TAXATION ON PAYMENTS.
The Borrower hereby agrees:
(a) that any and all payments made by the Borrower under or
pursuant to any of the Loan Documents shall be made without
set-off or counterclaim and free and clear of, and without
deduction for, any and all present or future Taxes, levies,
imposts, deductions, charges, fees, duties or withholding or
other charges of any nature imposed by any taxing authority,
and all liabilities with respect thereto, imposed by any
jurisdiction as a consequence or result of any action taken by
the Borrower, including the making of any payment under or
pursuant to any of the Loan Documents, excluding, in the case
of the Agent, or any Bank, taxes imposed on its income or
capital taxes or receipts and franchise taxes. If the Borrower
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shall be required by Law to deduct any Taxes from or in
respect of any sum payable to the Agent or any Bank hereunder
or pursuant to any of the Loan Documents, the sum payable to
the Agent or such Bank, as the case may be, shall be increased
as may be necessary so that after making all required
deductions (including deductions applicable to additional sums
payable under this Section 10.3) the Agent or such Bank, as
the case may be, receives an amount equal to the sum it would
have received had no such deductions been made. If a Tax
credit is received by the Agent or such Bank for any Taxes
deducted or withheld by the Borrower in accordance with this
Section 10.3(a) and in respect of which additional amounts
have been paid by the Borrower under this Section 10.3(a),
then, to the extent such Tax credit is reasonably identified
by the Agent or such Bank as being related to the additional
amounts paid by the Borrower under this Section 10.3(a) and
has been received and utilized by the Agent or such Bank, the
Agent or such Bank shall pay to the Borrower an amount equal
to such Tax credit; provided that such amount shall not exceed
the additional amounts paid by the Borrower to the Agent or
such Bank under this Section 10.3(a); and
(b) to indemnify and hold harmless the Agent and each Bank for the
full amount of Taxes (excluding, in the case of the Agent, or
any Bank, taxes imposed on its income or capital taxes or
receipts and franchise taxes) and for any incremental Taxes
due to the Borrower's failure to remit to the Agent and the
Banks the required receipts or other required documentary
evidence of payment of such Taxes or due to the Borrower's
failure to pay any Taxes (excluding, in the case of the Agent,
or any Bank, taxes imposed on its income or capital taxes or
receipts and franchise taxes) when due to the appropriate
taxing authority (including any Taxes imposed by any taxing
authority on amounts payable under this Section 10.3) paid by
the Agent or any Bank and any liability (including penalties,
interest and expenses) arising therefrom or with respect
thereto, whether or not such Taxes were correctly or legally
assessed. The Agent or any Bank shall promptly notify the
Borrower of such payment and, if such payment was made
pursuant to an incorrect or illegal assessment, shall
reasonably co-operate with the Borrower, at the expense of the
Borrower, in any dispute of such assessment. The Agent or 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. Payment pursuant to this indemnification shall be made
within thirty (30) days from the date the Agent or such Bank
makes written demand therefor or if earlier, on the Maturity
Date.
SECTION 10.4 JUDGMENT CURRENCY.
If, for the purposes of obtaining judgment in any court, it is
necessary to convert any sum due, or owing hereunder or under any other Loan
Document to the Agent or any one or more of the Banks in any currency (the
"Original Currency") into another currency (the "Other Currency"), the parties
hereto agree, to the fullest extent that they may effectively do so, that the
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rate of exchange used shall be that at which in accordance with normal banking
procedures the Agent could purchase the Original Currency with the Other
Currency on the Business Day preceding that on which final judgment is granted.
The obligations of the Borrower in respect of any sum due in
the Original Currency from it to the Agent or any one or more of the Banks under
any of the Loan Documents shall, notwithstanding any judgement in any Other
Currency, be discharged only to the extent that on the Business Day following
receipt by the Agent of any sum adjudged to be so due or owing in such Other
Currency, the Agent may in accordance with normal banking procedures purchase
the Original Currency with such Other Currency. If the amount of the Original
Currency so purchased is less than the sum originally due or owing to the Agent
or any one or more of the Banks in the Original Currency, the Borrower shall, as
a separate obligation and notwithstanding any such judgement, indemnify the
Agent or such Bank against such Loss, and if the amount of the Original Currency
so purchased exceeds the sum originally due or owing to the Agent or such Bank
in the Original Currency, the Agent or such Bank shall remit such excess to the
Borrower.
SECTION 10.5 CLAIMS FOR INCREASED COSTS AND TAXES.
Prior to the occurrence of a Default in the event that any
Bank shall have notified the Borrower that it is entitled to claim compensation
pursuant to Section 10.1 or Section 10.3 hereof (each such Bank being an
"Affected Bank"), the Borrower may designate a replacement Canadian chartered
bank reasonably acceptable to the Agent (a "Replacement Bank") to assume the
Commitment and the obligations of any such Affected Bank hereunder, and to
purchase the outstanding Accommodations of such Affected Bank and such Affected
Bank's rights hereunder and with respect thereto, without recourse upon, or
warranty by, or expense to, such Affected Bank, for a purchase price equal to
the outstanding principal amount of the Accommodations of such Affected Bank
plus all interest accrued and unpaid thereon and all other amounts owing to such
Affected Bank hereunder and upon such assumption and purchase by the Replacement
Bank, such Replacement Bank shall be deemed to be a "Bank" for purposes of this
Agreement and such Affected Bank shall cease to be a "Bank" for purposes of this
Agreement and shall no longer have any obligations or rights hereunder (other
than any obligations or rights which according to this Agreement shall survive
the termination of the Commitment).
ARTICLE 11
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 personally delivered to an officer
or other responsible employee of the addressee or sent by
facsimile, charges prepaid, at or to the applicable addresses
or facsimile numbers, as the case may be, set forth in this
Section 11.1. Any communication which is personally delivered
as aforesaid shall be deemed to have been validly and
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effectively given on the date of such delivery if such date is
a Business Day and such delivery was made during normal
business hours of the recipient; otherwise, it shall be deemed
to have been validly and effectively given on the Business Day
next following such date of delivery. Any communication which
is transmitted by facsimile as aforesaid shall be deemed to
have been validly and effectively given on the date of
transmission if such date is a Business Day and such
transmission was made during normal business hours of the
recipient; otherwise, it shall be deemed to have been validly
and effectively given on the Business Day next following such
date of transmission. All notices and other communications
under this Agreement shall be given to the parties hereto at
the following addresses:
(i) If to the Borrower, to it at:
Paging Network of Canada Inc.
c/o Paging Network, Inc.
14911 Quorum Drive
Dallas, Texas 75240
Attn: Chief Financial Officer
Telecopy No.: (972) 801-8973
with a copy to:
Paging Network of Canada Inc.
3250 Bloor Street, West
Suite 700
Toronto, Ontario M8X 2X9
Attn: President
Telecopy No.: (416) 207-4321
Madison Telecommunications Holdings, Inc.
c/o Madison Venture Corporation
1970 Alberta Street
Vancouver, British Columbia
V5Y 3X4
Attn: Mr. Bruce W. Aunger
Telecopy No.: (604) 879-1483
John Schmidt, Esq.
Mayer, Brown & Platt
190 South La Salle Street
Chicago, Illinois 60603-3441
Telecopy No.: (312) 701-7711
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Blake Cassels & Graydon
Commerce Court West
2800 - 199 Bay Street
Toronto, Ontario
M5L 1A9
Attn: Mr. Rob Granatstein
Telecopy No.: (416) 863-2653
Blake Cassels & Graydon
1700-1030 West George Street
Vancouver, BC V6E2Y3
Attn: Anne M. Stewart, Q.C.
Telecopy No.: (604) 631-3309
(ii) If to the Agent, to it at:
Toronto Dominion Bank Tower, 9th Floor
Toronto Dominion Centre
Toronto, Ontario M5K 1A2
Attn: Manager, Agency
Telecopy No.: (416) 982-5535
(iii) If to the Banks, to them at the addresses set forth
beside their names on the signature pages hereof.
(b) Each Accommodation Notice and Repayment Notice shall be
irrevocable and binding on the Borrower. With respect to any
Accommodation Notice or Repayment Notice, the Agent may act
upon the basis of telephonic notice believed by it reasonably
and in good faith to be from the Borrower prior to receipt of
an Accommodation Notice or Repayment Notice. In the event of
conflict between the Agent's record of the applicable terms of
any Accommodation or repayment and such Accommodation Notice
or Repayment Notice, as the case may be, the Agent's record
shall prevail.
(c) Any party hereto may change the address to which notices shall
be directed under this Section 11.1 by giving five (5) days'
prior written notice of such change to the other parties.
SECTION 11.2 EXPENSES.
The Borrower will promptly pay, or reimburse:
(a) all reasonable and customary out-of-pocket expenses of the
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
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Advance is made), including, but not limited to, the
reasonable fees and disbursements of counsel for the Agent;
(b) all reasonable and customary out-of-pocket expenses of the
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 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 counsel for the Agent; and
(c) all reasonable and customary 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
Obligations, which in each case shall include reasonable fees
and out-of-pocket expenses of counsel for the Agent and the
Banks.
SECTION 11.3 WAIVERS.
The rights and remedies of the 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 Agent, the Majority Banks, or the Banks, or any of them, in exercising any
right, shall operate as a waiver of such right. The Agent and the Banks
expressly reserve the right to require strict compliance with the terms of this
Agreement and the other Loan Documents in connection with any future funding of
an Accommodation Notice. In the event the Banks decide to fund an Accommodation
Notice at a time when the Borrower is not in strict compliance with the terms of
this Agreement and the other Loan Documents, such decision by the Banks shall
not be deemed to constitute an undertaking by the Banks to fund any further
Accommodation Notice or preclude the Banks or the Agent from exercising any
rights available under the Loan Documents or at law or equity. Any waiver or
indulgence granted by the 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 RIGHT TO COMBINE AND SET-OFF.
Upon the occurrence and during the continuance of any Event of
Default, the Agent or any one or more of the Banks is hereby authorized at any
time and from time to time, to the fullest extent permitted by Applicable Law,
to combine, set-off and apply any and all deposits (general or special, time or
demand, provisional or final) at any time held and other indebtedness at any
time owing by the Agent or such Bank to or for the credit or the account of the
Borrower with or against any and all of the Obligations of the Borrower now or
hereafter existing under any of the Loan Documents, irrespective of whether or
not the Agent shall have
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made any demand under any of the Loan Documents and
although such Obligations may be unmatured. The Agent or such Bank agrees
promptly to notify the Borrower after any such combination or set-off and
application made by the Agent or such Bank provided that the failure to give
such notice shall not affect the validity of such combination or set-off and
application. The rights of the Agent and the Banks under this Section are in
addition to other rights and remedies (including, without limitation, other
rights of combination and set-off) which the Agent or the Banks may have.
SECTION 11.5 ASSIGNMENT.
(a) The Borrower may not assign or transfer any of its rights or
obligations hereunder or under any other Loan Document without
the prior written consent of each Bank and the Agent.
(b) Any Bank may, without the consent of the Borrower grant
participations in all or any part of the Commitment to one or
more Persons (each a "Participant"). Any Bank may, with prior
written notice to the Agent, and, prior to the occurrence and
continuance of a Default, with the consent of the Borrower
(which consent is not to be unreasonably withheld or delayed),
assign all or any part of its respective interest in the
Commitment to one or more Persons; provided that prior to the
occurrence and continuance of a Default (i) such Person is a
resident of Canada for the purpose of the Income Tax Act
(Canada) or (ii) such assignment will not cause the Borrower
to incur any increased costs pursuant to Section 10.3 hereof
(each an "Assignee").
(c) The Agent or any Bank may deliver a copy of any financial
statement or any other information relating to the prospects,
business, Assets or condition (financial or otherwise) of the
Borrower or any of its Subsidiaries which may be furnished to
it under this Agreement or otherwise to any Participant or
Assignee or any prospective Participant or Assignee; provided
that each such delivery is made on the understanding that the
information contained therein is confidential in nature. For
greater certainty, the Agent shall have no obligation to
communicate or have any involvement with any Participant.
(d) Without limitation of its obligations hereunder, the Borrower
shall, at its sole cost and expense, give such certificates,
acknowledgements and other further assurances in respect of
this Agreement and the Commitment as any Bank may reasonably
require in connection with any participation or assignment
pursuant to this Section.
(e) Except in the case of an Assignee which has delivered an
Assignment and Assumption Agreement substantially in the form
of Exhibit G hereto, prior to the occurrence of a Default or
an Event of Default, a Bank granting a participation or making
an assignment shall act on behalf of all of its Participants
and Assignees in all dealings with the Borrower in respect
hereof.
<PAGE> 80
- 76 -
(f) Any Bank shall deliver to the Agent an Assignment and
Assumption Agreement substantially in the form of Exhibit G
hereto by which any Assignee of such Bank assumes the
obligations and agrees to be bound by all the terms and
conditions of this Agreement, all as if such Assignee had been
an original party hereto. Any such assignment and assumption
shall become effective upon the consent of the Borrower if and
to the extent required pursuant to Section 11.5(b) and the
receipt by the Agent of an Assignment and Assumption Agreement
executed by the assigning Bank and the Assignee. In no event
shall such assignment and assumption become effective until
such date as specified in the Assignment and Assumption
Agreement (the "Effective Date") which shall be no earlier
than five Business Days following receipt of an Assignment and
Assumption Agreement by, and the payment of an administrative
fee of $5,000 to, the Agent by the assigning Bank. On the
Effective Date, the assigning Bank and the Borrower shall be
mutually released from their respective obligations to each
other hereunder to the extent of such assignment and
assumption and from thenceforth have no liability or
obligations to each other to such extent, except in respect of
matters which shall have arisen prior to such assignment and
assumption.
SECTION 11.6 ACCOUNTING PRINCIPLES.
All accounting terms used herein without definition shall be
used as defined under GAAP. GAAP shall be applied on a basis consistent with
prior fiscal years of the Borrower.
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 all Loan Documents shall be governed by and
interpreted in accordance with the Applicable Laws of the Province of Ontario
and the Applicable Laws of Canada applicable therein which apply to contracts
made and to be performed entirely in Ontario; provided that any Loan Document
stated to be governed by and interpreted in accordance with the laws of any
other jurisdiction shall be governed by and interpreted in accordance with the
laws of such jurisdiction. The parties hereby irrevocably attorn and submit to
the non-exclusive jurisdiction of the courts of Ontario with respect to any
matter arising under or related to this Agreement or any Loan Document; provided
that, with respect to any other Loan Document stated to be governed by the laws
of any other jurisdiction, the parties agree to attorn and submit to the
non-exclusive jurisdiction of the courts of such 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
judgement or in any other manner provided by Applicable Law.
<PAGE> 81
- 77 -
SECTION 11.9 SEVERABILITY.
If any provision of this Agreement or any Loan Document is, or
becomes, illegal, invalid or unenforceable, such provision shall be severed from
this Agreement or such Loan Document and be ineffective to the extent of such
illegality, invalidity or unenforceability. The remaining provisions hereof or
thereof shall be unaffected by such provision and shall continue to be valid and
enforceable.
SECTION 11.10 INTEREST.
(a) For purposes of the Interest Act (Canada): (i) whenever any
interest or fee under this Agreement is calculated using a
rate based on a year of 360 or 365 days, such rate determined
pursuant to such calculation, when expressed as an annual
rate, is equivalent to (x) the applicable rate based on a year
of 360 or 365 days, (y) multiplied by the actual number of
days in the calendar year in which the period for which such
interest or fee is calculated ends, and (z) divided by 360 or
365; (ii) the principle of deemed reinvestment of interest
shall not apply to any interest calculation under this
Agreement; and (iii) the rates of interest stipulated in this
Agreement are intended to be nominal rates and not effective
rates or yields.
(b) Notwithstanding any provision to the contrary contained in
this Agreement, in no event shall the aggregate "interest" (as
defined in Section 347 of the Criminal Code, Revised Statutes
of Canada, 1985, c.46 as the same may be amended, replaced or
re-enacted from time to time) payable under this Agreement
exceed the maximum amount of interest on the "Credit advanced"
(as defined in that section) under this Agreement lawfully
permitted under that section and, if any payment, collection
or demand pursuant to this Agreement in respect of "interest"
(as defined in that section) is determined to be contrary to
the provisions of that section, such payment, collection or
demand shall be deemed to have been made by mutual mistake of
the Borrower and the Agent and the Banks and the amount of
such payment or collection shall be refunded to the Borrower.
For purposes of this Agreement, the effective annual rate of
interest shall be determined in accordance with generally
accepted actuarial practices and principles over the term of
the Credit Facilities are outstanding on the basis of annual
compounding of the lawfully permitted rate of interest and, in
the event of dispute, a certificate of a Fellow of the
Canadian Institute of Actuaries appointed by the Agent will be
conclusive for the purposes of such determination absent
manifest error.
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.
<PAGE> 82
- 78 -
SECTION 11.12 AMENDMENT AND WAIVER.
Neither this Agreement nor any other Loan Document nor any
term hereof or thereof 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 Agent and, in the case of an amendment, by the Borrower, except that in
the event of (a) any increase in the amount of the Commitment, (b) any delay or
extension in the terms of repayment of the Accommodations or any mandatory
reductions in the Commitment provided in Section 2.6 or Section 2.8 hereof or
amend the provisions of this Agreement dealing with the types of Accommodations
available hereunder, (c) any reduction in principal, interest or fees due
hereunder (without a corresponding payment by the Borrower in the amount of such
reduction) or postponement or subordination of the payment thereof without a
corresponding payment by the Borrower, (d) any release of any portion of the
Collateral for the Accommodations, 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 or amendment of any Security Document except in
connection with a merger, sale or other disposition otherwise permitted
hereunder (in which case, such release or amendment shall require no further
approval by the Banks), or (g) any amendment of this Section 11.12, or the
definitions of Majority Banks or Permitted Collateral, 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 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 Agent solely to any of the Banks may be made only by an
instrument in writing signed by the Agent and by each of the Banks.
SECTION 11.13 NON-MERGER.
Except as otherwise expressly provided in this Agreement, the
covenants, representations and warranties of the parties contained in this
Agreement and the other Loan Documents shall not merge on and shall survive the
Restatement Date and the making of any Accommodation, and notwithstanding such
closing or Accommodation, or any investigation made by or on behalf of any
party, shall continue in full force and effect. Neither the Restatement Date nor
the making of any Accommodation shall prejudice any right of one party against
any other party in respect of anything done or omitted hereunder or under any of
the other Loan Documents or in respect of any right to damages or other
remedies.
SECTION 11.14 OTHER RELATIONSHIPS.
No relationship created hereunder or under any other Loan
Document shall in any way affect the ability of the 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.
<PAGE> 83
- 79 -
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 Agent and each of the Banks
notwithstanding any investigation heretofore or hereafter made by them, and (ii)
shall survive the execution and delivery of this Agreement and shall continue in
full force and effect so long as any Obligation is outstanding and unpaid. Any
right to indemnification hereunder, including, without limitation, rights
pursuant to Section 2.13, Section 10.1, Section 10.2, Section 10.3 and Section
11.2 hereof, shall survive the termination of this Agreement and the payment and
performance of all Obligations for a period of three (3) years thereafter.
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 Agent and each of the Banks hereunder
are several, not joint.
SECTION 11.19 CONFIDENTIALITY.
The Banks and the Agent shall hold all non-public, proprietary
or confidential information (which has been identified as such by the Borrower)
obtained pursuant to the requirements of this Agreement in accordance with their
customary procedures for handling confidential information of this nature and in
accordance with safe and sound banking practices; provided, however, the Banks
and the Agent may make disclosure of any such information to such of their
examiners, Affiliates, outside auditors, counsel, consultants, appraisers and
other professional advisors as may be reasonably necessary in connection with
this Agreement or as reasonably required by any proposed participant or assignee
or as required or requested by any Governmental Entity or representative thereof
or in connection with the enforcement hereof or of any other Loan Document or
related document or pursuant to legal process or with respect to any litigation
between or among the Borrower and any of the Banks or the Agent; provided,
however, that, as a condition to receipt of any such information, each such
Affiliate, auditor, counsel, consultant, appraiser, professional advisor,
proposed participant or assignee shall agree in writing to treat all such
information as confidential; and provided, further, that prior to any such
disclosure to any unrelated entity outside the ordinary course of business or
pursuant to
<PAGE> 84
- 80 -
legal process, the disclosing Bank or the Agent shall give notice of such
disclosure to the Borrower and co-operate with the Borrower in any efforts to
limit or restrict such disclosure. In no event shall any Bank or the Agent be
obligated or required to return any materials furnished to it by the Borrower.
The foregoing provisions shall not apply to a Bank or the Agent with respect to
information that (i) is or becomes generally available to the public (other than
through such Bank or the Agent), (ii) is already in the possession of such Bank
or the Agent on a nonconfidential basis, or (iii) comes into the possession of
such Bank or the Agent in a manner not known to such Bank or the Agent to
involve a breach of a duty of confidentiality owing to the Borrower.
SECTION 11.20 TIME OF THE ESSENCE.
Time shall be of the essence of this Agreement.
SECTION 11.21 THIRD PARTY BENEFICIARIES.
Each party hereto intends that this Agreement shall not
benefit or create any right or cause of action in or on behalf of any Person,
other than the parties hereto and the Persons contemplated in Section 10.2
hereof, and no Person, other than the parties hereto and the Persons
contemplated in Section 10.2 hereof, shall be entitled to rely on the provisions
hereof in any action, suit, proceeding, hearing or other forum.
SECTION 11.22 ENUREMENT.
This Agreement shall enure to the benefit of and be binding
upon the parties hereto and any Person becoming a party to this Agreement
through the procedure set out in Section 11.5 hereof. This Agreement shall be
binding upon any assigns and enure to the benefit of any permitted assigns.
<PAGE> 85
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement or caused it to be executed under seal by their duly authorized
officers, all as of the day and year first above written.
BORROWER: PAGING NETWORK OF CANADA INC.,
a Canada Corporation
By: GARRY R. FITZGERALD
------------------------------------
Its: President and
Chief Executive Officer
-------------------------
AGENT: THE TORONTO-DOMINION BANK
By: MICHAEL A. FREEMAN
------------------------------------
Its: Manager-Agency,
Syndicated Loans
-------------------------
BANKS THE TORONTO-DOMINION BANK
ADDRESS:
9th Floor By: JOHN DAVID
Toronto Dominion Bank Tower ------------------------------------
Toronto Dominion Centre Its: Manager
Toronto, Ontario M5K 1A2 -------------------------
ADDRESS:
181 Bay Street By: KEN KLASSEN
8th Floor ------------------------------------
Toronto, Ontario Its: Assistant Vice President
M5J 2S8 -------------------------
CANADIAN IMPERIAL BANK OF COMMERCE
By: ANDREW WALLER
------------------------------------
Executive Director
By: MAURO SPAGNOLO
-----------------------------------
Director
ADDRESS: NATIONAL BANK OF CANADA
150 York Street By: WILLIAM CROSSLAND
Suite 200 ------------------------------------
Toronto, Ontario Its: Senior Manager
M5H 3S5 -------------------------
By: WILLIAM WASSON
------------------------------------
Its: Manager
-------------------------
<PAGE> 86
EXHIBIT A
COMMITMENT RATIOS
<TABLE>
<S> <C>
The Toronto-Dominion Bank 44.9541284%
Canadian Imperial Bank of Commerce 32.1100917%
National Bank of Canada 22.9357799%
</TABLE>
<PAGE> 87
EXHIBIT B
ACCOMMODATION NOTICE
Paging Network of Canada Inc., a Canada corporation (the "Borrower"),
acting by and through _______________________, the duly elected and qualified
___________________________ of the Borrower, in connection with that certain
Amended and Restated Loan Agreement (as in effect on the date hereof, the "Loan
Agreement"), dated as of August 5, 1999, among the various financial
institutions which are party thereto (the "Banks"), The Toronto-Dominion Bank,
as Agent (the "Agent"), and the Borrower, hereby certifies to the Agent and the
Banks that:
1. The Borrower hereby requests an Accommodation as follows:
(a) Date
--------------------
(b) Aggregate Amount of Accommodation: $
--------------------
(c) Type and Amount of Accommodation:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
(i) COLLATERALIZED PRIME RATE AMOUNT CONVERTED FROM
ADVANCE (IF APPLICABLE)
- --------------------------------------------------------------------------------
<S> <C> <C>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
(ii) UNCOLLATERALIZED PRIME AMOUNT CONVERTED FROM
RATE ADVANCE (IF APPLICABLE)
- --------------------------------------------------------------------------------
<S> <C> <C>
$
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
(iii) COLLATERALIZED BANKERS' ACCEPTANCES
- --------------------------------------------------------------------------------
CONVERTED FROM
FACE AMOUNT TERM IN MONTHS ROLLOVER AMOUNT (IF APPLICABLE)
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Cdn. $ Cdn. $
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
</TABLE>
<PAGE> 88
-2-
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
(iv) UNCOLLATERALIZED BANKERS' ACCEPTANCES
- --------------------------------------------------------------------------------
CONVERTED FROM
FACE AMOUNT TERM IN MONTHS ROLLOVER AMOUNT (IF APPLICABLE)
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Cdn. $ Cdn. $
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
</TABLE>
2. All of the representations and warranties of the Borrower made under
the Loan Agreement (including, without limitation, all representations and
warranties with respect to the Borrower's Subsidiaries) and the other Loan
Documents, which, pursuant to Section 4.2 of the Loan Agreement or otherwise,
are made on the date hereof, are as of the date hereof, and will be as of the
date of such Advance, true and correct in all material respects both before and
after giving effect to the application of the proceeds of the Advance in
connection with which this Accommodation Notice is given, and after giving
effect to any updates to information provided to the Banks in accordance with
the terms of the representations and warranties.
3. There does not exist, as of this date, and there will not exist after
giving effect to the Advance requested in this Accommodation Notice, any Default
under the Loan Agreement.
4. All Necessary Authorizations have been obtained or made, are in full
force and effect and are not subject to any pending or threatened reversal or
cancellation.
5. There has occurred no event having, or which could be reasonably
expected to have, a Materially Adverse Effect since December 31, 1998.
6. All other conditions precedent to the Advance requested hereby set
forth in Section 3.2 of the Loan Agreement have been satisfied.
Capitalized terms used in this Accommodation Notice and not otherwise
defined are used as defined in the Loan Agreement.
IN WITNESS WHEREOF, the Borrower, acting through an Authorized
Signatory, has signed this Accommodation Notice, as of _____ the day of
_______________, ____.
PAGING NETWORK OF CANADA INC., a
Canada corporation
By:
--------------------------------------
Its:
-------------------------------------
Schedule 1 - Wiring Instructions
Schedule 2 - Compliance Calculations
<PAGE> 89
EXHIBIT C
FORM OF REPAYMENT NOTICE
[DATE]
TO: THE TORONTO-DOMINION BANK, AS BOOKRUNNER, ARRANGER AND ADMINISTRATION AGENT
(1) This Repayment Notice is delivered to you pursuant to Section o of that
certain amended and restated loan agreement made as of August 5, 1999 among the
undersigned as Borrower, the Banks named therein, and you, as amended or amended
and restated from time to time (the "Loan Agreement"). All defined terms set
forth in this Repayment Notice shall have the respective meanings set forth in
the Loan Agreement.
(2) We hereby give notice of a repayment as follows:
(a) Date of Repayment:
------------------------------------------------------
(b) Accommodation Type:
-----------------------------------------------------
(c) Principal Amount:
-------------------------------------------------------
(d) Manner of Repayment (if applicable):
------------------------------------
(3) We hereby give notice of a cancellation or permanent reduction as
follows:
(a) Date of Reduction:
------------------------------------------------------
(b) Principal Amount:
-------------------------------------------------------
DATED this _________ day of ____________________, 19[YEAR].
PAGING NETWORK OF CANADA INC.
By:
--------------------------------------
Its:
-------------------------------------
<PAGE> 90
EXHIBIT D
FORM OF BORROWER'S LOAN CERTIFICATE
The undersigned, who is the __________ of Paging Network of Canada Inc.,
a Canada corporation (the "Borrower"), does hereby certify on behalf of the
Borrower that he is the duly elected and qualified of the Borrower and an
Authorized Signatory of the Borrower.
In connection with the making of certain Accommodations to the Borrower
by the Banks under that certain Amended and Restated Loan Agreement of even date
herewith (the "Loan Agreement") by and among the Borrower, The Toronto-Dominion
Bank, as bookrunner, arranger and administration agent (the "Agent), and The
Toronto-Dominion Bank, Canadian Imperial Bank of Commerce, National Bank of
Canada and such other financial institutions as become "Banks" thereunder
(collectively, the "Banks"), the undersigned hereby further certifies to the
Agent and the Banks on behalf of the Borrower that:
1. Attached hereto as Exhibit A is a true, complete, and correct copy of
the Certificate and Articles of Incorporation of the Borrower, certified by
appropriate government officials of the jurisdiction of incorporation of the
Borrower, as in full force and effect on the date hereof.
2. Attached hereto as Exhibit B is a true, complete and correct copy of
the By-Laws of the Borrower, together with all amendments thereto, as in full
force and effect on the date hereof.
3. Attached hereto as Exhibit C is a true, complete and correct copy of
the resolutions of the Board of Directors of the Borrower authorizing the
execution of the Loan Agreement, each other Loan Document to which the Borrower
is a party, and the creation and assumption, by the Borrower, of the
obligations.
4. Attached hereto as Exhibit D are true, complete, and correct copies
of certificates of good standing for the Borrower from appropriate government
officials of the jurisdiction of incorporation of the Borrower and for each
other jurisdiction in which the Borrower carries on business. The Borrower has,
from the dates of such certificates to the date hereof, remained in good
standing under the laws of such jurisdiction.
5. Attached hereto as Exhibit E are true, complete and correct copies of
any shareholders' agreements or voting trust agreements in effect with respect
to the Capital Stock of the Borrower.
6. The following persons are the Authorized Signatories of the Borrower,
each of such persons having been duly elected, and set forth opposite their
respective names below are their respective genuine signatures:
<TABLE>
<CAPTION>
NAME SIGNATURE DATE
<S> <C> <C>
- ----------------------- --------------------------------- ----------------
- ----------------------- --------------------------------- ----------------
- ----------------------- --------------------------------- ----------------
- ----------------------- --------------------------------- ----------------
</TABLE>
<PAGE> 91
-2-
Capitalized terms used herein and not otherwise defined are used as
defined in the Loan Agreement.
IN WITNESS WHEREOF, I have signed this Certificate on the _____ day of
________________, ____.
PAGING NETWORK OF CANADA INC., a
Canada corporation
By:
--------------------------------------
Name:
Title:
EXHIBITS:
Exhibit A - Certificate and Articles of Incorporation
Exhibit B - By-Laws
Exhibit C - Authorizing Resolutions
Exhibit D - Certificates of Good Standing
Exhibit E - Shareholder's Agreements or Voting Trust Agreements
<PAGE> 92
EXHIBIT E
FORM OF SUBSIDIARY LOAN CERTIFICATE
The undersigned, who is the _____________________________ of
____________________, a [CORPORATION] [PARTNERSHIP] (the "Subsidiary"), does
hereby certify on behalf of the Subsidiary that he is the duly elected and
qualified ____________________________ of [ ________________________, THE
____________________________ OF] the Subsidiary and an Authorized Signatory.
In connection with the making of certain Accommodations to Paging
Network of Canada Inc., a Canada corporation (the "Borrower") by the Banks under
that certain Amended and Restated Loan Agreement of even date herewith (the
"Loan Agreement") by and among the Borrower, The Toronto-Dominion Bank, as
bookrunner, arranger and administration agent (the "Agent), and The
Toronto-Dominion Bank, Canadian Imperial Bank of Commerce, National Bank of
Canada and such other financial institutions as become "Banks" thereunder
(collectively, the "Banks"), the undersigned hereby further certifies to the
Agent and the Banks on behalf of the Subsidiary that:
1. Attached hereto as Exhibit A is a true, complete, and correct copy of
the Certificate and Articles of Incorporation of the Subsidiary,
certified by appropriate government officials of the jurisdiction of
incorporation of the Subsidiary, as in full force and effect on the date
hereof.
2. Attached hereto as Exhibit B is a true, complete and correct copy of the
By-Laws of the Subsidiary, together with all amendments thereto, as in
full force and effect on the date hereof.
3. Attached hereto as Exhibit C is a true, complete and correct copy of the
resolutions of the Board of Directors of the Subsidiary authorizing the
execution of each Loan Document to which the Subsidiary is a party.
4. Attached hereto as Exhibit D are true, complete, and correct copies of
certificates of good standing for the Subsidiary from appropriate
government officials of the jurisdiction of incorporation of the
Subsidiary and for each other jurisdiction in which the Subsidiary
carries on business. The Subsidiary has, from the dates of such
certificates to the date hereof, remained in good standing under the
laws of such jurisdiction.
5. Attached hereto as Exhibit E are true, complete and correct copies of
any shareholders' agreements or voting trust agreements in effect with
respect to the Capital Stock of the Subsidiary.
6. The following persons are the Authorized Signatories of the Subsidiary,
each of such persons having been duly elected, and set forth opposite
their respective names below are their respective genuine signatures:
<TABLE>
<CAPTION>
NAME SIGNATURE DATE
<S> <C> <C>
- ----------------------- --------------------------------- ----------------
- ----------------------- --------------------------------- ----------------
- ----------------------- --------------------------------- ----------------
- ----------------------- --------------------------------- ----------------
</TABLE>
<PAGE> 93
-2-
Capitalized terms used herein and not otherwise defined are used as
defined in the Loan Agreement.
IN WITNESS WHEREOF, I have signed this Certificate on the _____ day of
________________, 1999.
[___________________ A ____________________
PARTNERSHIP, THROUGH ITS GENERAL PARTNER:],
____________________ a ____________________
corporation
By:
--------------------------------------
Its:
EXHIBITS:
Exhibit A - Certificate and Articles of Incorporation/Partnership
Exhibit B - By-Laws/Partnership Agreement
Exhibit C - Authorizing Resolutions
Exhibit D - Certificates of Good Standing
Exhibit E - Shareholder's Agreements or Voting Trust Agreements
<PAGE> 94
EXHIBIT F
FORM OF PERFORMANCE CERTIFICATE
The undersigned, who is the ______________________ of Paging Network of Canada
Inc., a Canada corporation (the "Borrower"), does hereby certify on behalf of
the Borrower that he is the duly elected and qualified ________________________
of the Borrower and an Authorized Signatory of the Borrower.
1. [WITH RESPECT TO QUARTERLY STATEMENTS: The accompanying unaudited
financial statements of the Borrower on a consolidated and consolidating
(unconsolidated) basis with its Subsidiaries as of [DATE] and for the quarterly
accounting period ended [DATE] are complete and correct and present fairly, in
accordance with GAAP, the financial condition of the Borrower on a consolidated
and consolidating (unconsolidated) basis with its subsidiaries, and the results
of operations for such quarter, and for the elapsed portion of the fiscal year
ended with the last day of such quarter, in each case on the basis presented and
subject only to normal year-end adjustments and the absence of footnotes.]
[WITH RESPECT TO FISCAL YEAR STATEMENTS: The accompanying audited
financial statements of the Borrower on a consolidated and consolidating
(unconsolidated) basis with its Subsidiaries as of [DATE] and for the fiscal
year ended [DATE], and for the previous fiscal year, are complete and correct
and present fairly, in accordance with GAAP, the financial condition of the
Borrower on a consolidated and consolidating (unconsolidated) basis with its
Subsidiaries as of the end of such period, and the results of operations for
such fiscal year, and for the previous fiscal year.]
2. Attached hereto are arithmetical calculations required to establish
(i) any adjustment to the Applicable Margins, as provided for in Section 2.6(d)
of the Loan Agreement, and (ii) whether or not the Borrower was in compliance
with the requirements of the following Sections of the Loan Agreement:
(a) Section 7.8 - Leverage Ratio
(b) Section 7.9 - Annualized Operating Cash Flow to Interest Expense
(c) Section 7.10 - Total Debt Per Subscriber
(d) Section 7.11 - Capital Expenditures
(e) Section 7.12 - Minimum Revenue Test
(f) Section 7.13 - Minimum Units in Service (including a breakdown by
each category set forth in the definition of Units in Service)
(g) Section 7.14 - Minimum Operating Cash Flow
3. Based on an examination sufficient to enable me to make an informed
statement, no Default exists at the end of such quarter or fiscal year, as
applicable.
4. All capitalized terms not otherwise defined herein are used herein as
defined in the Loan Agreement.
- ----------------------------- --------------------------------------------
Date: [OFFICER]
[TITLE]
<PAGE> 95
EXHIBIT G
FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT
This Assignment and Assumption Agreement is made and entered into as of
__________________________, _____ by and between _______________________________
(the "Assignor"), and __________________________________ (the "Assignee").
RECITALS
A. Paging Network of Canada Inc., a Canada corporation (the "Borrower"),
the Assignor (together with any other Person which becomes a `Bank' under the
Loan Agreement, as such term is hereinafter defined, the "Banks") and The
Toronto-Dominion Bank, as bookrunner, arranger and administration agent (the
"Agent"), are parties to a certain Amended and Restated Loan Agreement dated as
of August 5, 1999 (the "Loan Agreement"). Pursuant to the Loan Agreement, the
Banks have agreed to make Accommodations to the Borrower pro rata in an
aggregate original principal amount of the Commitment, as such amount may be
reduced from time to time pursuant to the Loan Agreement. The Assignor's pro
rata portion of the Commitment is the amount specified in Item 1 of Schedule 1
hereto (the "Assignor's Commitment"). The aggregate principal amount of the
outstanding Accommodations made by the Assignor to the Borrower under the
Commitment pursuant to the Assignor's Commitment is specified in Item 2 of
Schedule 1 hereto (the "Assignor's Accommodations"). All capitalized terms not
otherwise defined herein are used herein as defined in the Loan Agreement.
B. The Assignor wishes to sell and assign to the Assignee, and the
Assignee wishes to purchase and assume from the Assignor, (i) the portion of the
Assignor's Commitment specified in Item 3 of Schedule 1 hereto ("Assigned
Commitment"), and (ii) the portion of the Assignor's Accommodations under the
Commitment specified in Item 4 of Schedule 1 hereto (the "Assigned
Accommodations").
The parties agree as follows:
1. Assignment. Subject to the terms and conditions set forth herein, the
Assignor hereby sells and assigns to the Assignee, and the Assignee purchases
and assumes from the Assignor, without recourse and except as provided in
Section 3(a) hereof, without representation or warranty to the Assignor, on the
date set forth above (the "Assignment Date") (a) all right, title, and interest
of the Assignor, to the Assigned Accommodations and (b) all obligations of the
Assignor under the Loan Agreement with respect to the Assigned Commitment. As
full consideration for the sale of the Assigned Accommodations and the Assigned
Commitment, the Assignee shall pay to the Assignor on the Assignment Date such
amount as shall have been agreed to between the Assignor and the Assignee (the
"Purchase Price").
2. Notice. Prior written notice of the assignment made herein has been
given to the Agent.
3. Representations and Warranties. Each of the Assignor and the Assignee
represents and warrants to the other, to the Agent and to the Borrower (a) that
(i) it has full power and legal right to execute and deliver this Agreement and
to perform the provisions of this Agreement; (ii) the execution, delivery, and
performance of this Agreement have been authorized by all
<PAGE> 96
-2-
necessary action, corporate or otherwise, on its part and do not violate any
provisions of its charter or by-laws or any contractual obligations or
requirement of law binding on it; and (iii) this Agreement constitutes its
legal, valid and binding obligation, enforceable against it in accordance with
its terms subject, as to enforcement of remedies, to the following
qualifications: (A) 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 (B) 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
Assignee or the Assignor, as the case may be), and (b) that its purchase of the
Assigned Accommodations and the Assigned Commitment does not constitute a
"prohibited transaction" as defined in Section 4.1(m) of the Loan Agreement.
4. Condition Precedent. The obligations of the Assignor and the Assignee
hereunder shall be subject to the fulfilment of the condition that (a) the
Assignor shall have received payment in full of the Purchase Price and (b) the
Assignor and the Assignee shall have complied with other applicable provisions
of Section 11.5 of the Loan Agreement.
5. Notice of Assignment. The Assignor hereby gives notice of the
assignment and assumption of the Assigned Accommodations and the Assigned
Commitment to the Agent and hereby instructs the Borrower to make payments with
respect to the Assigned Accommodations and the Assigned Commitment directly to
the Agent for the benefit of the Assignee as provided in the Loan Agreement;
provided, however, that the Borrower and the Agent shall be entitled to continue
to deal solely and directly with the Assignor in connection with the interests
so assigned until the Agent shall have received a copy of this Assignment and
Assumption Agreement duly executed by the Assignor, the Assignee, the Agent,
and, if applicable, the Borrower, and shall have received the assignment fee
described in Section 11.5 of the Loan Agreement. From and after the Assignment
Date, the Assignee shall be deemed to be a party to the Loan Agreement and, to
the extent that rights and obligations thereunder shall have been assigned to
Assignee as provided herein, shall have the rights and obligations of a Bank
under the Loan Agreement. After the Assignment Date, and with respect to all
such amounts accrued from the Assignment Date, (a) all interest, principal,
fees, and other amounts that would otherwise be payable to the Assignor in
respect of the Assigned Accommodations and the Assigned Commitment shall be paid
to the Assignee, (b) if the Assignor receives any payment on account of the
Assigned Accommodations or the Assigned Commitment that is payable to the
Assignee, the Assignor shall promptly deliver such payment to the Assignee, and
(c) if the Assignee receives any payment in respect of Obligations of the
Borrower accrued prior to the Assignment Date, then Assignee shall pay over the
same to Assignor.
6. Independent Investigation. The Assignee acknowledges that it is
purchasing the Assigned Accommodations and the Assigned Commitment from the
Assignor without recourse and, except as provided in Section 3(a) hereof,
without representation or warranty. The Assignee further acknowledges that it
has made its own independent investigation and credit evaluation of the Borrower
in connection with its purchase of the Assigned Accommodations and the Assigned
Commitment and has received copies of all Loan Documents that it has requested.
Except for the representations or warranties set forth in Section 3(a), the
Assignee acknowledges that it is not relying on any representation or warranty
of the Assignor, expressed or implied, including without limitation, any
representation or warranty relating to the legality, validity, genuineness,
<PAGE> 97
-3-
enforceability, collectibility, interest rate, repayment schedule, or accrual
status of the Assigned Accommodations or the Assigned Commitment, the legality,
validity, genuineness, or enforceability of the Loan Agreement, or any other
Loan Document referred to in or delivered pursuant to the Loan Agreement, or the
financial condition or creditworthiness of the Borrower. The Assignor has not
acted and will not be acting as either the representative, agent or trustee of
the Assignee with respect to matters arising out of or relating to the Loan
Agreement or this Agreement. From and after the Assignment Date, the Assignor
shall have no rights or obligations with respect to the Assigned Accommodations
or the Assigned Commitment.
7. Effective Date. This Agreement will be effective on the date that is
the later of:
(i) the date hereof; and
(ii) five Business Days following receipt of an executed copy of this
Agreement by, and the payment of an administrative fee of $5,000
to, the Agent by the Assignor.
8. Method of Payment. All payments to be made by the Assignor or the
Assignee party hereunder shall be in funds available at the place of payment on
the same day and shall be made by wire transfer to the account designated by the
party to receive payment.
9. Integration. This Agreement shall supersede any prior agreement or
understanding between the parties (other than the Loan Agreement or other Loan
Documents) as to the subject matter hereof.
10. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and shall be
binding upon the parties, their successors and assigns.
11. Governing Law. This Agreement shall be governed by, and construed in
accordance with, the Applicable Laws of the Province of Ontario and the
Applicable Laws of Canada applicable therein which apply to contracts to be
performed entirely in Ontario.
IN WITNESS WHEREOF, the Assignor and Assignee have executed, sealed and
delivered this Agreement as of the date first above written.
[ASSIGNOR]
By:
--------------------------------------
Title:
<PAGE> 98
-4-
[ASSIGNEE]
By:
--------------------------------------
Title:
The undersigned hereby acknowledge the assignment made herein.
THE TORONTO-DOMINION BANK,
as Agent
By:
--------------------------------
Title
PAGING NETWORK OF CANADA INC.,
a Canada corporation
By:
--------------------------------
Title
<PAGE> 99
SCHEDULE 1
TO
ASSIGNMENT AND ASSUMPTION AGREEMENT
RELATING TO
AMENDED AND RESTATED LOAN AGREEMENT AMONG
PAGING NETWORK OF CANADA INC.,
THE TORONTO-DOMINION BANK AND SUCH OTHER
FINANCIAL INSTITUTIONS AS BECOME "BANKS" THEREUNDER,
AND THE TORONTO-DOMINION BANK, AS AGENT
DATED AS OF AUGUST 5, 1999
Item 1. Assignor's Commitment: $
------------
Item 2. Assignor's Accommodations $
------------
Item 3. Amount of Assigned Commitment $
------------
Item 4. Amount of Assigned Accommodations $
------------
Item 5. Applicable Lending Office of Assignee
and Address for Notices under the Loan Agreement
----------------------------
----------------------------
----------------------------
----------------------------
<PAGE> 100
NOTES TO SCHEDULE 1
1. Insert the dollar amount of Assignor's Commitment under the
Commitment prior to assignment.
2. Insert the total amount of outstanding Accommodations of Assignor.
3. Insert the dollar amount of the Assignor's Commitment under the
Commitment, including the outstanding Accommodations, being assigned.
4. Insert the total amount of the outstanding Accommodations of Assignor
being assigned to Assignee.
5. Insert the name and address of the applicable lending office of the
Assignee.
<PAGE> 101
SCHEDULE 1
LICENSES
(To Be Provided by the Borrower)
<PAGE> 102
SCHEDULE 2
SECURITY DOCUMENTS
1. Debenture of the Borrower
2. Debenture Pledge Agreement of the Borrower
3. Collateral Hypothec of the Borrower
4. General Assignment of Book Debts of the Borrower
5. Guarantee of Paging Network Canadian Holdings, Inc. (re: securities pledge)
6. Securities Pledge Agreement by Paging Network Canadian Holdings, Inc.
7. Guaranty of Paging Network Canadian Holdings, Inc. (re: deposit agreement)
8. Deposit Agreement by Paging Network Canadian Holdings, Inc.
9. Guarantee of Paging Network Canadian Holdings, Inc. (with assignment of
intercorporate debt and related liens)
10. Specific Assignment of Receivables by the Borrower
11. Security from the Borrower under Section 427 of the Bank Act
<PAGE> 103
SCHEDULE 3
SUBSIDIARIES
None
<PAGE> 104
SCHEDULE 4
AGREEMENTS WITH AFFILIATES
Madison Telecommunications Holdings Inc. Unanimous Shareholders' Agreement dated
as of October 28, 1994, among Madison Venture Corporation, Paging Network, Inc.
and Madison Telecommunications Holdings Inc.
Amendment No. 1 to Unanimous Shareholders' Agreement dated as of October 26,
1995, among Madison Venture Corporation, Paging Network. Canadian Holdings,
Inc., Madison Telecommunications Holdings Inc. and Paging Network, Inc.
Network Co-ordination and Equipment Supply Agreement dated October 28, 1994, by
and between Paging Network, Inc. and Madison Telecommunications Inc.
Amendment No. 1 to Network Co-ordination and Equipment Supply Agreement dated
October 26, 1995, by and between Paging. Network, Inc. and Madison
Telecommunications Inc.
Sales and Distribution Agreement dated October 28, 1994, by and between Madison
Telecommunications Inc. and Paging Network of Canada Inc.
Amendment No. 1 to Sales and Distribution Agreement dated October 26, 1995, by
and between Madison Telecommunications Inc. and Paging Network of Canada Inc.
<PAGE> 105
SCHEDULE 5
YEAR 2000 PLAN
<PAGE> 1
EXHIBIT 10.25
AMENDED AND RESTATED LOAN AGREEMENT
AMONG
MADISON TELECOMMUNICATIONS HOLDINGS INC.(THE "BORROWER");
THE TORONTO-DOMINION BANK, CANADIAN IMPERIAL BANK OF COMMERCE,
NATIONAL BANK OF CANADA AND
SUCH OTHER FINANCIAL INSTITUTIONS AS BECOME
"BANKS" HEREUNDER (COLLECTIVELY, THE "BANKS"); AND
THE TORONTO-DOMINION BANK, AS BOOKRUNNER, ARRANGER AND
ADMINISTRATION AGENT
FOR THE BANKS (THE "AGENT")
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
ARTICLE 1 DEFINITIONS.............................................................................................2
ARTICLE 2 CREDIT FACILITY........................................................................................19
SECTION 2.1 COMMITMENT............................................................................19
SECTION 2.2 UNCOLLATERALIZED PRIME RATE ADVANCES..................................................19
SECTION 2.3 COLLATERALIZED ADVANCES...............................................................20
SECTION 2.4 NOTIFICATION OF BANKS; DISBURSEMENT...................................................21
SECTION 2.5 BANKERS'ACCEPTANCES...................................................................23
SECTION 2.6 INTEREST; FEES........................................................................25
SECTION 2.7 FEES..................................................................................27
SECTION 2.8 MANDATORY COMMITMENT REDUCTIONS.......................................................27
SECTION 2.9 OPTIONAL PREPAYMENTS; COMMITMENT REDUCTIONS..........................................28
SECTION 2.10 MANDATORY REPAYMENTS..................................................................28
SECTION 2.11 EVIDENCE OF OBLIGATIONS; ACCOMMODATION ACCOUNTS.......................................29
SECTION 2.12 MANNER OF PAYMENT.....................................................................29
SECTION 2.13 REIMBURSEMENT.........................................................................30
SECTION 2.14 PRO RATA TREATMENT....................................................................31
ARTICLE 3 CONDITIONS PRECEDENT...................................................................................32
SECTION 3.1 CONDITIONS PRECEDENT TO AGREEMENT.....................................................32
SECTION 3.2 CONDITIONS PRECEDENT TO ALL ACCOMMODATIONS............................................34
ARTICLE 4 REPRESENTATIONS AND WARRANTIES.........................................................................35
SECTION 4.1 REPRESENTATIONS AND WARRANTIES........................................................35
SECTION 4.2 SURVIVAL OF REPRESENTATIONS AND WARRANTIES, ETC.......................................41
SECTION 4.3 NO REPRESENTATIONS BY BANKS...........................................................42
ARTICLE 5 GENERAL COVENANTS......................................................................................42
SECTION 5.1 PRESERVATION OF EXISTENCE AND SIMILAR MATTERS.........................................42
SECTION 5.2 BUSINESS; COMPLIANCE WITH APPLICABLE LAW..............................................42
SECTION 5.3 MAINTENANCE OF PROPERTIES.............................................................42
SECTION 5.4 ACCOUNTING METHODS AND FINANCIAL RECORDS..............................................43
</TABLE>
<PAGE> 2
<TABLE>
<S> <C> <C>
SECTION 5.5 INSURANCE.............................................................................43
SECTION 5.6 PAYMENT OF TAXES AND CLAIMS...........................................................43
SECTION 5.7 COMPLIANCE WITH ERISA.................................................................43
SECTION 5.8 VISITS AND INSPECTIONS................................................................45
SECTION 5.9 PAYMENT OF INDEBTEDNESS; ACCOMMODATIONS...............................................45
SECTION 5.10 USE OF PROCEEDS.......................................................................45
SECTION 5.11 PROTECT SECURITY INTERESTS............................................................46
SECTION 5.12 ENVIRONMENTAL AUDITS..................................................................46
SECTION 5.13 FURTHER ASSURANCES....................................................................46
ARTICLE 6 INFORMATION COVENANTS..................................................................................46
SECTION 6.1 QUARTERLY FINANCIAL STATEMENTS AND INFORMATION........................................46
SECTION 6.2 ANNUAL FINANCIAL STATEMENTS AND INFORMATION...........................................47
SECTION 6.3 PERFORMANCE CERTIFICATES..............................................................47
SECTION 6.4 COPIES OF OTHER REPORTS...............................................................48
SECTION 6.5 NOTICE OF LITIGATION AND OTHER MATTERS................................................48
SECTION 6.6 ENVIRONMENTAL REPORTING...............................................................49
ARTICLE 7 NEGATIVE COVENANTS.....................................................................................50
SECTION 7.1 INDEBTEDNESS OF THE BORROWER AND ITS SUBSIDIARIES.....................................50
SECTION 7.2 LIMITATION ON LIENS...................................................................50
SECTION 7.3 AMENDMENT AND WAIVER..................................................................51
SECTION 7.4 LIQUIDATION, MERGER, OR DISPOSITION OF ASSETS.........................................51
SECTION 7.5 LIMITATION ON GUARANTIES..............................................................51
SECTION 7.6 INVESTMENTS AND ACQUISITIONS..........................................................51
SECTION 7.7 RESTRICTED PAYMENTS AND PURCHASES.....................................................51
SECTION 7.8 LEVERAGE RATIO........................................................................52
SECTION 7.9 ANNUALIZED OPERATING CASH FLOW TO INTEREST EXPENSE....................................52
SECTION 7.10 TOTAL DEBT PER SUBSCRIBER.............................................................52
SECTION 7.11 CAPITAL EXPENDITURES..................................................................53
SECTION 7.12 MINIMUM REVENUE TEST..................................................................53
SECTION 7.13 MINIMUM UNITS IN SERVICE..............................................................54
SECTION 7.14 MINIMUM OPERATING CASH FLOW TEST......................................................54
SECTION 7.15 AFFILIATE TRANSACTIONS................................................................54
SECTION 7.16 REAL ESTATE...........................................................................55
SECTION 7.17 ERISA LIABILITIES.....................................................................55
ARTICLE 8 DEFAULT................................................................................................55
SECTION 8.1 EVENTS OF DEFAULT.....................................................................55
SECTION 8.2 REMEDIES..............................................................................57
ARTICLE 9 THE AGENT..............................................................................................58
SECTION 9.1 APPOINTMENT AND AUTHORIZATION.........................................................58
SECTION 9.2 INTEREST HOLDERS......................................................................58
SECTION 9.3 CONSULTATION WITH COUNSEL.............................................................59
SECTION 9.4 DOCUMENTS.............................................................................59
SECTION 9.5 AGENT AND AFFILIATES..................................................................59
SECTION 9.6 RESPONSIBILITY OF THE AGENT...........................................................59
SECTION 9.7 SECURITY DOCUMENTS....................................................................59
SECTION 9.8 ACTION BY THE AGENT...................................................................60
SECTION 9.9 NOTICE OF DEFAULT OR EVENT OF DEFAULT.................................................60
SECTION 9.10 RESPONSIBILITY DISCLAIMED.............................................................60
SECTION 9.11 INDEMNIFICATION.......................................................................61
SECTION 9.12 CREDIT DECISION.......................................................................61
SECTION 9.13 SUCCESSOR AGENT.......................................................................61
SECTION 9.14 DELEGATION OF DUTIES..................................................................62
SECTION 9.15 DETERMINATION BY AGENT CONCLUSIVE AND BINDING.........................................62
</TABLE>
(ii)
<PAGE> 3
<TABLE>
<S> <C> <C>
ARTICLE 10 COMPUTATIONS AND INDEMNITIES..........................................................................62
SECTION 10.1 INDEMNITY FOR CHANGE IN CIRCUMSTANCES.................................................62
SECTION 10.2 INDEMNITY FOR TRANSACTIONAL AND ENVIRONMENTAL LIABILITY...............................63
SECTION 10.3 TAXATION ON PAYMENTS..................................................................64
SECTION 10.4 JUDGMENT CURRENCY.....................................................................65
SECTION 10.5 CLAIMS FOR INCREASED COSTS AND TAXES..................................................65
ARTICLE 11 MISCELLANEOUS.........................................................................................66
SECTION 11.1 NOTICES...............................................................................66
SECTION 11.2 EXPENSES..............................................................................68
SECTION 11.3 WAIVERS...............................................................................69
SECTION 11.4 RIGHT TO COMBINE AND SET-OFF..........................................................69
SECTION 11.5 ASSIGNMENT............................................................................69
SECTION 11.6 ACCOUNTING PRINCIPLES.................................................................70
SECTION 11.7 COUNTERPARTS..........................................................................71
SECTION 11.8 GOVERNING LAW.........................................................................71
SECTION 11.9 SEVERABILITY..........................................................................71
SECTION 11.10 INTEREST..............................................................................71
SECTION 11.11 TABLE OF CONTENTS AND HEADINGS........................................................72
SECTION 11.12 AMENDMENT AND WAIVER..................................................................72
SECTION 11.13 NON-MERGER............................................................................72
SECTION 11.14 OTHER RELATIONSHIPS...................................................................73
SECTION 11.15 DIRECTLY OR INDIRECTLY................................................................73
SECTION 11.16 RELIANCE ON AND SURVIVAL OF VARIOUS PROVISIONS........................................73
SECTION 11.17 SENIOR DEBT...........................................................................73
SECTION 11.18 OBLIGATIONS SEVERAL...................................................................73
SECTION 11.19 CONFIDENTIALITY.......................................................................73
SECTION 11.20 TIME OF THE ESSENCE...................................................................74
SECTION 11.21 THIRD PARTY BENEFICIARIES.............................................................74
SECTION 11.22 ENUREMENT.............................................................................74
</TABLE>
(iii)
<PAGE> 4
EXHIBITS
Exhibit A - Commitment Ratio
Exhibit B - Form of Accommodation Notice
Exhibit C - Form of Repayment Notice
Exhibit D - Form of Borrower's Loan Certificate
Exhibit E - Form of Subsidiary Loan Certificate
Exhibit F - Form of Performance Certificate
Exhibit G - Form of Assignment and Assumption Agreement
SCHEDULES
Schedule 1 - Licenses
Schedule 2 - Security Documents
Schedule 3 - Subsidiaries
Schedule 4 - Agreements with Affiliates
Schedule 5 - Year 2000 Plan
(iv)
<PAGE> 5
AMENDED AND RESTATED LOAN AGREEMENT
DATED the 5th day of June, 1996, as AMENDED AND RESTATED as of the 5th
day of August, 1999.
AMONG:
MADISON TELECOMMUNICATIONS HOLDINGS INC.
(the "Borrower")
- and -
THE TORONTO-DOMINION BANK, CANADIAN IMPERIAL BANK OF
COMMERCE, NATIONAL BANK OF CANADA and such other
financial institutions as become "Banks" hereunder
(collectively, the "Banks")
- and -
THE TORONTO-DOMINION BANK, AS BOOKRUNNER, ARRANGER
AND ADMINISTRATION AGENT
(the "Agent")
WHEREAS:
A. The Borrower, The Toronto-Dominion Bank, as a Bank, and the Agent,
entered into a loan agreement made as of the 5th day of June, 1996;
B. The loan agreement was amended pursuant to a first amendment to the
loan agreement dated as of the 18th day of April, 1997;
C. The Borrower, the Agent and the Banks wish to enter into this
Agreement to incorporate the provisions of the amendment referred to
in Recital B above, document certain additional amendments agreed upon
among them, and restate the loan agreement, all upon the terms and
conditions more particularly specified herein;
NOW THEREFORE, the parties agree as follows:
<PAGE> 6
- 2 -
ARTICLE 1
DEFINITIONS
For the purposes of this Agreement:
"ACCOMMODATION" shall mean (i) an Advance made by the Banks or any one
or more of them on the occasion of any Borrowing; and (ii) a Bankers'
Acceptance created by any Bank on the occasion of any Drawing.
"ACCOMMODATION NOTICE" shall mean a notice substantially in the form
of Exhibit B.
"AGENT" shall mean The Toronto-Dominion Bank, in its capacity as Agent
for the Banks or any successor Agent appointed pursuant to Section 9.13 of this
Agreement.
"AGENT'S OFFICE" shall mean the office of the Agent located at
International Office Centre Toronto, Toronto Dominion Bank Tower, Toronto
Dominion Centre, Toronto, Ontario M5K 1A2, 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 Section 2.2 and Section 2.3 hereof on the occasion of any Borrowing
and shall include, as designated by the Borrower in accordance with the terms
of this Agreement, a Collateralized Advance and an Uncollateralized Prime Rate
Advance; 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 Amended and Restated Loan Agreement,
together with all Exhibits and Schedules hereto.
"AGREEMENT DATE" shall mean June 5, 1996.
"ANNUALIZED OPERATING CASH FLOW" shall mean, as of any date, the
product of (a) the aggregate Operating Cash Flow for the Borrower Group on a
combined basis for the fiscal quarter end being tested or the most recently
completed fiscal quarter, as the case may be, times (b) four (4).
"APPLICABLE LAW" shall mean, in respect of any Person, all provisions
of constitutions, statutes, codes, ordinances, rules, regulations, municipal
by-laws, judicial, arbitral, administrative, ministerial, departmental or
regulatory judgments, orders, decisions, rulings or awards, policies and
guidelines of any Governmental Entity, or any provisions of the foregoing,
including general principles of common and civil law and equity, applicable to
such Person, including, without limiting the foregoing, the Licenses, and all
orders, decisions, judgments and
<PAGE> 7
- 3 -
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 or fee margin
applicable to Advances and Bankers' Acceptances, as the case may be, in each
case determined in accordance with Section 2.6(d) hereof.
"ASSETS" means, with respect to any Person, all property and assets of
such Person, both real and personal, of every kind and wheresoever situate,
whether now owned or hereafter acquired.
"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.
"AVAILABLE COMMITMENT" shall mean, as of any date, the greater of:
(a) the Equivalent Canadian Dollar Amount of the aggregate amount
of Permitted Collateral held on such date by the Agent
pursuant to the Deposit Agreement; and
(b) $25,500,000, but only to the extent that the Minimum
Permitted Collateral Amount is held on such date by the Agent
pursuant to the Deposit Agreement; or
(c) $28,500,000, but only to the extent that (i) the Minimum
Permitted Collateral Amount is held on such date by the Agent
pursuant to the Deposit Agreement, and (ii) as of the end of
the most recently completed fiscal quarter for which
financial statements have been delivered pursuant to Sections
6.1 or 6.2, as applicable, hereof, either (A) for the two (2)
most recently completed fiscal quarters, the Leverage Ratio
is less than 6.0 to 1, or (B) (i) the aggregate number of
Units in Service is greater than or equal to 245,000, and
(ii) Gross Revenue for the Borrower Group on a combined basis
is greater than or equal to $5,000,000;
provided, however, that the Available Commitment shall not at anytime exceed
the Commitment on such date; and provided, further, however, that from and
after the date of any event which, with respect to the Licenses, results in a
violation of the Canadian ownership and control rules promulgated under the
Radiocommunication Act (Canada), the Telecommunications Act (Canada) and any
replacement act or any regulations made under any such act, the Available
Commitment shall be as set forth in clause (a) of this definition.
"BANKERS' ACCEPTANCE" shall have the meaning set forth in Section 2.5
hereof and shall include, as designated by the Borrower in accordance with the
terms of this Agreement, a Collateralized Bankers' Acceptance and an
Uncollateralized Bankers' Acceptance.
"BANKERS' ACCEPTANCE FEE RATE" shall mean the Applicable Margin for
Bankers' Acceptances as determined in accordance with Section 2.6 (d) hereof.
"BANKERS' ACCEPTANCE PERMITTED COLLATERAL RATE" shall mean, with
respect to any Bankers' Acceptance to be purchased by a Bank pursuant to
Section 2.5(e), the sum of (a) the
<PAGE> 8
- 4 -
discount rate per annum based on a year of 365 days which is equivalent to the
rate quoted to the Borrower by such Bank as such Bank's Canadian Dollar
bankers' acceptance rate for bankers' acceptances having the same term to
maturity as such Bankers' Acceptance, plus (b) 0.500%.
"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.
"BORROWER" shall mean Madison Telecommunications Holdings Inc., a
corporation incorporated under the laws of Canada.
"BORROWER GROUP" shall mean, collectively, the Borrower and its
Subsidiaries and PageNet Canada and its Subsidiaries.
"BORROWING" shall mean a borrowing consisting of one or more Advances.
"BUSINESS" shall have the meaning specified in Section 4.1(e) hereof.
"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
Toronto, Canada, as relevant to the determination to be made or the action to
be taken.
"CAPITAL EXPENDITURES" shall mean, for any Person for any period,
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; provided, however, that Capital Expenditures for any period shall be
reduced by the net book value of Units in Service sold during such period,
which had been reflected in the determination of Capital Expenditures for any
prior periods' Capital Expenditures.
"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 sheet of such Person in accordance
with GAAP.
"CHANGE EVENT" shall mean the occurrence of any of the following
events or the existence of any of the following conditions: (a) Paging Network,
Inc. shall cease to own, directly or indirectly, (i) 33-1/3% of the voting
Capital Stock of the Borrower and (ii) 100% of the nonvoting Capital Stock of
the Borrower; or (b) except in connection with a transfer to (i) a Person
acceptable to all of the Banks acting reasonably, or (ii) Paging Network, Inc.
(or a wholly-owned Subsidiary of Paging Network, Inc.) so long as on such date
(A) the sum of the principal amount of all Advances and the Face Amount of all
Bankers' Acceptances then outstanding does not exceed the sum of (1) the
Equivalent Canadian Dollar Amount of the Permitted Collateral held by the Agent
under the Deposit Agreement on such date and (2) the Letter of Credit or (B)
such transfer is in full compliance with the Canadian ownership and control
rules promulgated under the Radiocommunication Act (Canada), the
<PAGE> 9
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Telecommunications Act (Canada) and any replacement act or any regulations made
under any such act, Madison Venture Corporation shall cease to own, directly or
indirectly, 66-2/3% of the voting Capital Stock of the Borrower; or (c) the
Borrower shall fail to own, directly or indirectly through one or more
wholly-owned Subsidiaries all of the issued and outstanding Capital Stock of
each of its Subsidiaries.
"CLAIM" shall mean any claim of any nature whatsoever, including any
demand, liability (whether accrued or accruing, actual or contingent),
obligation, debt, cause of action, suit, proceeding, judgment, award,
assessment and reassessment.
"CODE" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
"COLLATERAL" shall mean any property of any kind constituting or
intended to constitute collateral for the Obligations under any of the Loan
Documents and shall include, without limitation, the Permitted Collateral.
"COLLATERALIZED ADVANCE" shall mean a Collateralized Prime Rate
Advance; provided, however, that the Borrower may not request a Collateralized
Advance (and no Collateralized Advance shall be made) if on the date of such
Collateralized Advance the sum of the Equivalent Canadian Dollar Amount of the
Permitted Collateral held under the Deposit Agreement and the Letter of Credit
does not equal or exceed the sum of the principal amount of all Collateralized
Advances and the Face Amount of all Collateralized Bankers' Acceptances then
outstanding plus the principal amount of the Collateralized Advance so
requested.
"COLLATERALIZED BANKERS' ACCEPTANCE" shall mean a Drawing which the
Borrower requests to be made as a Collateralized Bankers' Acceptance or is
continued as or converted into a Collateralized Bankers' Acceptance in
accordance with the provisions of Section 2.5 hereof; provided, however, that
the Borrower may not request a Collateralized Bankers' Acceptance (and no such
Bankers' Acceptance shall be issued) if on the date of such Drawing the sum of
the Equivalent Canadian Dollar Amount of the Permitted Collateral held pursuant
to the Deposit Agreement and the Letter of Credit does not equal or exceed the
sum of the principal amount of all Collateralized Advances and the Face Amount
of all Collateralized Bankers' Acceptances outstanding on such date plus the
Face Amount of the Collateralized Bankers' Acceptance so requested.
"COLLATERALIZED PRIME RATE ADVANCE" shall mean a Collateralized
Advance which bears interest at the Prime Rate Basis and which the Borrower
requests to be made as a Collateralized Prime Rate Advance or is continued as
or converted into a Collateralized Prime Rate Advance, in accordance with the
provisions of this Agreement, and which shall be in a principal amount of at
least $500,000 and in an integral multiple of $500,000.
"COMMITMENT" shall mean the several obligations of the Banks to make
Accommodations to the Borrower pro rata, in accordance with their respective
Commitment Ratios, in an aggregate amount of up to $28,500,000 pursuant to the
terms hereof, as such obligations may be reduced from time to time pursuant to
the terms hereof.
"COMMITMENT RATIO" shall mean, with respect to any Bank, the
percentage equivalent of the ratio which such Bank's pro rata portion of the
total Commitment bears to the aggregate
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amount of the Commitment (as each may be adjusted from time to time as provided
herein); and "Commitment Ratios" shall mean the Commitment Ratios of all of the
Banks with respect to the Commitment. As of the Restatement Date, the
Commitment Ratio of each Bank is as set forth on Exhibit A.
"DEFAULT" shall mean any Event of Default, and any of the events
specified in Section 8.1 hereof, regardless of whether there shall have
occurred any passage of time or giving of notice, or both, that would be
necessary in order to constitute such event an Event of Default.
"DEFAULT RATE" shall mean a simple per annum interest rate equal to
the sum of (a) the Prime Rate, PLUS (b) the Applicable Margin for
Uncollateralized Prime Rate Advances, PLUS (c) two percent (2%).
"DEPOSIT AGREEMENT" shall mean, collectively, that certain Deposit
Agreement dated as of April 18, 1997 between PNCHI and the Agent for the
benefit of the Banks, the Deposit Agreement dated June 5, 1996 between Madison
Venture Corporation and the Agent for the benefit of the Banks and any other
Deposit Agreement entered into by the Agent after the Restatement Date.
"DEPOSIT AGREEMENT GUARANTY" shall mean that certain Guaranty in
favour of the Agent for the benefit of the Banks, given by PNCHI on April 18,
1997.
"DOLLAR" or "$" shall mean (except where specifically designated
otherwise) lawful money of Canada.
"DRAFT" shall mean, at any time, a blank depository bill within the
meaning of the Depository Bills and Notes Act (Canada) or a blank bill of
exchange within the meaning of the Bills of Exchange Act (Canada) drawn by the
Borrower on a Bank and bearing such distinguishing letters and numbers as such
Bank may determine, but which at such time, except as otherwise provided
herein, has not been completed or accepted by such Bank.
"DRAWING" shall mean the creation of a Bankers' Acceptance by a Bank.
"DRAWING DATE" shall mean the requested date for a Drawing set forth
in an Accommodation Notice.
"DRAWING FEE" shall mean, with respect to each Draft drawn by the
Borrower hereunder and accepted by a Bank on any Drawing Date, an amount equal
to the Bankers' Acceptance Fee Rate multiplied by the aggregate Face Amount of
such Draft, calculated daily on the basis of the term to maturity of such Draft
and a year of 365 days.
"EMPLOYEE PENSION PLAN" shall mean any Plan subject to the minimum
funding requirement of Section 302 of ERISA or Section 412 of the Code.
"ENVIRONMENTAL AUDITOR" shall mean a qualified environmental auditor
at arm's length from the Borrower and acceptable to the Agent.
<PAGE> 11
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"ENVIRONMENTAL LAWS" shall mean all Applicable Laws in force from time
to time relating to the environment, Hazardous Substances, pollution or
protection of the environment, including Laws relating to: (i) on site or
off-site contamination; (ii) occupational health and safety; (iii) chemical
substances or products; (iv) Releases of pollutants, contaminants, chemicals or
other industrial, toxic or radioactive substances or Hazardous Substances into
the environment; and (v) the manufacture, processing, distribution, use,
treatment, storage, transport or handling of Hazardous Substances.
"ENVIRONMENTAL LIABILITIES AND COSTS" shall mean all Losses and
Claims, whether known or unknown, current or potential, past, present or
future, imposed by, under or pursuant to Environmental Laws, including all
Losses and Claims related to Remedial Actions and all reasonable fees,
disbursements and expenses of counsel, experts, personnel and consultants,
where such Losses and Claims are based on, arise out of or are otherwise in
respect of: (i) the ownership or operation of the Business or any Assets
related to the Business; (ii) the conditions on, under, above or about any real
property, assets, equipment or facilities currently or previously owned, leased
or operated by the Borrower or its Subsidiaries; (iii) expenditures necessary
to cause the operations of the Business or Assets either related to the
Business or owned, leased or operated by the Borrower or its Subsidiaries to
comply materially with any and all requirements, including expenditures
necessary to effect the closure, decommissioning or rehabilitation of any of
the operations of the business or Assets either related to the Business or
owned, leased or operated by the Borrower or its Subsidiaries; (iv) the use,
generation, manufacture, refining, treatment, transportation, storage,
handling, recycling, disposal, depositing, transferring, producing or
processing of Hazardous Substances; (v) liability for personal injury or
property damage, including damages assessed for the maintenance of a public or
private nuisance; and (vi) any other matter affecting the Real Estate or other
Assets within the jurisdiction of any Governmental Entity administering any
Environmental Law.
"ENVIRONMENTAL NOTICE" shall mean any written claim, citation,
directive, request for information, statement of claim, notice of
investigation, letter or other communication from any Person given pursuant to
Environmental Laws.
"ENVIRONMENTAL PERMITS" shall mean all permits, certificates,
approvals, registrations and licenses issued by any Governmental Entity to the
Borrower, its Subsidiaries or to the Business pursuant to Environmental Laws
and relating to or required for the operation of the Business or the use of the
Real Estate or other Assets of the Borrower or its Subsidiaries.
"EQUIVALENT CANADIAN DOLLAR AMOUNT" shall mean, on any day (a) with
respect to Permitted Collateral denominated in Dollars, the principal or face
amount of such Permitted Collateral, and (b) with respect to Permitted
Collateral denominated in U.S. Dollars, the equivalent amount of Dollars
determined using the quoted spot rate at which the Agent's principal office in
Toronto offers to provide Dollars in exchange for U.S. Dollars in Toronto at
12:00 noon (Toronto time) on such day.
"EQUIVALENT U.S. DOLLAR AMOUNT" shall mean, on any day, with respect
to any amount of Dollars, the equivalent amount of U.S. Dollars determined by
using the quoted spot rate at which the Agent's principal office in Toronto
offers to provide U.S. Dollars in exchange for Dollars in Toronto at 12:00 noon
(Toronto time) on such day.
<PAGE> 12
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"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as in effect from time to time.
"ERISA AFFILIATE" shall mean any Person, including a Subsidiary or an
Affiliate of the Borrower, that is treated as a single employer with the
Borrower pursuant to Section 414(b), (c), (m) or (o) of the Code.
"EVENT OF DEFAULT" shall mean any of the events specified in Section
8.1 hereof, provided that any requirement for notice or lapse of time has been
satisfied.
"FACE AMOUNT" shall mean, in respect of a Bankers' Acceptance, the
amount payable to the holder thereof on its maturity.
"FREE CASH FLOW" shall mean, with respect to any Person and its
Subsidiaries, on a consolidated basis, at the end of the most recently
completed fiscal year, as determined in accordance with GAAP, Operating Cash
Flow, less (i) the amounts actually paid during such period in respect of (A)
Interest Expense, (B) income taxes, (C) payments on any Indebtedness for Money
Borrowed falling within the definition of Total Debt (including any amounts
actually paid in connection with reductions of the Commitment pursuant to
Section 2.8 (a)), (D) Capital Expenditures, and (ii) to the extent not included
in the amounts calculated pursuant to (i) above, the amount of any automatic
reduction in the Commitment made during such fiscal year in accordance with the
provisions of Section 2.8 (a).
"GAAP" shall mean accounting principles generally accepted in Canada
as recommended in the Handbook of the Canadian Institute of Chartered
Accountants as in effect on the Restatement Date.
"GOVERNMENT LIST" shall mean a list maintained by any Governmental
Entity of sites identified for investigation or clean-up pursuant to any
Environmental Law.
"GOVERNMENTAL ENTITY" shall mean any: (i) multinational, federal,
provincial, state, municipal, local or other government, governmental or public
department, central bank, court, commission, board, bureau, agency or
instrumentality, domestic or foreign; (ii) any subdivision, agent, commission,
board, or authority of any of the foregoing; or (iii) any quasi-governmental or
private body exercising any regulatory, expropriation or taxing authority under
or for the account of any of the foregoing.
"GROSS REVENUE" shall mean, with respect to any Person and its
Subsidiaries on a consolidated basis, for the most recently completed fiscal
quarter, gross revenues determined in accordance with GAAP.
"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 with respect to outstanding letters of credit or
capital call requirements.
<PAGE> 13
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"HAZARDOUS SUBSTANCE" shall mean any Substance which is or is deemed
to be, alone or in any combination, hazardous, hazardous waste, toxic, a
pollutant, a deleterious substance, a contaminant or a source of pollution or
contamination under any Environmental Law, whether or not such Substance is
defined as hazardous under the Environmental Law.
"IMMATERIAL SITE SPECIFIC LICENSES" shall mean, at any time, the
aggregate Site Specific Licenses, the termination or cancellation of which,
without contemporaneous replacement, would not reasonably be expected to have a
Materially Adverse Effect.
"INDEBTEDNESS" shall mean, with respect to any Person, and without
duplication, (a) all items 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 (except (i) items of shareholders' and partners' equity or
capital stock, (ii) items of surplus or general contingency or deferred tax
reserves incurred in the ordinary course of business, (iii) accounts incurred
and payable in the ordinary course of business, (iv) dividends payable, or (v)
deferred pension costs) (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, whether or not the obligation secured thereby shall have been
assumed, (c) 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, bankers' acceptances or similar instruments, (e)
all obligations, contingent or otherwise, arising under Guaranties issued by
such Person, 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, bankers' acceptances or similar instruments, all
Indebtedness issued or assumed as full or partial payment for property or
services, 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.
"INTEREST EXPENSE" shall mean, for any Person for any period, all
interest expense (including imputed interest with respect to Capitalized Lease
Obligations) with respect to any Indebtedness for Money Borrowed of such Person
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 to the extent not already included in cash interest paid, all as
calculated in accordance with GAAP.
"INTEREST PERIOD" shall mean (a) in connection with any Prime Rate
Advance, the period beginning on the date such Advance is made and ending on
the last day of the calendar month in which such Advance is made, provided,
however, that if a Prime Rate Advance is made on the last day of any calendar
month, it shall have an Interest Period ending on, and its Payment Date shall
be, the last day of the following calendar month, and (b) in connection with
any Bankers'
<PAGE> 14
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Acceptance, the term of such Bankers' Acceptance selected by the Borrower or
otherwise determined in accordance with this Agreement.
"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.
"KNOWN TO THE BORROWER" or "TO THE KNOWLEDGE OF THE BORROWER" shall
mean known by the executive officers of the Borrower or any Subsidiary (which
shall mean the chairman/president, the chief executive officer, the chief
financial officer, the chief operating officer, the treasurer, and any in-house
general counsel or other Persons performing like functions) or, based upon the
reasonable inquiry that an executive officer would make, should have been known
by such executive officer.
"LEASEHOLD REAL ESTATE" shall mean the land and premises of the
Borrower and its Subsidiaries held under agreement to lease or other right of
occupation.
"LETTER OF CREDIT" shall mean that certain irrevocable letter of
credit in the original principal amount of at least $3,500,000 issued in favour
of the Agent for the benefit of the Banks and all renewals thereof and
substitutions therefor, all of which shall be in form and substance
satisfactory to the Agent.
"LEVERAGE RATIO" shall mean, as of any date, the ratio of (a) Total
Debt for the Borrower Group on a combined basis to (b) Annualized Operating
Cash Flow.
"LICENSES" shall mean any radio, telephone, microwave, wireless
messaging or other license (excluding Immaterial Site Specific Licenses),
authorization, certificate of compliance or convenience, franchise, approval or
permit, granted or issued by any Governmental Entity and held by the Borrower
or any of its Subsidiaries, all of which (other than Immaterial Site Specific
Licenses) are listed as of the Restatement 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 Security Documents,
all subordination agreements entered into by creditors of the Borrower or any
of its Subsidiaries with respect to Indebtedness for Money Borrowed of the
Borrower or any of its Subsidiaries, all legal opinions or reliance letters
issued by counsel to the Borrower or any of its Subsidiaries, all fee letters,
all Requests for Advance, all Interest Rate Hedge Agreements between the
Borrower, on the one hand, and the Agent and the Banks, or any of them, on the
other hand, and all other
<PAGE> 15
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documents and agreements executed or delivered in connection with or
contemplated by this Agreement.
"LOSS" means any loss whatsoever, whether direct or indirect,
including expenses, costs, damages, judgments, penalties, fines, charges,
claims, demands, liabilities, loss of profits, debts, interest, any and all
legal fees and disbursements, on a solicitor and own client basis.
"MAJORITY BANKS" shall mean (i) at any time that no Accommodations are
outstanding hereunder, Banks, the total of whose Commitment Ratios equals or
exceeds sixty-six and two-thirds percent (66-2/3%) of the aggregate Commitment
Ratios of all Banks entitled to vote hereunder or (ii) at any time that there
are Accommodations outstanding hereunder, Banks the total of whose
Accommodations outstanding equals or exceeds sixty-six and two thirds percent
(66-2/3%) of the total principal amount of the Accommodations then outstanding
of all Banks hereunder (excluding from such calculation the Accommodations of
any Banks who fail to provide Accommodations as provided in Section 2.4(b)(iv)
hereof).
"MATERIALLY ADVERSE EFFECT" shall mean (a) any material adverse effect
upon the business, assets, liabilities, financial condition, results of
operations, properties, or business of the Borrower and its Subsidiaries on a
consolidated basis, or (b) except as a result of the action or inaction of the
Agent or any Bank, a material adverse effect upon the validity or
enforceability of this Agreement or any of the Loan Documents, or upon the
ability of the Borrower or any of its Subsidiaries to perform the payment
obligations or other 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 Accommodations or the rights of the 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 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 Commitment to zero or otherwise).
"MINIMUM PERMITTED COLLATERAL AMOUNT" shall mean, as of any date
$17,500,000 (or the Equivalent U.S. Dollar Amount).
"MULTIEMPLOYER PLAN" shall mean an Employee Pension Plan which is a
"multiemployer plan" within the meaning set forth in Section 4001(a)(3) of
ERISA.
"NECESSARY AUTHORIZATIONS" shall mean all approvals and licenses from,
and all filings and registrations with, any Governmental Entity or other
regulatory authority, including, without limiting the foregoing, the Licenses
and all approvals, licenses, filings and registrations under Applicable Law,
necessary in order to enable the Borrower and its Subsidiaries to own,
construct, maintain, and operate wireless messaging systems currently being
constructed, maintained or operated and to invest in other Persons who own,
construct, maintain, and operate wireless messaging systems.
<PAGE> 16
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"NET INCOME" shall mean, for any Person and its Subsidiaries on a
consolidated basis, for any period, net income determined in accordance with
GAAP for such Person and its Subsidiaries.
"NETWORK AND EQUIPMENT AGREEMENT" shall mean that certain Network
Co-ordination and Equipment Supply Agreement dated as of October 28, 1994
between PageNet and Madison Telecommunications Inc., as amended by Amendment
No. 1 dated as of October 26, 1995.
"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 Agent, or any of them, under this Agreement
and the other Loan Documents (including any interest, fees and other charges on
the Accommodations 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 Agent or any of the Banks under any
Interest Rate Hedge Agreements) as they may be amended, restated or
supplemented from time to time and all extensions or renewals, or as a result
of making the Accommodations, whether such obligations are direct or indirect,
absolute or contingent, due or not due, contractual or tortious, liquidated or
unliquidated, arising by operation of Applicable Law or otherwise, now existing
or hereafter arising.
"OPERATING CASH FLOW" shall mean, with respect to any Person and its
Subsidiaries, on a consolidated basis, at the end of the most recently
completed fiscal quarter, as determined in accordance with GAAP, the sum of (a)
Net Income for such period (after eliminating any extraordinary gains and
losses, including gains and losses from the sale of assets), 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 and
(iii) income tax expense and (iv) all other non-cash items which will not
require cash payment in the future. Operating Cash Flow attributable to any
acquisition will be included in the determination of Operating Cash Flow as if
the Assets so acquired had been acquired on the first day of such fiscal
period, and the operating results of any acquired Assets for that portion of
any fiscal period in which they were not owned by the Borrower or any of its
Subsidiaries shall be determined by reference to financial information prepared
by the prior owners thereof, subject to such adjustments as the Agent may
reasonably require. Operating Cash Flow attributable to any assets disposed of
will be excluded in the determination of Operating Cash Flow as if the Assets
so disposed of had been disposed of on the first day of such fiscal quarter.
"PAGENET" shall mean Paging Network, Inc., a corporation incorporated
under the laws of the State of Delaware.
"PAGENET CANADA" shall mean Paging Network of Canada Inc., a Canada
corporation.
"PAGENET CANADA AGREEMENT" shall mean that certain Amended and
Restated Loan Agreement dated as of even date herewith by and among Paging
Network of Canada Inc., the Banks and the Agent.
<PAGE> 17
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"PAGENET CANADA OBLIGATIONS" shall mean the indebtedness, liabilities
and obligations of PageNet Canada to the Agent and the Banks under, or in
connection with, the PageNet Canada Agreement.
"PAYMENT DATE" shall mean the last day of any Interest Period.
"PBGC" shall mean the Pension Benefit Guaranty Corporation, or any
successor thereto.
"PERMITTED ASSET SALE" shall mean the sale by the Borrower or any of
its Subsidiaries of all or any part of its Assets as permitted under Section
7.4 hereof.
"PERMITTED COLLATERAL" shall mean (a) the Letter of Credit (or the
proceeds thereof in Dollars if such Letter of Credit is drawn), (b) U.S.
Dollars, (c) marketable, direct obligations of the United States of America
maturing within ninety (90) days of the date of purchase, or (d) other
collateral acceptable to the Banks at any time and from time to time held by or
on deposit with the Agent pursuant to the Deposit Agreement as collateral for
the Deposit Agreement Guaranty.
"PERMITTED INVESTMENTS" shall mean: (a) negotiable instruments or
securities in bearer or registered form which are not held for more than 30
days and which evidence: (i) obligations of or guaranteed by the Government of
Canada so long as they have the Permitted Rating; (ii) obligations of or
guaranteed by a province or municipality of Canada so long as they have the
Permitted Rating; (iii) deposits or bankers' acceptances issued or accepted by
any Schedule I Canadian chartered bank so long as they have the Permitted
Rating; (iv) commercial paper of Canadian corporations or other Canadian
issuers so long as it has the Permitted Rating; (v) other similar negotiable
instruments or securities which are issued or guaranteed by Persons which have
the Permitted Rating; or (b) demand deposits in any Schedule I Canadian
chartered bank so long as they have the Permitted Rating or (c) investments in
any wholly-owned Subsidiary of the Borrower so long as the corresponding debt
instruments, if any, are pledged to the Agent as security for the Obligations.
"PERMITTED LIENS" shall mean, as applied to any Person:
(a) Any Lien in favour of the 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, labourers and
materialmen incurred in the ordinary course of business for
sums not yet more than sixty (60) days past due or being
diligently contested in good faith, if adequate reserves
shall 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;
<PAGE> 18
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(d) Liens incurred in the ordinary course of business in
connection with worker's compensation and unemployment
insurance;
(e) Restrictions on the transfer of the Licenses or assets of the
Borrower or its Subsidiaries imposed by any of the Licenses
as presently in effect;
(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) The reservations, limitations, provisos and conditions, if
any, expressed in any original grants of real property from
the Crown;
(h) Purchase money security interests to the extent incurred in
connection with the acquisition of any property or assets by
the Borrower or any of its Subsidiaries permitted hereunder;
provided, that
(1) such Lien shall attach only to the property or asset
acquired in such transaction and shall not extend to
or cover any other assets or properties of the
Borrower or any of its Subsidiaries;
(2) the Indebtedness secured or covered by such Lien
shall not exceed the cost of the asset or property
acquired and shall not be increased; and
(3) all such Indebtedness secured or covered by such
Liens shall not exceed $500,000 in the aggregate at
anytime outstanding;
(i) Undetermined and inchoate Liens, rights of distress and
charges incurred in the ordinary course of business which
have not been filed or exercised or which relate to
obligations not due or payable, or if due or payable, the
validity of which is being contested diligently and in good
faith by appropriate proceedings, but only so long as no
foreclosure, distraint, sale or similar proceedings have been
commenced with respect thereto;
(j) Title defects or irregularities in respect of real property
which are of a minor nature and which in the aggregate do not
materially impair the use of such property for the purpose
for which it is used or the conduct of the business of such
Person;
(k) The rights reserved to or vested in any Governmental Entity
by the terms of any lease, License, franchise, grant or
permit or by any statutory provision, to terminate any such
lease, license, franchise, grant or permit, or to require
annual or other payments as a condition to the continuance
thereof; and
(l) Any Liens resulting from the deposit of cash or securities in
connection with contracts, tenders or expropriation
proceedings, or to secure surety or appeal
<PAGE> 19
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bonds, costs of litigation when required by law and public,
statutory and other like obligations incurred in the ordinary
course of business.
"PERMITTED RATING" shall mean, with respect to any Permitted
Investment, a rating for short-term indebtedness of R-1 (Middle) or better from
Dominion Bond Rating Service Limited or A-1+ from CBRS Inc. or a rating for
long-term indebtedness of A (High) or better from Dominion Bond Rating Service
Limited or A (High) from CBRS Inc.
"PERSON" shall mean an individual, corporation, limited liability
company, association, partnership, joint venture, trust or estate, an
unincorporated organization, any Governmental Entity or other entity.
"PLAN" shall mean an employee benefit plan within the meaning of
Section 3(3) of ERISA.
"PNCHI" shall mean Paging Network Canadian Holdings, Inc., a
corporation incorporated under the laws of the State of Delaware.
"PRIME RATE" shall mean, for any particular day, a per annum interest
rate equal to the higher of (a) the variable rate of interest per annum,
calculated on the basis of a year of 365 days or 366 days (in the case of a
leap year), equal to the rate of interest per annum established and reported by
The Toronto-Dominion Bank to the Bank of Canada for such day as the variable
rate of interest per annum for determination of interest rates that The
Toronto-Dominion Bank charges to its customers of varying degrees of
creditworthiness in Canada for Canadian Dollar loans made by it in Canada, and
(b) the sum of the simple average of the rates per annum for Canadian Dollar
bankers' acceptances having a term of 30 days that appears on the Reuters
Screen CDOR Page as of 10:00 a.m. (Toronto time) for such day plus one percent
(1%). The Prime Rate is not necessarily the lowest rate of interest charged to
customers of The Toronto-Dominion Bank.
"PRIME RATE ADVANCE" shall mean a Collateralized Prime Rate Advance or
an Uncollateralized Prime Rate Advance.
"PRIME RATE BASIS" shall mean a simple interest rate equal to the sum
of (i) the Prime Rate and (ii) the Applicable Margin for Prime Rate Advances
which are Collateralized Advances or Uncollateralized Prime Rate Advances, as
the case may be. The Prime Rate Basis shall be adjusted automatically as of the
opening of business on the effective date of each change in the Prime Rate to
account for such change, and shall also be changed to reflect changes in the
Applicable Margin for Prime Rate Advances in accordance with Section 2.6 (d).
"REAL ESTATE" shall mean the real estate of the Borrower and its
Subsidiaries held in fee simple (or an interest analogous to a fee simple
interest as it relates to real estate situate in the Province of Quebec).
"RELEASE" when used as a verb includes release, spill, leak, emit,
deposit, discharge, leach, migrate or dispose into the environment and
"Release" when used as a noun has a correlative meaning.
<PAGE> 20
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"REMEDIAL ACTION" shall mean any action, whether voluntary or
compelled, that is reasonably necessary to: (i) clean up, remove, treat or in
any other way deal with Hazardous Substances in the environment; (ii) prevent
any Release of Hazardous Substances where such Release would violate any
Environmental Laws or would endanger or threaten to endanger public health or
welfare or the environment; or (iii) perform remedial studies, investigations,
restoration and post-remedial studies, investigations and monitoring on, about
or in connection with the business or any of the Real Estate or other Assets
(including the Collateral).
"REPAYMENT NOTICE" means a notice substantially in the form of Exhibit
C.
"REPORTABLE EVENT" shall mean, with respect to any Employee Pension
Plan subject to Title IV of ERISA, an event described in Section 4043(b) of
ERISA as to which the requirement of advance notice has not been waived or an
event described in Sections 2615.11, 2615.12, 2615.13, 2615.15 or 2615.19 of
PBGC regulations.
"RESTATEMENT DATE" shall mean August 5, 1999.
"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 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
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;
(c) any payment of principal of, or interest on, Indebtedness referred to in
Section 7.1 (g) hereof; and (d) any management, consulting or similar fees, or
any interest thereon, payable by the Borrower or any of its Subsidiaries to any
partner, shareholder or Affiliate of any such Person.
"RESTRICTED PURCHASE" shall mean any payment (including, without
limitation, any sinking fund payment, prepayment or instalment payment) on
account of the purchase, redemption 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 (other than to the Borrower or any wholly-owned Subsidiary of the
Borrower), 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.
"SALES AND DISTRIBUTION AGREEMENT" shall mean that certain Sales and
Distribution Agreement dated as of October 28, 1994 between Paging Network of
Canada Inc. and Madison Telecommunications Inc. as amended by Amendment No. 1
dated as of October 26, 1995.
"SECURITY DOCUMENTS" means those agreements and other documents in
favour of the Agent for the benefit of itself and the Banks described in
Schedule 2, as such documents may be
<PAGE> 21
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amended or supplemented from time to time, and any other agreement or
instrument which may from time to time be held by the Agent for the benefit of
itself and the Banks, or by the Banks themselves, as security for all or any
portion of the Obligations.
"SECURITY INTEREST" shall mean all Liens in favour of the Agent, for
the benefit of itself and the Banks, or in favour of the Banks themselves,
created or intended to be created hereunder or under any of the Security
Documents to secure the Obligations.
"SITE SPECIFIC LICENSES" shall mean all licenses or other
authorizations granted in respect of the use of specific transmitter locations
pursuant to the Licenses listed on Schedule 1.
"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 under the current facts 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. The Subsidiaries of
the Borrower as of the Restatement Date are set forth on Schedule 3 attached
hereto.
"SUBSTANCE" shall mean any substance, waste, liquid, gaseous or solid
matter, fuel, micro-organism, sound, vibration, ray, heat, odour, radiation,
energy vector, plasma, and organic or inorganic matter.
"TAXES" shall mean all taxes imposed by any Governmental Entity,
including income, profits, real property, personal property, goods and
services, sales, transfer, purchase, stumpage, registration, capital, excise,
payroll, unemployment, disability, employee's income withholding, social
security or withholding.
"THIRD PARTIES" shall mean third party suppliers and others on whom
the operations of the business of the Borrower and/or its Subsidiaries is
partly dependent for ordinary course operations which may affect the Borrower's
or its Subsidiaries' ability to be Year 2000 Ready at and after January 1,
2000.
"THIRD PARTY FACTORS" shall mean those factors beyond the control of
the Borrower or its Subsidiaries and within the control of Third Parties.
"TOTAL DEBT" shall mean, as of any date with respect of any Person and
its Subsidiaries on a consolidated basis, the difference between (a) the
aggregate amount of Indebtedness for Money Borrowed, determined in accordance
with GAAP, minus (b) the aggregate of: (i) the aggregate principal amount of
Collateralized Advances and Face Amount of Collateralized Bankers' Acceptances
outstanding on such date, and (ii) the aggregate amount of Indebtedness
permitted to be incurred in accordance with Section 7.1 (g) hereof outstanding
on such date.
<PAGE> 22
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"TOTAL SUBSCRIBERS" shall mean, as of any date, the aggregate number
of subscribers for the Units in Service of the Borrower Group on a combined
basis.
"TRANSPONDER LEASE AGREEMENT" shall mean any agreement by and between
the Borrower or any of its 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.
"U.S. DOLLARS" and "U.S. $" shall mean lawful money of the United
States of America.
"UNCOLLATERALIZED BANKERS' ACCEPTANCE" shall mean a Drawing which the
Borrower requests to be made as an Uncollateralized Bankers' Acceptance or is
continued as or converted into an Uncollateralized Bankers' Acceptance in
accordance with the provisions of Section 2.5 hereof.
"UNCOLLATERALIZED PORTION OF THE COMMITMENT" shall mean, as of any
date, that portion of the Available Commitment in excess of the Minimum
Permitted Collateral Amount.
"UNCOLLATERALIZED PRIME RATE ADVANCE" shall mean an Uncollateralized
Prime Rate Advance which bears interest at the Prime Rate Basis and which the
Borrower requests to be made as an Uncollateralized Prime Rate Advance or is
continued or converted as an Uncollateralized Prime Rate Advance, in accordance
with the provisions of this Agreement, and which shall be in a principal amount
of at least $500,000 and in an integral multiple of $500,000.
"UNITS IN SERVICE" shall mean, as of any date, for the Borrower Group
on a combined basis, the aggregate number of wireless messaging units that are
operating pursuant to valid and binding agreements with customers, in respect
of which the customer is obligated to make payments at regular intervals in
amounts consistent with standard industry practice, where the customer is
delinquent less than sixty (60) days (unless the amount for such customer which
is delinquent sixty (60) days or more constitutes less than thirty-five (35)
percent of such customer's current monthly billing), except for governmental or
corporate customers delinquent less than ninety (90) days that (a) have been
serviced by such Person for at least six (6) months and have a consistent prior
payment history and in which the customer has made a payment within the last
forty-five (45) days equal to or greater than the amount of the current monthly
billing for such customer, or (b) have a regular history of paying on their
accounts amounts equal to or greater than the amount of the current monthly
billing for such customer and whose total account receivable is (i) no older
and (ii) no greater in dollar amount, than such account receivable was on the
date ninety (90) days prior.
"YEAR 2000 READY" shall mean that, except as would not have
individually or in the aggregate, a Materially Adverse Effect, the Year 2000
Systems used or relied upon by the Borrower or its Subsidiaries will function
accurately and without material delay or interruption at all times before, on
and after January 1, 2000 (including through February 29, 2000), without any
change in the operations of such Year 2000 Systems associated with the advent
of 2000 or the 21st century.
"YEAR 2000 PLAN" shall mean the plan of the Borrower to ensure that
the Year 2000 Systems are Year 2000 Ready in the form delivered to the Agent
prior to the date hereof.
<PAGE> 23
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"YEAR 2000 SYSTEMS" shall mean all computer hardware, software and
files (including all operating systems, application software and related
supporting data) and files owned, used, sold, leased or licensed by the
Borrower or its Subsidiaries in connection with the operation of its business
and all process controls, environmental controls, communications systems and
any other support systems or equipment owned, used, sold, leased or licensed by
the Borrower or its Subsidiaries, in the operation of its business which
employs, stores or processes date/time information in electronic form.
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 FACILITY
SECTION 2.1 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 make available to the Borrower such Accommodations as may
be requested by the Borrower, prior to the Maturity Date, in an amount not
exceeding, in the aggregate, the Available Commitment. Each of the Banks shall,
on the terms and conditions of this Agreement, make its pro rata share of
Advances, and Bankers' Acceptances on the occasion of any Borrowing or Drawing,
as applicable, available to the Borrower under the Commitment. All Advances and
Bankers' Acceptances requested hereunder shall be made available to the
Borrower in accordance with Sections 2.2, 2.3 and 2.5 hereof, respectively. Any
notice given to the Agent in connection with a requested Accommodation
hereunder shall be given to the Agent prior to 12:00 noon (Toronto time) in the
case of Advances and 1:00 p.m. (Toronto time) in the case of Bankers'
Acceptances in order for such Business Day to count toward the minimum number
of Business Days required.
SECTION 2.2 UNCOLLATERALIZED PRIME RATE ADVANCES.
(a) CHOICE OF INTEREST RATE, ETC. Any Uncollateralized Prime Rate
Advance shall be made as an Uncollateralized Prime Rate Advance.
(b) MANNER OF BORROWING.
(i) UNCOLLATERALIZED PRIME RATE ADVANCES. The Borrower
shall give the Agent irrevocable written notice no
later than 12:00 noon (Toronto time) at least one
(1) Business Day prior to the date of any requested
Uncollateralized Prime Rate Advance in the form of
an Accommodation Notice, or telephonic notice
followed immediately by an Accommodation Notice;
provided, however, that the Borrower's failure to
confirm any telephonic notice with an Accommodation
Notice shall not invalidate any notice so given if
acted upon by the Agent. Upon receipt of such notice
from the Borrower, the Agent shall promptly notify
each Bank in writing of the contents thereof.
<PAGE> 24
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(ii) CONVERSIONS OF UNCOLLATERALIZED PRIME RATE ADVANCES.
On any Business Day, the Borrower may, subject to
the provisions of this Agreement, convert the
outstanding principal amount of an Uncollateralized
Prime Rate Advance, in whole or in part, to (A)
Bankers' Acceptances, by giving an Accommodation
Notice in accordance with Section 2.5 hereof
(including in accordance with the period for notice
set forth in Section 2.5(b) hereof), and (B)
Collateralized Prime Rate Advances by giving the
Accommodation Notice in accordance with Section 2.3
(b) hereof (including in accordance with the period
for notice set forth in Section 2.3 (b) hereof). The
Borrower may convert the Uncollateralized Prime Rate
Advance on any Business Day. If the Uncollateralized
Prime Rate Advance to be converted cannot be
converted to an aggregate Face Amount of Bankers'
Acceptances in an amount which may be drawn as
Bankers' Acceptances under this Agreement, then the
amount which cannot be so converted, subject to the
other terms and conditions of this Agreement, shall
thereafter continue to be outstanding as an
Uncollateralized Prime Rate Advance. When any
Uncollateralized Prime Rate Advances are to be
converted, in whole or in part, to Bankers'
Acceptances, the Borrower shall repay and there
shall become due and payable on the Drawing Date,
the principal amount of such Uncollateralized Prime
Rate Advances which are to be so converted. Upon
such Payment Date such Uncollateralized Prime Rate
Advance will, subject to the provisions hereof, be
so repaid and, as applicable, reborrowed.
SECTION 2.3 COLLATERALIZED ADVANCES.
(a) CHOICE OF INTEREST RATE, ETC. Any Collateralized Advance shall be
made as a Collateralized Prime Rate Advance.
(b) COLLATERALIZED PRIME RATE ADVANCES.
(i) ADVANCES. The Borrower shall give the Agent
irrevocable written notice not later than 12:00 noon
(Toronto time) at least one (1) Business Day prior
to the date of any requested Collateralized Prime
Rate Advance in the form of an Accommodation Notice,
or telephonic notice followed immediately by an
Accommodation Notice; provided, however, that the
Borrower's failure to confirm any telephonic notice
with an Accommodation Notice shall not invalidate
any notice so given if acted upon by the Agent. Upon
receipt of such notice from the Borrower, the Agent
shall promptly notify each Bank in writing of the
contents thereof.
(ii) CONVERSIONS OF COLLATERALIZED PRIME RATE ADVANCES.
On any Business Day, the Borrower may, subject to
the provisions of this Agreement, convert the
outstanding principal amount of a Collateralized
Prime Rate Advance, in whole or in part, to (A)
Bankers' Acceptances, by giving an Accommodation
Notice in accordance with Section 2.5 hereof
(including
<PAGE> 25
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in accordance with the period for notice set forth
in Section 2.5(b) hereof), and (C) Uncollateralized
Prime Rate Advances by giving the Accommodation
Notice in accordance with Section 2.2(b) hereof
(including in accordance with the period for notice
set forth in Section 2.2(b) hereof). In the case of
any such conversion, the Borrower shall notify the
Agent of the amount of any Collateralized Prime Rate
Advance to be converted. The Borrower may convert a
Collateralized Prime Rate Advance on any Business
Day. If the Collateralized Prime Rate Advance to be
converted to Bankers' Acceptances cannot be
converted to an aggregate Face Amount of Bankers'
Acceptances in an amount which may be drawn as
Bankers' Acceptances under this Agreement, then the
amount which cannot be so converted shall, subject
to the other terms and conditions of this Agreement,
thereafter continue to be outstanding as a
Collateralized Prime Rate Advance. When any
Collateralized Prime Rate Advances are to be
converted, in whole or in part, to Bankers'
Acceptances the Borrower shall repay and there shall
become due and payable on the Drawing Date, the
principal amount of such Collateralized Prime Rate
Advances which are to be so converted. Upon such
Payment Date such Collateralized Prime Rate Advance
will, subject to the provisions hereof, be so repaid
and, as applicable, reborrowed.
(c) AUTOMATIC CONVERSION OF COLLATERALIZED ADVANCES AND COLLATERALIZED
BANKERS' ACCEPTANCES. If, on any date, the sum of the principal amount of
Collateralized Advances and the Face Amount of Collateralized Bankers'
Acceptances then outstanding exceeds the sum of the Equivalent Canadian Dollar
Amount of Permitted Collateral held by the Agent pursuant to the Deposit
Agreement on such date and the Letter of Credit, (i) an amount of
Collateralized Advances up to the amount of such excess shall automatically be
converted to an Uncollateralized Prime Rate Advance, and (ii) if after such
conversions of, or adjustments to, all Collateralized Advances there remains an
excess, the Borrower shall on such date pay to the Agent for the benefit of the
Banks an amount equal to the increased Drawing Fee which would be payable for
Uncollateralized Bankers' Acceptances from such date until the Payment Date for
the Face Amount of Collateralized Bankers' Acceptances equal to such excess.
SECTION 2.4 NOTIFICATION OF BANKS; DISBURSEMENT
(a) NOTIFICATION OF BANKS. Upon receipt of an Accommodation Notice, or
a notice from the Borrower with respect to any outstanding Advance prior to the
Payment Date for such Advance, the Agent shall promptly notify each Bank in
writing of the contents thereof and the amount of such Bank's pro rata portion
of the Advance. Each Bank shall, not later than 11:00 a.m. (Toronto time) on
the date of borrowing specified in such notice, make available to the Agent at
the Agent's Office, or at such account as the Agent shall designate, the amount
of its pro rata portion of any Advance which represents an additional borrowing
hereunder in immediately available funds.
(b) DISBURSEMENT.
<PAGE> 26
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(i) Prior to 2:00 p.m. (Toronto time) on the date of an
Advance hereunder, the Agent shall, subject to the
satisfaction of the conditions set forth in Article
3 hereof, disburse the amounts made available to the
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 Toronto-Dominion Bank.
(ii) Unless the Agent shall have received notice from a
Bank prior to 11:00 a.m. (Toronto time) on the date
of any Advance that such Bank will not make
available to the Agent such Bank's pro rata portion
of such Advance, the Agent may assume that such Bank
has made or will make such pro rata portion
available to the Agent on the date of such Advance
and the 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 pro rata
portion available to the Agent, such Bank agrees to
repay to the 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
Agent, at the Prime Rate.
(iii) If such Bank shall repay to the Agent such
corresponding amount, such amount so repaid shall
constitute such Bank's pro rata portion of the
applicable Advance for purposes of this Agreement.
If such Bank does not repay such corresponding
amount immediately upon the Agent's demand therefor,
the Agent shall notify the Borrower and the Borrower
shall immediately pay such corresponding amount to
the Agent, with interest at the Prime Rate. The
failure of any Bank to fund its pro rata portion of
any Advance shall not relieve any other Bank of its
obligation, if any, hereunder to fund its respective
pro rata 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 Article 3 hereof, a Bank for any
reason fails or refuses to fund its pro rata portion
of such Advance, then, until such time as such Bank
has funded its pro rata 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 pro rata portion of the Accommodations shall
not be counted as outstanding for purposes of
determining "Majority Banks" hereunder, or (B) to
receive payments of
<PAGE> 27
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principal, interest or fees from the Borrower, the
Administrative Agent or the other Banks in respect
of its pro rata portion of the Accommodations.
SECTION 2.5 BANKERS' ACCEPTANCES.
(a) ACCEPTANCES AND DRAFTS. The Banks agree subject to the terms and
conditions of this Agreement to create acceptances ("Bankers' Acceptances") by
accepting Drafts of the Borrower under the Available Commitment from time to
time, on any Business Day prior to the Maturity Date, which Drafts have an
aggregate Face Amount equal to such Bank's pro rata share of the total
Accommodations being made by way of Bankers' Acceptances, except that, if the
fact amount of a Bankers' Acceptance would not be equal to any integral
multiple of $100,000, the fact amount shall be increased or reduced by the
Agent in its sole discretion, even if as a result of any such increase a Bank's
Commitment Ratio would be exceeded. Bankers' Acceptances shall be created by
Banks' acceptance of Drafts. Each Drawing shall be in an aggregate amount of
not less than $1,000,000 and in an integral amount of $100,000.
(b) PROCEDURE FOR DRAWING. The Borrower shall give the Agent
irrevocable written notice not later than 1:00 p.m. (Toronto time) at least two
(2) Business Days prior to the date of the proposed Drawing in the form of an
Accommodation Notice, or telephonic notice followed immediately by an
Accommodation Notice; provided, however, that the Borrower's failure to confirm
any telephonic notice with an Accommodation Notice shall not invalidate any
notice so given if acted upon by the Agent. Upon receipt of an Accommodation
Notice, the Agent shall be responsible for making all necessary arrangements
with each of the Banks with respect to the stamping of Bankers' Acceptances in
the manner contemplated in this Section 2.5. The Borrower shall not in any
Accommodation Notice select an Interest Period for a Draft which ends after the
Maturity Date or which conflicts with the repayments provided for in Sections
2.8 or 2.10(b) hereof.
(c) FORM OF DRAFTS. Each Draft presented by the Borrower for
acceptance by a Bank: (i) shall be in a Face Amount of not less than $1,000,000
and in an integral multiple of $100,000; (ii) shall be dated the date of the
Drawing; and (iii) shall mature and be payable by the Borrower on a Business
Day which occurs one (1), two (2), three (3) or six (6) months (nine (9) or
twelve (12) months subject to availability) after the Drawing Date. The
Borrower hereby renounces, and shall not claim, any days of grace for the
payment of any Bankers' Acceptances.
(d) ACCEPTANCE OF DRAFTS. Not later than 12:00 noon (Toronto time) on
the Drawing Date specified for a relevant Drawing, a Bank: (i) shall complete
one or more Drafts dated the date of such Drawing in an aggregate Face Amount
equal to such Bank's pro rata portion of the amount of such Drawing and with
the Interest Period specified by the Borrower in its Accommodation Notice; (ii)
shall accept the Drafts; and (iii) shall purchase the Bankers' Acceptance
thereby created in the manner provided in Section 2.5(e) hereof.
(e) PURCHASE OF BANKERS' ACCEPTANCES. The Borrower shall request a
quotation from the Agent of the purchase price of all Bankers' Acceptances
created hereunder on the Drawing Date for such Bankers' Acceptances. The Agent,
after consultation with the Banks, shall notify the Borrower of the purchase
price for the Bankers' Acceptance in the Face Amount and for the Interest
Period specified by the Borrower. The purchase price shall be calculated by
reference to
<PAGE> 28
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a discount rate which is an arithmetic average (rounded up to the nearest
0.01%) of the discount rates of the Banks determined in accordance with normal
market practice at or about 10:00 a.m. (Toronto time) on the applicable Drawing
Date for Bankers' Acceptances of each Bank having a comparable Face Amount and
comparable maturity date as such Bankers' Acceptances. Each Bank shall purchase
all Bankers' Acceptances created by such Bank hereunder at the purchase price
quoted by such Bank to the Agent and advised by the Agent to the Borrower and
such purchase price shall be paid and satisfied by such Bank making payment to
the Agent in the amount of such purchase price less the applicable Drawing Fee.
The Agent shall disburse the amounts made available to the 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 Agent. Bankers' Acceptances purchased by a Bank
hereunder may be held by it for its own account until maturity or sold by it at
any time prior thereto in the relevant market therefor in Canada, in the Bank's
sole discretion.
(f) REIMBURSEMENT AT PAYMENT DATE. Subject to Section 2.5(g) hereof,
the Borrower shall pay to the Agent on behalf of a Bank in same day funds, and
there shall become due and payable at 11:00 a.m. (Toronto time) on the Payment
Date for each Bankers' Acceptance, an amount in Canadian Dollars equal to the
Face Amount of such Bankers' Acceptance accepted by such Bank. The Borrower
shall make each payment hereunder in respect of Bankers' Acceptances by deposit
of the required funds in accordance with Section 2.12 hereof. If the Borrower
fails to pay the Bank pursuant to this Section 2.5 (f), or to convert or renew
the Face Amount of such Bankers' Acceptance pursuant to Section 2.5 (g) hereof,
the unpaid amount due and payable to such Bank in respect of such Bankers'
Acceptance shall automatically be converted to a Prime Rate Advance on the
Payment Date, and shall bear interest: (i) for the first three (3) days from
the date on which such amount is converted, or until such earlier date as an
Accommodation Notice is given in accordance with Section 2.2 or Section 2.3
hereof, as the case may be, at a per annum rate of interest equal to 115% of
the Prime Rate Basis; and (ii) thereafter, at a rate per annum equal to the
Prime Rate Basis, in each case, until such amount is paid in full.
(g) RENEWAL OR CONVERSION OF BANKERS' ACCEPTANCES. For effect on the
Payment Date of a Bankers' Acceptance, the Borrower may elect: (i) to renew all
or a portion of the Face Amount of such Bankers' Acceptance by giving an
Accommodation Notice in accordance with this Section 2.5 (including in
accordance with the period for notice set forth in Section 2.5 (b) hereof); or
(ii) to have all or a portion of the Face Amount of such Bankers' Acceptance
converted to an Advance, by giving an Accommodation Notice in accordance with
Section 2.2 or Section 2.3 hereof (including in accordance with the period for
notice set forth in Section 2.2 or Section 2.3 hereof, as the case may be). If
the Bankers' Acceptance to be converted cannot be converted into an Advance in
an amount which may be outstanding as an Advance under this Agreement, then the
amount which cannot be so converted shall be repaid to the Agent on behalf of a
Bank on the date of such conversion in accordance with Section 2.5 (f) hereof.
(h) PREPAYMENTS. Except as required by Section 2.9 or Section 2.10
hereof, no repayment of Bankers' Acceptances shall be made by the Borrower to a
Bank prior to the Payment Dates of such Bankers' Acceptances as have been
created by the Borrower. If the Borrower shall prepay any Bankers' Acceptances
accepted by a Bank as required by Section 2.9
<PAGE> 29
- 25 -
or Section 2.10 hereof then (unless such prepayment has been rescinded or
otherwise is required to be returned by such Bank for any reason), as between
the Borrower and such Bank, such Bank shall thereafter be solely responsible
for the payment of the Face Amount of such Bankers' Acceptances as have been
created by the Borrower to the holder or holders thereof in accordance with the
terms thereof.
(i) CIRCUMSTANCES MAKING BANKERS' ACCEPTANCES UNAVAILABLE. If the
Banks or any one or more of them determine in good faith that by reason of
circumstances affecting the money market there is no market for Bankers'
Acceptances and advises the Agent and the Borrower to such effect, in writing,
then the right of the Borrower to request a Drawing shall be suspended until
the Banks determine that the circumstances causing such suspension no longer
exist and the Agent so notifies the Borrower. Any Accommodation Notice which is
outstanding at the time of such notice by the Banks or any one or more of them
shall be deemed to be an Accommodation Notice requesting a Prime Rate Advance
in the principal amount equal to the requested Face Amount in such
Accommodation Notice.
(j) DRAFT FORMS.
(i) Authorization Regarding Drafts. In order to
facilitate the issuance of Bankers' Acceptances
pursuant to this Agreement, the Borrower hereby
authorizes each of the Banks to complete, sign and
endorse Drafts on its behalf in handwritten form or
by facsimile or mechanical signature or otherwise
and, once completed, signed and endorsed to accept
them as Bankers' Acceptances under this Agreement.
Drafts so completed, signed, endorsed and negotiated
on behalf of the Borrower by the Banks shall bind
the Borrower as fully and effectively as if those
acts were performed by an authorized officer of the
Borrower.
(ii) Safekeeping of Drafts. Any executed Drafts to be
used for Bankers' Acceptances which are held by any
Bank need only be held in safekeeping with the same
degree of care as if they were that Bank's own
property and that Bank was keeping them at a place
at which they are to be held. The Borrower shall, by
written notice to the Agent, designate the Persons
authorized to give the Agent and each Bank
instructions regarding the manner in which the
Bankers' Acceptances are to be completed and the
times at which they are to be issued. Neither the
Agent nor the Banks or any of their respective
directors, officers, employees or representatives
shall be liable for any action taken or omitted to
be taken by any of them under this Section except
for their own gross negligence or wilful misconduct.
SECTION 2.6 INTEREST; FEES.
(a) INTEREST ON UNCOLLATERALIZED PRIME RATE ADVANCES. Interest on each
Uncollateralized Prime Rate Advance shall be computed daily and shall be
payable at the Prime Rate Basis for such Advance, in arrears on the applicable
Payment Date. Interest on
<PAGE> 30
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Uncollateralized Prime Rate Advances then outstanding shall also be due and
payable on the Maturity Date.
(b) INTEREST ON COLLATERALIZED ADVANCES Interest on each
Collateralized Prime Rate Advance shall be computed daily and shall be payable
at the Prime Rate Basis for such Advance, in arrears on the applicable Payment
Date. Interest on Collateralized Prime Rate Advances then outstanding shall
also be due and payable on the Maturity Date.
(c) INTEREST UPON DEFAULT. Immediately upon the occurrence and during
the continuance of an Event of Default under (1) Section 8.1(b) hereof, or (2)
resulting from a failure to comply with any provision of Article 7 hereof, 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.
(d) APPLICABLE MARGIN. With respect to any Accommodation, the
Applicable Margin shall be determined by the Agent based upon the 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 Agent and
each Bank for such fiscal quarter, as follows:
<TABLE>
<CAPTION>
COLLATERALIZED UNCOLLATERALIZED
COLLATERALIZED PRIME RATE UNCOLLATERALIZED BANKERS'
BANKERS' ACCEPTANCES ADVANCES PRIME RATE ADVANCE ACCEPTANCES
LEVERAGE RATIO APPLICABLE MARGIN APPLICABLE MARGIN APPLICABLE MARGIN APPLICABLE MARGIN
- ---------------------------------- ----------------------- ------------------ -------------------- -------------------
<S> <C> <C> <C> <C>
A. Greater than or equal to 0.500% 0.00% 2.500% 4.000%
6.00:1
B. Greater than or equal to 0.500% 0.00% 1.500% 3.000%
4.00:1, but less than 6.00:1
C. Less than 4.00:1 0.500% 0.00% 0.500% 2.000%
</TABLE>
Notwithstanding the foregoing, if the Borrower shall fail timely to
deliver to the Agent the financial statements required for the calculation of
the 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 Leverage Ratio for such period shall be conclusively presumed to be, and
the Applicable Margin shall be calculated based upon, the Leverage Ratio which
is one level greater than the Leverage Ratio in effect for the immediately
preceding fiscal quarter for which financial statements were delivered or were
due to be delivered. If, for any reason, the Leverage Ratio cannot be
calculated or determined, the Applicable Margin shall be based upon the
Leverage Ratio set forth for level A above.
<PAGE> 31
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SECTION 2.7 FEES.
(a) COMMITMENT FEES. The Borrower agrees to pay each of the Banks, in
accordance with their respective Commitment Ratios, commitment fees as follows:
(i) a commitment fee on the aggregate unborrowed available balance of the
Commitment, for each day from the Restatement Date until the Maturity Date at
the rate of one percent (1.000%) per annum and (ii) a commitment fee on the
aggregate unborrowed unavailable balance of the Commitment, for each day from
the Restatement Date to the Maturity Date at the rate of three-eighths of one
percent (0.375%) per annum. Such commitment fees shall be computed daily on the
basis of a year of 365 or 366 days (in the case of a leap year), shall be
payable quarterly in arrears on the last day of each 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.
(b) DRAWING FEES. Drawing Fees for Bankers' Acceptances hereunder
shall be payable in advance on the date of its respective Drawing, and shall be
fully earned when due and non-refundable when paid.
SECTION 2.8 MANDATORY COMMITMENT REDUCTIONS
(a) Commencing March 31, 2002 and at the end of each fiscal quarter
thereafter, the Uncollateralized Portion of the Commitment as in effect on
March 30, 2002, shall be automatically and permanently reduced by the amounts
set forth below:
<TABLE>
<CAPTION>
QUARTERLY REDUCTION OF THE
UNCOLLATERALIZED PORTION OF
THE COMMITMENT IN EFFECT ON
DATES OF COMMITMENT REDUCTION MARCH 30, 2002
----------------------------------------------------- ---------------------------
<S> <C>
March 31, 2002, June 30, 2002, September 30, 2002 and $55,000.00
December 31, 2002
March 31, 2003, June 30, 2003, September 30, 2003 and $330,000.00
December 31, 2003
March 31, 2004, June 30, 2004 and September 30, 2004 $660,000.00
December 31, 2004 remainder
</TABLE>
(b) Commencing with the fiscal year ending December 31, 1999, and for
each fiscal year thereafter, concurrently with the delivery of the financial
statements referred to in Section 6.1 (b) in respect of the final quarter of
each such fiscal year, the Uncollateralized Portion of the Commitment as in
effect at the end of such fiscal year, shall be automatically and permanently
reduced by an amount equal to 50% of the Borrower's Free Cash Flow for the
immediately preceding fiscal year (provided that any such reduction shall be
subject to adjustment based on the financial statements delivered in accordance
with Section 6.2 . The amount of any such
<PAGE> 32
- 28 -
reduction of the Uncollateralized Portion of the Commitment shall be applied to
the reductions required under Section 2.8 (a) in inverse order of maturity.
The Borrower shall make a repayment of the Accommodations
outstanding under the Commitment, together with accrued interest thereon, on or
before the effective date of each reduction in the Commitment under this
Section 2.8, such that the aggregate principal amount of the Accommodations
outstanding at no time exceeds the Commitment as so reduced. In addition, any
remaining unpaid principal and interest under the Commitment shall be due and
payable in full on the Maturity Date.
SECTION 2.9 OPTIONAL PREPAYMENTS; COMMITMENT REDUCTIONS.
(a) PREPAYMENT OF ACCOMMODATIONS. The Borrower may without penalty
(but subject to Section 2.13 hereof) at any time prepay in full or in part the
principal amount of any Advance prior to the Payment Date for such Advance by
giving the Agent at least three (3) Business Days' prior written notice, of
such prepayment, such notice to be in the form of a Repayment Notice. Partial
prepayments shall be in a principal amount of not less than $1,000,000.00, and
in an integral multiple of $500,000.00.
(b) COMMITMENT REDUCTION. The Borrower may without penalty (but
subject to Section 2.13 hereof) at any time terminate or permanently reduce all
or any part of the Commitment by giving the Agent and the Banks at least three
(3) Business Days' prior written notice thereof, such notice to be in the form
of a Repayment Notice; provided, however, that any reduction shall reduce the
Commitment in a principal amount of at least $3,500,000.00 and in an integral
multiple of $500,000.00, and provided, further, that no such reduction shall be
permitted if it would require a prepayment of a Bankers' Acceptance. The
Borrower shall make any required repayment or prepayment of Accommodations
outstanding under the Commitment, plus accrued interest on such portion of the
Accommodations and any accrued fees in respect thereof, on or before the
effective date of the reduction of the Commitment, so that the principal amount
of the Accommodations outstanding after such repayment or prepayment does not
exceed the Commitment as so reduced. The Borrower shall not have any right to
rescind any termination or reduction pursuant to this Section 2.9 (b). Any
reduction of the Commitment effected pursuant to this Section 2.9 (b) shall be
applied pro rata as between the Uncollateralized Portion of the Commitment and
the remaining portion of the Commitment.
SECTION 2.10 MANDATORY REPAYMENTS
In addition to the scheduled Commitment reductions provided for in
Section 2.8 hereof, the Borrower shall repay the Obligations as follows:
(a) ACCOMMODATIONS IN EXCESS OF AVAILABLE COMMITMENT. If, at any time,
the amount of the Accommodations then outstanding under the Commitment shall
exceed the Available Commitment, the Borrower shall, on such date and subject
to Section 2.13 hereof, provide the Agent with a Repayment Notice and make a
repayment of the principal amount of the Accommodations in an amount equal to
such excess, together with any accrued interest and fees with respect thereto.
If any such repayment would require a prepayment of any Bankers' Acceptance,
the Borrower shall make an interest-bearing deposit with the Agent the Face
<PAGE> 33
- 29 -
Amount of such Bankers' Acceptances and hereby irrevocably authorizes and
directs the Agent to apply such payment to the Borrower's reimbursement
obligations in respect of such Drawing on the Payment Date therefor.
(b) 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 2.11 EVIDENCE OF OBLIGATIONS; ACCOMMODATION ACCOUNTS.
(a) The indebtedness of the Borrower in respect of all Obligations
(other than Accommodations and interest) hereunder shall be prima facie
evidenced by the account records maintained by the Agent. The failure of the
Agent to correctly record any amount or date shall not, however, affect the
obligation of the Borrower to pay amounts due hereunder to the Agent or any of
the Banks in accordance with this Agreement.
(b) Each Bank may open and maintain on its books in the name of the
Borrower a loan account with respect to its pro rata portion of the
Accommodations and interest thereon. Each Bank which opens such a loan account
shall debit such loan account for the principal amount of its pro rata 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
Accommodations. The records of a Bank with respect to the loan account
maintained by it shall be prima facie evidence of its pro rata portion of the
Accommodations 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 Accommodations.
SECTION 2.12 MANNER OF PAYMENT.
(a) Each payment (including any prepayment) by the Borrower on account
of the principal of or interest on the Accommodations, commitment fees and any
other amount owed to the Banks or the Agent or any of them under this Agreement
or the other Loan Documents shall be made not later than 1:00 p.m. (Toronto
time) on the date specified for payment under this Agreement to the Agent at
the Agent's Office, for the account of the Banks or the Agent, as the case may
be, in lawful Canadian currency in immediately available funds. Any payment
received by the Agent after 1:00 p.m. (Toronto time) shall be deemed received
on the next Business Day. Receipt by the Agent of any payment intended for any
Bank or Banks hereunder prior to 1:00 p.m. (Toronto 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 Agent will
promptly thereafter distribute the amount so received in like funds to such
Bank. If the Agent shall not have received any payment from the Borrower as and
when due, the Agent will promptly notify the Banks accordingly.
(b) 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 Agent with respect to the Obligations, the Agent shall distribute such
amounts in the following order of priority, all on a pro rata basis to the
Banks: (i) to the payment on a pro rata basis of any fees or expenses then due
and payable to the Agent and the Banks, or any of them; (ii) to the payment of
interest then
<PAGE> 34
- 30 -
due and payable on the Accommodations; (iii) to the payment of all other
amounts not otherwise referred to in this Section 2.12(b) then due and payable
to the Agent and the Banks, or any of them, hereunder or under any other Loan
Document; and (iv) to the payment of principal then due and payable on the
Accommodations.
(c) 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.
(d) On the date of any Accommodation or the maturity thereof,
including the date of any extension or conversation of any Accommodation (the
"Transaction Date" ), the Agent shall be entitled to net amounts payable in one
currency on such Transaction Date by the Agent to a Bank against amounts
payable in the same currency on such Transaction Date by such Bank to the Agent
for the account of the Borrower. Similarly, on any Transaction Date, the
Borrower hereby authorizes each Bank to net amounts payable in one currency on
such date by such Bank to the Agent, for the account of the Borrower, against
amounts payable in the same currency on such date by the Borrower to the Agent,
for the account of such Bank, in accordance with the Agent's calculations made
in accordance with the provisions of this Agreement.
SECTION 2.13 REIMBURSEMENT.
(a) Upon the earlier of demand or the Maturity Date, the Borrower
shall pay to the Agent or the Banks such amount or amounts as will compensate
the Agent or the Banks for any loss, cost or expense incurred by them with
respect to any Bankers' Acceptance arising from any Claim, including legal fees
and disbursements, respecting the collection of amounts owing by the Borrower
hereunder in respect of such Bankers' Acceptance or the enforcement of the
Agent's or Banks' rights hereunder in respect of such Bankers' Acceptance,
including legal proceedings attempting to restrain the Agent or the Banks from
paying any amount under such Bankers' Acceptance, except for any loss, cost or
expense resulting from the gross negligence or wilful misconduct of the Agent
or such Bank, as applicable, as determined by a final, non-appealable judicial
order of a court of competent jurisdiction. 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 prima facie evidence of such
losses or expenses absent manifest error.
(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.
<PAGE> 35
- 31 -
SECTION 2.14 PRO RATA TREATMENT.
(a) ADVANCES. Each Advance from the Banks hereunder shall be made pro
rata on the basis of the respective Commitment Ratios of the Banks.
(b) PAYMENTS PRIOR TO DECLARATION OF EVENT OF DEFAULT. Except as
provided in Section 2.5(f) hereof and Article 10 hereof, each payment and
prepayment of principal of the Accommodations and each payment of interest on
the Accommodations, shall be made to the Banks pro rata on the basis of their
respective unpaid principal amounts outstanding hereunder 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 Accommodations in excess of its pro rata share of the
Accommodations under its Commitment Ratio, such Bank shall forthwith purchase
from the other Banks such participations in the portion of the Accommodations
made by them as shall be necessary to cause such purchasing Bank to share the
excess payment rateably 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 2.14(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.
(c) PAYMENTS SUBSEQUENT TO DECLARATION OF EVENT OF DEFAULT. Subsequent
to the acceleration of the Accommodations under Section 8.2 hereof, payments
and prepayments made to the Agent or the Banks or otherwise received by any of
them (from realization on Collateral for the Obligations or otherwise) on
account of the Accommodations shall be distributed as follows: first, to the
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 in connection with the sale or disposition of any
Collateral for the Obligations; second, to the payment of fees then due and
payable to the Agent and the Banks and any reasonable costs and expenses, if
any, incurred by any of the Banks under Section 11.2 hereof, pro rata on the
basis of the amount of such Obligations; third, to any unpaid interest which
may have accrued on the Obligations, pro rata on the basis of the amount of
such Obligations; fourth, to any unpaid principal or the Face Amount of the
Obligations and Obligations under Interest Rate Hedge Agreements, pro rata on
the basis of the amount of such Obligations; fifth, to damages incurred by the
Agent or any Bank by reason of any breach hereof or of any other Loan Document,
pro rata on the basis of the amount of such Obligations; and sixth, upon
satisfaction in full of all remaining Obligations, to the Borrower or as
otherwise required by Applicable Law.
<PAGE> 36
- 32 -
ARTICLE 3
CONDITIONS PRECEDENT
SECTION 3.1 CONDITIONS PRECEDENT TO AGREEMENT
The effectiveness of this Agreement and the obligation of the
Banks to make Accommodations hereunder are subject to the prior or
contemporaneous fulfilment of each of the following conditions:
(a) The Agent and the Banks shall have completed their due diligence
investigation and examination of the Borrower's operation and affairs and shall
have determined, in their sole discretion, acting reasonably, that the results
of such investigation and examination are satisfactory, including, without
limitation, in respect of matters relating to (i) current business plans, (ii)
financial projections, and (iii) the operations of the Borrower Group on a
consolidated basis;
(b) The Agent and the Banks shall have received each of the following:
(i) the loan certificate of the Borrower dated as of the
Restatement Date, in substantially the form attached
hereto as Exhibit D, including a certificate of
incumbency with respect to each Authorized Signatory
of such Person, together with the following items:
(A) a true, complete and correct copy of the
Certificate and Articles of Incorporation and
by-laws of the Borrower as in effect on the
Restatement Date, or confirmation that there have
been no amendments to such articles and by-laws
since the Agreement Date, (B) certificates of
status, compliance or good standing for the Borrower
issued by the appropriate government officials of
the jurisdiction of incorporation of the Borrower
and for each jurisdiction in which the Borrower
carries on business, (C) a true, complete and
correct copy of the corporate resolutions of the
Borrower authorizing the Borrower to execute,
deliver and perform this Agreement and the other
Loan Documents to which it is a party and the
transactions contemplated hereby and thereby, and
(D) a true, complete and correct copy of any
shareholders' agreements or voting trust agreements
in effect with respect to the Capital Stock of the
Borrower;
(ii) a loan certificate of each Subsidiary of the
Borrower dated as of the Restatement Date, in
substantially the form attached hereto as Exhibit E,
including a certificate of incumbency with respect
to each Authorized Signatory of such Person,
together with the following items: (A) a true,
complete and correct copy of the Certificate and
Articles of Incorporation and by-laws of such Person
as in effect on the Restatement Date, or
confirmation that there have been no amendments to
such articles and by-laws since the Agreement Date,
(B) certificates of status, compliance or good
standing for such Person issued by the appropriate
government officials of the jurisdiction of
incorporation or formation, as applicable, of such
Person and for each jurisdiction in which such
Person is required to
<PAGE> 37
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qualify to do business, (C) a true, complete and
correct copy of the corporate resolutions of such
Person authorizing such Person to execute, deliver
and perform the Loan Documents to which it is party
and the transactions contemplated thereby, and (D) a
true, complete and correct copy of any shareholders'
agreements or voting trust agreements in effect with
respect to the Capital Stock of such Person;
(iii) duly executed acknowledgements and confirmations
from the Borrower and any of its Affiliates that had
previously granted security in connection with this
Agreement prior to its amendment and restatement,
that such security (A) remains in full force and
effect, unamended, and (B) secures the obligations
of the Borrower under this Agreement (it being
acknowledged that no such document is required from
Paging Network, Inc. because it has been released
from any obligations it had in connection with
security it previously delivered);
(iv) evidence of the registration and continued
perfection of the Security Documents in all offices
where such registration, filing or recording is
necessary or desirable to protect any rights or
remedies of the Agent and the Banks thereunder;
(v) copies of insurance binders or certificates covering
the assets of the Borrower and its Subsidiaries, and
otherwise meeting the requirements of Section 5.5
hereof, together with copies of the underlying
insurance policies;
(vi) a legal opinion of Blake Cassels & Graydon, Canadian
counsel to the Borrower and its Subsidiaries,
addressed to each Bank and the Agent, and dated as
of the Restatement Date;
(vii) audited year-end financial statements of the
Borrower and its Subsidiaries on a consolidated
basis for the fiscal year ending December 31, 1998,
and unaudited financial statements for the Borrower
Group on a combined basis for the fiscal year ending
December 31, 1998 and the fiscal quarter ending
March 31, 1999, certified by (A) in the case of the
audited statements, an independent auditor
acceptable to the Agent, and (B) in the case of the
unaudited statements, the Chief Financial Officer or
the Chief Executive Officer of the Borrower;
(viii) lien search results with respect to the Borrower and
its Subsidiaries from appropriate jurisdictions; and
(ix) all such other documents as the Agent or any Bank
may reasonably request, certified by an appropriate
governmental official or an Authorized Signatory if
so requested.
(c) The Agent and the Banks shall have received evidence satisfactory
to them that all Necessary Authorizations, including any consent or
authorization of Industry Canada and all
<PAGE> 38
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other necessary consents to the closing of this Agreement and the other Loan
Documents, have been obtained or made, are in full force and effect and are not
subject to any pending or, to the knowledge of the Borrower, threatened
reversal or cancellation, and the Agent and the Banks shall have received a
certificate of an Authorized Signatory so stating.
(d) The Borrower shall certify to the Agent and the Banks that each of
the representations and warranties in Article 4 hereof are true and correct as
of the Agreement Date and that no Default or Event of Default then exists or is
continuing.
(e) There shall not exist as of the Restatement 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, which,
in the judgment of the Agent, could be expected to have a Materially Adverse
Effect.
(f) No event shall have occurred and no condition shall exist which,
in the judgment of the Agent, has had or could be expected to have a Materially
Adverse Effect.
(g) The Agent and the Banks shall have received evidence satisfactory
to them of the simultaneous closing of the PageNet Canada Agreement dated as of
even date hereof.
(h) The Agent and the Banks shall have received all agreements entered
into, in connection with the Business, by PageNet and Madison Venture
Corporation and their respective Subsidiaries, which agreements shall be in
form and substance satisfactory to the Agent and the Banks and shall each be
collaterally assigned to the Agent for the benefit of the Banks.
(i) The Agent and the Banks and their counsel shall have received
payment of all fees due and payable on the Restatement Date.
SECTION 3.2 CONDITIONS PRECEDENT TO ALL ACCOMMODATIONS
The obligation of the Banks to make any Accommodation hereunder is
subject to the fulfilment of each of the following conditions immediately prior
to or contemporaneously with such Accommodation satisfactory to the Majority
Banks:
(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 or otherwise, are made at and as of the
time of such Accommodation, 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 Accommodation, 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
aggregate principal amount of Accommodations outstanding hereunder, the Agent
shall have received a duly executed Accommodation Notice;
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(c) Each of the 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 Agent or any Bank may
reasonably request;
(d) No event shall have occurred and no condition shall exist which
has had or which could reasonably be expected to have a Materially Adverse
Effect;
(e) No Applicable Law, proposed Applicable Law, change in any
Applicable Law, or the interpretation or enforcement of any Applicable Law
shall have been enacted (including the enactment of any Applicable Law
respecting Taxes or environmental matters or any change therein or in the
interpretation or enforcement thereof), the effect of which will be to prohibit
the Agent or any of the Banks from making such Accommodation or to increase
materially the cost thereof to the Banks.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
SECTION 4.1 REPRESENTATIONS AND WARRANTIES
To induce the Agent and each of the Banks to make Accommodations
available hereunder, the Borrower hereby agrees, represents and warrants, upon
the Restatement Date, and at all times thereafter as required pursuant to
Sections 3.2 and 4.2 hereof, in favour of the Agent and each Bank that:
(a) Organization; Ownership; Power; Qualification. The Borrower is a
corporation duly incorporated or amalgamated, as the case may be, and
organized, validly subsisting and in good standing under the laws of its
jurisdiction of incorporation. 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 and to borrow monies and to enter into
agreements therefor. Each Subsidiary of the Borrower is a corporation or
partnership duly organized, validly existing and in good standing under the
laws of its jurisdiction of 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, licensed or registered to carry on business as an extra-provincial
corporation in the jurisdictions in which the nature of its properties or the
business carried on by it make such qualification necessary.
(b) Authorization; Enforceability. The Borrower has the corporate
power and has taken all necessary corporate action to authorize it to obtain
Accommodations 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 only to their
enforceability against the other parties thereto and to any limitation under
Applicable Laws relating to: (i) bankruptcy, insolvency, reorganization,
moratorium or
<PAGE> 40
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creditors' rights generally; and (ii) the discretion that a court may exercise
in the granting of equitable remedies (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
Restatement Date are as set forth on Schedule 3 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 only
to their enforceability against the other parties thereto and to any limitation
under Applicable Laws relating to: (i) bankruptcy, insolvency, reorganization,
moratorium or creditors' rights generally; and (ii) the discretion that a court
may exercise in the granting of equitable remedies (insofar as any such law
relates to the bankruptcy, insolvency or similar event of any such Subsidiary).
The Borrower's ownership interest in each of its 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 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 of
incorporation, constating documents or by-laws or partnership agreements, 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, investing
in, wireless messaging systems and communications businesses incidental or
directly relating thereto.
(f) Licenses, etc. The Licenses have been duly issued and are in full
force and effect. The Borrower and its Subsidiaries are in compliance in all
material respects with all of the provisions thereof. The Borrower and its
Subsidiaries have secured all Necessary Authorizations and all such Necessary
Authorizations are in full force and effect. Neither any License nor any
<PAGE> 41
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Necessary Authorization is the subject of any pending or, to the best of the
Borrower's knowledge, threatened revocation.
(g) Compliance with Law. The Borrower and its Subsidiaries are in
compliance in all material respects with all material Applicable Law,
including, without limitation, all Environmental Laws.
(h) Title to Assets. Each of the Borrower and its Subsidiaries is the
sole beneficial owner of, and has a good and marketable title to, and will be
lawfully possessed of its Assets, including the Collateral, free and clear of
all Liens, except Permitted Liens, and each of the Borrower and the
Subsidiaries has full legal right to mortgage, pledge, charge and assign to the
Agent for the benefit of itself and the Banks the Collateral to the Agent
pursuant to the Security Documents as contemplated herein. No Person has any
written or oral agreement, option, understanding or commitment, or any right or
privilege capable of becoming any agreement, option, understanding or
commitment, for the purchase from the Borrower or the Subsidiaries of any of
the Collateral.
(i) Litigation. There is no action, suit, proceeding or investigation
pending against, or, to the knowledge of the Borrower, 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 Entity in Canada or elsewhere, nor is there any such material
action, suit or proceeding which would prevent the Borrower from proceeding
with any Accommodations. None of the Borrower or any of its Subsidiaries is in
default with respect to any judgment, order, writ, injunction, decree or award
of any court or Governmental Entity or any arbitrator or board in Canada or
elsewhere, nor is there any judgment, order, writ, injunction, decree or award
which would prevent the Borrower from proceeding with any Accommodations. 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. Each of the Borrower and its Subsidiaries has in a timely
manner filed all tax returns, elections, filings and reports with respect to
Taxes required by, and in accordance with, Applicable Law to be filed by it.
Each of the Borrower and its Subsidiaries has paid, or reserved in the
financial statements, all Taxes which are due and payable, and has paid all
assessments and reassessments and all other Taxes, governmental charges
penalties, interest and fines due and payable by it on or before the date
hereof. Each of the Borrower and its Subsidiaries has no liability, contingent
or otherwise, for Taxes, except Taxes not now due and payable with respect to
ordinary operations during the current fiscal period adequate provision for the
payment of which has been made. Each of the Borrower and its Subsidiaries has
paid as and when due all applicable Taxes and remitted as required by
Applicable Law all applicable Taxes and deductions and any interest or
penalties related thereto, except any such taxes (i) the payment of which the
Borrower or any Subsidiary is diligently contesting in good faith by
appropriate proceedings, (ii) for which adequate reserves to the extent
required by GAAP have been provided on the books of the Borrower or the
Subsidiary involved, and (iii) as to which no Lien
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other than a Permitted Lien has attached and no foreclosure, distraint, sale or
similar proceedings have been commenced.
(k) Financial Statements. The Borrower has furnished or caused to be
furnished to the Agent and the Banks financial information for the Borrower and
its Subsidiaries, all of which, together with other financial statements
furnished to the Banks subsequent to the Restatement Date have been prepared in
accordance with GAAP and present fairly in all material respects the financial
position of the Borrower and its Subsidiaries on a consolidated and
consolidating (unconsolidated) 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 its 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.
(l) No Material Adverse Change. Since December 31, 1998, 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 ERISA Affiliate of the Borrower and
each of their respective Plans are in compliance with ERISA and the Code
(except for instances of non-compliance which, individually and in the
aggregate, would not have a Materially Adverse Effect) and neither the Borrower
nor any of its ERISA Affiliates has incurred any accumulated funding deficiency
with respect to any such Employee Pension Plan within the meaning of ERISA or
the Code. The Borrower and each other ERISA Affiliate have complied with all
requirements of COBRA (except for instances of non-compliance which,
individually and in the aggregate, would not have a Materially Adverse Effect).
Neither the Borrower nor any of its ERISA Affiliates 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 except for promises which, individually or in the
aggregate, would not have a Materially Adverse Effect. Neither the Borrower nor
any of its ERISA Affiliates has incurred any material liability to PBGC in
connection with any Plan. The assets of each Plan of the Borrower and its ERISA
Affiliates 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 Plan. No 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 non-exempt "prohibited
transaction" (as such term is defined in Section 406 of ERISA or Section 4975
of the Code) which would subject the Borrower or any of its ERISA Affiliates to
the tax or penalty on "prohibited transactions" imposed by Section 502 of ERISA
or Section 4975 of the Code, which tax or penalty, individually or in the
aggregate, would have a Materially Adverse Effect. Neither the Borrower nor any
of its ERISA Affiliates is obligated to make any contribution to a
Multiemployer Plan.
(n) No Margin Stock. The Borrower and its Subsidiaries do not own or
have any present intention of acquiring any "margin stock" as defined in
Regulation U (12 CFR Part 221, as amended) of the Board of Governors of the
Federal Reserve System (herein called "Margin
<PAGE> 43
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Stock"). None of the proceeds of any Accommodation will be used, directly or
indirectly, for the purpose of purchasing or carrying any Margin Stock or
maintaining, reducing or retiring any indebtedness which was originally
incurred to purchase or carry any Margin Stock, or to extend credit to others
for the purpose of purchasing or carrying any Margin Stock, or for any other
purpose which might constitute this transaction a "purpose credit" within the
meaning of such Regulation (12 CFR Part 207, as amended). Neither the Borrower
nor any agent acting on its behalf has taken or will take any action which
might cause this Agreement or any of the Loan Documents to violate, or be
inconsistent with, Regulation G, Regulation U or Regulation X (12 CFR Part 224,
as amended) or any other regulation of the Board of Governors of the Federal
Reserve System or to violate, or be inconsistent with, the Securities Exchange
Act of 1934, as amended, in each case as in effect now or as the same may
hereafter be in effect.
(o) Governmental Regulation. Neither the Borrower nor any of its
Subsidiaries is required to obtain any consent, approval, authorization, permit
or license (excluding Immaterial Site Specific Licenses) which has not already
been obtained from, or effect any filing or registration which has not already
been effected with, any Governmental Entity 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 (excluding Immaterial Site Specific Licenses)
which has not already been obtained from, or effect any filing or registration
which has not already been effected with, any Governmental Entity in connection
with the performance, in accordance with their respective terms, of this
Agreement or any other Loan Document.
(p) Absence of Default, Etc. Neither the Borrower nor any of its
Subsidiaries is subject to, or a party to, any charter or by-law restriction,
any Applicable Law, any Claim, any contract or instrument, a Lien or any other
restriction of any kind or character which would prevent the consummation of
the transactions contemplated by this Agreement or compliance by the Borrower
or such Subsidiary with the terms, conditions and provisions hereof or of any
Loan Document to which it is a party or the continued operation of the business
on or after the date hereof on substantially the same basis as operated to the
date hereof in each case. Neither the Borrower nor any of its Subsidiaries is a
party to or bound by any contract or agreement continuing after the Restatement
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.
(q) Accuracy and Completeness of Information. None of: (i) this
Agreement, (ii) any of the Loan Documents, or (iii) any certificate or
statement in writing which has been supplied by or on behalf of the Borrower or
its Subsidiaries or by any of the directors, officers or employees of the
Borrower or its Subsidiaries in connection with the transactions contemplated
hereby or by any of the Loan Documents contained any untrue statement of a
material fact, or omitted any statement of a material fact, necessary in order
to make the statements contained herein or therein not materially misleading at
the time it was furnished. There is no material fact known to the Borrower or
its Subsidiaries or any of their directors, officers or employees which the
Borrower has not disclosed to the Agent in writing and which could be expected
to have a Materially Adverse Effect.
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(r) Agreements with Affiliates. Except for (1) agreements or
arrangements set forth on Schedule 4 and (2) agreements or arrangements with
Affiliates wherein the Borrower or one or more of its Subsidiaries provides
services to such Affiliates on terms no less advantageous to the Borrower or
such Subsidiary than would be the case if such transaction had been effected
with a non-Affiliate, neither the Borrower nor any of its 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.
(s) Priority. Except as a result of the action or inaction of the
Agent or any Bank, the Security Interest is a valid and perfected first
priority security interest in the Collateral in favour of the 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).
(t) Indebtedness. Neither the Borrower nor any of its Subsidiaries has
outstanding, as of the Restatement Date, and after giving effect to the initial
Accommodations hereunder on the Restatement Date, any Indebtedness for Money
Borrowed other than the Obligations hereunder.
(u) Solvency. As of the Restatement Date after the closing of the
PageNet Canada Agreement, and after giving effect to the transactions
contemplated by the Loan Documents, the Borrower and its Subsidiaries were and
continue to be able to pay their liabilities as they become due.
(v) Books and Records. All books and records of the Borrower and its
Subsidiaries have been fully, properly and accurately kept and completed in
accordance with GAAP and there are no material inaccuracies or discrepancies of
any kind contained or reflected therein.
(w) Environmental Liabilities. Neither the Borrower nor any of its
Subsidiaries has incurred or is incurring any material liability pursuant to
any Environmental Law, including any material Environmental Liabilities and
Costs. To the best knowledge of the Borrower, there is no past or present fact,
condition or circumstance relating to the Business, or the Real Estate, the
Leasehold Real Estate and the Assets currently or formerly owned or leased by
or under the charge, management or control of the Borrower or any of its
Subsidiaries (the "Affected Properties") that could reasonably be expected to
result in any material liability or material potential liability under any
Environmental Laws. Neither the Borrower nor any of its Subsidiaries has
received an Environmental Notice pursuant to, or raising concerns in respect
of, any material liability pursuant to any Environmental Laws and to the best
of the knowledge of the Borrower, there are no reasonable grounds which would
give rise to the issuance of any Environmental Notice concerning material
liability pursuant to any Environmental Law. To the
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best knowledge of the Borrower, there are no Hazardous Substances at, in, or
under the Affected Properties at levels or concentrations in excess of levels
or concentrations set out in Environmental Laws. Neither the Borrower nor, to
the best of the knowledge of the Borrower, any of its directors or officers has
ever: (i) been convicted of any offense for non-compliance with any
Environmental Laws; (ii) been fined or otherwise penalized for non-compliance
with Environmental Laws; or (iii) settled any prosecution in respect thereof
short of conviction.
(x) Material Agreements. The Transponder Lease Agreement, the Network
and Equipment Agreement and the Sales and Distribution Agreement represent the
only material agreements of the Borrower and its Subsidiaries.
(y) Year 2000 Warranty.
(i) The Borrower and its Subsidiaries have reviewed and
assessed the potential impact of the Year 2000 issue
on all areas of their critical businesses and
operations (including those areas that may be
affected by, or interfaced with, third party
suppliers and clients);
(ii) The Borrower and its Subsidiaries have prepared and
are implementing a Year 2000 Plan, the particulars
of which are appended hereto at Schedule 5, which
schedule also accurately sets out the current status
of activities under the Year 2000 Plan;
(iii) Subject to Third Party Factors, the Year 2000
Systems of the Borrower and its Subsidiaries shall
be Year 2000 Ready prior to December 31, 1999;
(iv) The cost to the Borrower (on a consolidated basis)
of completing the steps necessary for the Year 2000
Systems of the Borrower and its Subsidiaries to be
Year 2000 Complaint will not result in a Default,
and are not expected, in the reasonable opinion of
the Borrower, to have a Materially Adverse Effect on
the Borrower and its Subsidiaries, taken as a whole;
provided that this representation and warranty shall
not extend to any costs relating to steps to be
taken by Third Parties to deal effectively with
Third Party Factors; and
(v) The Borrower and its Subsidiaries have taken
reasonable commercial efforts, consistent with the
importance of succeeding therein to the continued
operation of the business of the Borrower and its
Subsidiaries in the ordinary course, to assess,
monitor and respond to the Third Party Factors in
order to minimize the impact of Third Party Factors
on the ability of the Borrower and its Subsidiaries
to have their Year 2000 Systems Year 2000 Ready
prior to December 31, 1999.
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 Restatement Date and on the date of each Accommodation except
to the extent previously
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fulfilled in accordance with the terms hereof and to the extent relating
specifically to the Restatement 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 Agent, any investigation
or inquiry by any Bank or the Agent, or the making of any Advance under this
Agreement.
SECTION 4.3 NO REPRESENTATIONS BY BANKS
No representation, warranty or other statement made by the Agent or
any one or more of the Banks in respect of the Commitment or any Accommodation
made hereunder shall be binding on such Person unless made by it in writing.
ARTICLE 5
GENERAL COVENANTS
So long as any of the Obligations is outstanding and unpaid or the
Banks have any Commitment 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
The Borrower will, and will cause each of its Subsidiaries to:
(a) preserve and maintain its existence, and its material rights,
franchises, licenses and privileges in the jurisdiction of its incorporation,
including, without limiting the foregoing, the Licenses and all other Necessary
Authorizations; and
(b) 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)
comply in all material respects with the requirements of all material
Applicable Law, including, without limitation, all Environmental Laws, and (b)
engage solely in the Business.
SECTION 5.3 MAINTENANCE OF PROPERTIES
The Borrower will, and will cause each of its 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 its 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 its Subsidiaries will maintain a fiscal year ending on December
31.
SECTION 5.5 INSURANCE
The Borrower will, and will cause each of its Subsidiaries to:
(a) Maintain in respect of itself, and each of its Subsidiaries, or
cause each of its Subsidiaries to maintain directly: (i) in respect of the
Collateral, adequate insurance coverage at all times with financially sound and
reputable insurers in such forms and amounts and against such risks acceptable
to the Agent and the Banks, showing the Agent as an additional named insured
and loss payee; and (ii) in respect of itself and its Assets (other than the
Collateral), adequate insurance coverage at all times with financially sound
and reputable insurers in such forms and amounts and against such risks as are
reasonable for the business operations that are carried on by it from time to
time.
(b) Require that each insurance policy provide for at least thirty
(30) days' prior written notice to the Agent of any termination of or proposed
cancellation or nonrenewal of such policy.
SECTION 5.6 PAYMENT OF TAXES AND CLAIMS
The Borrower will, and will cause each of its Subsidiaries to, pay and
discharge, before the same shall become delinquent: (i) all Taxes, assessments
and governmental charges or levies or Claims imposed upon it or upon any of its
Assets; and (ii) all lawful Claims which, if unpaid, might by Applicable Law
become a Lien upon its Assets, in each case except for any such Tax,
assessment, charge, levy or Claim which would result in a Lien which is a
Permitted Lien. The Borrower will, and will cause each of its Subsidiaries to,
timely file all information returns required by any Governmental Entity.
SECTION 5.7 COMPLIANCE WITH ERISA.
(a) The Borrower shall, and shall cause its Subsidiaries to avoid any
"accumulated funding deficiency" within the meaning of Section 412(a) of the
Code with respect to any Employee Pension Plan, 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 furnish to the 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, which could subject the Borrower
or any of its ERISA Affiliates to the tax or penalty on "prohibited
transactions" imposed by Section 502 of ERISA or Section 4975 of the Code which
tax or penalty,
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individually or in the aggregate, would have a Materially Adverse Effect, that
any Reportable Event has occurred with respect to any Employee Pension Plan of
the Borrower or any of its ERISA Affiliates or that PBGC has instituted or will
institute proceedings under Title IV of ERISA to terminate any Employee Pension
Plan of the Borrower or any of its ERISA Affiliates or to appoint a trustee to
administer any Employee Pension Plan of the Borrower or any of its ERISA
Affiliates, 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 Labour which sets forth or proposes any action or determination
with respect to such Plan which could have a Materially Adverse Effect, (iii)
promptly upon the Agent's request therefor, any annual report filed pursuant to
ERISA in connection with each Employee Pension Plan maintained by the Borrower
or any of its ERISA Affiliates, including the Subsidiaries, and (iv) promptly
upon the Agent's request therefor, such additional information concerning any
such Employee Pension Plan as may be reasonably requested by the Agent or any
Bank.
(c) The Borrower will promptly notify the 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 Service or the Department of Labour with
respect to any Plan of the Borrower or its ERISA Affiliates, including its
Subsidiaries which, individually or in the aggregate, could have a Materially
Adverse Effect.
(d) Within the time required for notice to the PBGC under Section
302(f)(4)(A) of ERISA, the Borrower will notify the Agent and the Banks of any
lien arising under Section 302(f) of ERISA in favour of any Plan of the
Borrower or its ERISA Affiliates, including its Subsidiaries.
(e) 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 would have a Materially Adverse Effect:
(i) engage in any transaction in connection with which
the Borrower or any of its Subsidiaries would 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 would result in any
liability of the Borrower, any of its Subsidiaries
or any ERISA Affiliate to the PBGC, other than for
payment of PBGC premiums;
<PAGE> 49
- 45 -
(iii) fail to make full payment when due of all amounts
which, under the provisions of any Employee Pension
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 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
Subsidiaries will also permit representatives of the 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; ACCOMMODATIONS
Subject to any provisions herein or in any other Loan Document, the
Borrower will, and will cause each of its Subsidiaries to, pay any and all of
their respective Indebtedness prior to its becoming delinquent or having any
late fees assessed or to the extent of trade payables of such Persons otherwise
in accordance with ordinary business practices customary for the wireless
messaging 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
Accommodations directly or indirectly:
(a) to fund Capital Expenditures associated with the Business and the
ongoing need for wireless messaging units for its Canadian wireless messaging
system;
(b) for working capital needs and other general corporate purposes of
the Borrower 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 payments permitted under Section 7.7 hereof).
<PAGE> 50
- 46 -
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.
SECTION 5.11 PROTECT SECURITY INTERESTS
Except for the filing of renewal statements and the making of other
filings by the Agent as a secured party or assignee, at all times take all
action and supply the Agent with all information necessary to maintain the
Liens provided for under the Security Documents and confer upon the Agent the
security interests intended to be created thereby.
SECTION 5.12 ENVIRONMENTAL AUDITS
Promptly if requested by the Agent: (i) if a Default has occurred and
is continuing or the Agent or the Majority Banks have a reasonable good faith
commercial concern as to the financial condition of the Borrower, conduct
environmental audits having a scope acceptable to the Agent with respect to the
potential liability under applicable Environmental Laws of the Borrower and its
Subsidiaries, their respective Real Estate or other Assets, and the Business,
such environmental audits to be conducted by the Environmental Auditor, and
provide copies of such environmental audits to the Agent; (ii) if the Agent or
the Majority Banks have a good faith concern that there is a material
non-compliance by the Borrower or any of its Subsidiaries with Environmental
Laws, conduct such environmental audit concerning alleged material
non-compliance as the Agent or such Majority Banks may require, such audits to
be conducted by the Environmental Auditor, and provide copies of such
environmental audits to the Agent; and (iii) diligently remedy any material
non-compliance with Environmental Laws revealed by any such audit.
SECTION 5.13 FURTHER ASSURANCES
At its cost and expense, upon request of the Agent, the Borrower will
duly execute and deliver or cause to be duly executed and delivered to the
Agent such further instruments and do and cause to be done such further acts as
may be necessary or proper in the reasonable opinion of the Agent to carry out
more effectively the provisions and purposes of the Loan Documents.
ARTICLE 6
INFORMATION COVENANTS
So long as any of the Obligations is outstanding and unpaid or the
Banks have any Commitment 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 Agent, at their respective offices:
SECTION 6.1 QUARTERLY FINANCIAL STATEMENTS AND INFORMATION
Within forty-five (45) days after the last day of each fiscal quarter
of the Borrower during any fiscal year:
<PAGE> 51
- 47 -
(a) a copy of the balance sheets of (i) the Borrower on a consolidated
and consolidating (unconsolidated) basis with its Subsidiaries, and (ii) the
Borrower Group on a combined basis, in each case as at the end of such quarter
and as of the end of the preceding fiscal year; and
(b) the related statements of operations and the related statements of
cash flows of (i) the Borrower on a consolidated basis with its Subsidiaries,
and (ii) the Borrower Group on a combined basis, in each case for such quarter
and for the elapsed portion of the year ended with the last day of such
quarter,
all of 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 (unconsolidated) figures with respect to any acquisitions
consummated during such quarter, 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 (x) the
Borrower on a consolidated and consolidating (unconsolidated) basis with its
Subsidiaries, and (y) the Borrower Group on a combined basis, in each case as
at the end of such quarter and the results of operations for such quarter, and
for the elapsed portion of the year ended with the last day of such quarter,
subject only to normal year-end and audit adjustments and the absence of
footnotes.
SECTION 6.2 ANNUAL FINANCIAL STATEMENTS AND INFORMATION
Within ninety (90) days after the end of each fiscal year of the
Borrower:
(a) a copy of the audited consolidated and consolidating
(unconsolidated) balance sheets of the Borrower and its Subsidiaries as of the
end of such fiscal year and for the previous fiscal year and the related
audited consolidated and consolidating (unconsolidated) statements of
operations for such fiscal year and for the previous fiscal year, the related
audited consolidated and consolidating (unconsolidated) statements of cash flow
and stockholders' equity for such fiscal year and for the previous fiscal year,
which shall be accompanied by an opinion of Ernst & Young or such other
independent auditor acceptable to the Agent, certified 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
(unconsolidated) basis with its Subsidiaries as at the end of such fiscal year;
and
(b) for the Borrower Group on a combined basis, a balance sheet as of
the end of such fiscal year and for the previous fiscal year and the related
statement of operations for such fiscal year and for the previous fiscal year,
the related statements of cash flow and stockholders' equity for such fiscal
year and for the previous fiscal year, which may be prepared on an unaudited
basis, but must 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 Group as at the end of
such fiscal year and the results of operations for such fiscal year, subject
only to normal year-end and audit adjustments and the absence of footnotes.
SECTION 6.3 PERFORMANCE CERTIFICATES
At the time the financial statements are furnished pursuant to Section
6.1 and Section 6.2 , a certificate of the president or chief financial officer
of the Borrower as to its financial performance, in substantially the form of
Exhibit F hereto:
<PAGE> 52
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(a) setting forth as and at the end of such quarter 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 2.6 (d)
hereof, and (ii) whether or not the Borrower was in compliance with the
requirements of Section 7.8 , Section 7.9 , Section 7.10 , Section 7.11 ,
Section 7.12 , Section 7.13 and Section 7.14 hereof; and
(b) stating that no Default has occurred as at the end of such quarter
or fiscal 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 material reports, if
any, submitted to the Borrower by the Borrower's independent auditors regarding
the Borrower, including, without limitation, any management report prepared in
connection with the annual audit referred to in Section 6.2 hereof.
(b) Promptly upon receipt thereof, copies of any material adverse
notice or report regarding any License from any Governmental Entity.
(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, as
the Agent or any Bank may reasonably request.
(d) Promptly upon request but not more frequently than 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) Within sixty (60) days after each fiscal year end, the annual
budget for the Borrower and its Subsidiaries, including forecasts of the income
statement and a cash flow statement for such fiscal year, on a quarter by
quarter basis.
(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 Ontario
Securities Commission or any other securities commission or stock exchange.
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:
(a) the commencement of all material proceedings and investigations by
or before any Governmental Entity particular to the Borrower and/or any of its
Subsidiaries and all actions and
<PAGE> 53
- 49 -
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, or any of their respective
properties, assets or businesses or any License;
(b) 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;
(c) any material amendment or change to the financial projections or
annual budget provided to the Banks by the Borrower;
(d) 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 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; and
(e) 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 ERISA
Affiliates 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, to the extent any of the foregoing would have, individually
or in the aggregate, a Materially Adverse Effect.
SECTION 6.6 ENVIRONMENTAL REPORTING
Promptly, and in any event within fifteen (15) days of becoming aware
of its existence, notify the Agent in writing of any notice or other state of
affairs (providing details of any actions taken by the Borrower in response)
which could reasonably be expected to give rise to: (i) Environmental
Liabilities and Costs of $500,000 or more; or (ii) any violation of
Environmental Laws involving the possible imposition of a fine of $500,000 or
more or the shutting down of any facility forming part of the Business for a
period in excess of 24 hours; and (iii) any facts or circumstances which could
reasonably be expected to give rise to (x) Environmental Liabilities and Costs
of $500,000 or more, or (y) any violation of Environmental Laws involving the
possible imposition of a fine of $500,000 or more or the shutting down of any
facility forming part of the Assets for a period in excess of 24 hours.
<PAGE> 54
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ARTICLE 7
NEGATIVE COVENANTS
So long as any of the Obligations is outstanding and unpaid or the
Banks have any Commitment 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 its 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(c) below);
(b) Indebtedness secured by Permitted Liens;
(c) obligations under Interest Rate Hedge Agreements having a notional
principal amount of not more than fifty percent (50%) of the Accommodations in
the aggregate outstanding at any time;
(d) Indebtedness of the Borrower or any of its wholly-owned
Subsidiaries to any other wholly-owned Subsidiary of the Borrower so long as
the corresponding debt instruments are pledged to the Agent as security for the
Obligations;
(e) Indebtedness of any of wholly-owned Subsidiaries of the Borrower
to the Borrower so long as the corresponding debt instruments are pledged to
the Agent as security for the Obligations;
(f) Capitalized Lease Obligations in an aggregate amount not to exceed
$500,000 at any time outstanding; and
(g) Indebtedness of the Borrower to PageNet Canada so long as (i) the
Indebtedness is not secured by any Lien, (ii) the corresponding debt
instruments are assigned to the Agent as security for the PageNet Canada
Obligations, and (iii) any such Indebtedness is fully postponed to the
Obligations. In this regard, prior to incurring any such Indebtedness, the
Agent shall receive a specific assignment of receivables from PageNet Canada,
which will include a postponement from PageNet Canada, together with any
additional documentation and opinions required by the Agent, all in form and
substance satisfactory to the Agent, in its sole discretion.
SECTION 7.2 LIMITATION ON LIENS
The Borrower shall not, and shall not permit any of its 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.
<PAGE> 55
- 51 -
SECTION 7.3 AMENDMENT AND WAIVER
The Borrower shall not, and shall not permit any of its Subsidiaries
to, enter into any amendment of, or agree to or accept or consent to any waiver
of any of the provisions of 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 effect on the Agent or any Bank or any of their
rights or claims under any of the Loan Documents).
SECTION 7.4 LIQUIDATION, MERGER, OR DISPOSITION OF ASSETS.
(a) DISPOSITION OF ASSETS. The Borrower shall not, and shall not
permit any of its Subsidiaries to, at any time sell, exchange, lease, abandon,
or otherwise dispose of any Assets (other than Assets disposed of in the
ordinary course of business) without the prior written consent of all the
Banks.
(b) LIQUIDATION OR MERGER. The Borrower shall not, and shall not
permit any of its 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 Subsidiaries, provided the Borrower is the surviving corporation,
or (ii) a merger between or among two or more Subsidiaries of the Borrower, or
(iii) in connection with an acquisition permitted hereunder effected by a
merger in which the Borrower or, in a merger in which the Borrower is not a
party, a Subsidiary of the Borrower is the surviving corporation.
SECTION 7.5 LIMITATION ON GUARANTIES
The Borrower shall not, and shall not permit any of its 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, (b) obligations under agreements of the Borrower
or any of its 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 its Subsidiaries, or (c)
Guaranties of Indebtedness incurred as permitted pursuant to Section 7.1
hereof.
SECTION 7.6 INVESTMENTS AND ACQUISITIONS
The Borrower shall not, and shall not permit any of its Subsidiaries
to, directly or indirectly, (a) 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 (i) assets or property in
the ordinary course of business or (ii) Permitted Investments; or (b) except
with the consent of the Majority Banks, make any acquisition.
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
<PAGE> 56
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no Default hereunder then exists or would be caused thereby the Borrower may
make (a) distributions to Paging Network International, Inc., Paging Network
International Inc., N.V., PNCHI or Madison Venture Corporation so long as the
Leverage Ratio is below 4.00 to 1 (both before and after giving effect to such
distribution), and (b) payments of principal of any Indebtedness referred to in
Section 7.1(g) hereof.
SECTION 7.8 LEVERAGE RATIO
Commencing January 1, 2001, the Borrower shall not permit the
Leverage Ratio to exceed the ratios set forth below during the periods
indicated:
<TABLE>
<CAPTION>
PERIOD RATIO
----------------------------------------- ------
<S> <C>
January 1, 2001 through June 30, 2001 6.00:1
July 1, 2001 through September 30, 2001 5.00:1
October 1, 2001 through December 31, 2001 4.50:1
January 1, 2002 through March 31, 2002 4.00:1
April 1, 2002 and thereafter 3.50:1
</TABLE>
SECTION 7.9 ANNUALIZED OPERATING CASH FLOW TO INTEREST EXPENSE.
Commencing April 1, 2000, the Borrower shall not permit the
ratio of Annualized Operating Cash Flow to Interest Expense for the Borrower
Group on a combined basis to be less than the ratios set forth below for the
periods indicated:
<TABLE>
<CAPTION>
PERIOD RATIO
----------------------------------------- ------
<S> <C>
April 1, 2000 through June 30, 2001 1.00:1
July 1, 2001 through June 30, 2002 1.25:1
July 1, 2002 and thereafter 1.50:1
</TABLE>
Solely for purposes of calculating the ratio referred to in
this Section 7.9 , Interest Expense shall not include, as of any date, interest
expense relating to that portion of the Commitment that is not the
Uncollateralized Portion of the Commitment.
SECTION 7.10 TOTAL DEBT PER SUBSCRIBER.
The Borrower shall not at any time permit the Total Debt for
the Borrower Group on a combined basis divided by Total Subscribers to be
greater than or equal to $150.00.
<PAGE> 57
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SECTION 7.11 CAPITAL EXPENDITURES.
The Borrower shall not permit the aggregate Capital
Expenditures for the Borrower Group on a combined basis to exceed the following
for the fiscal years indicated:
<TABLE>
<CAPTION>
PERIOD TOTAL CAPITAL EXPENDITURES
------------------------------------- --------------------------
<S> <C>
At December 31, 1999 $15,000,000.00
At December 31, 2000 $15,000,000.00
At December 31, 2001 $15,000,000.00
At December 31, 2002 and thereafter $10,000,000.00
</TABLE>
No amount of unused Total Capital Expenditure availability
may be carried forward from 1998 to 1999 or subsequent fiscal years. Commencing
in 1999, to the extent not used in any fiscal year, an amount equal to the
lesser of (a) the unused Total Capital Expenditure availability (exclusive of
any carry forwards from prior periods) for such fiscal year, and (b) 15% of the
Total Capital Expenditure availability shown above (exclusive of any carry
forwards from prior periods) for such fiscal year, may be carried forward, in
whole or in part, to subsequent fiscal years until fully utilized.
SECTION 7.12 MINIMUM REVENUE TEST.
Commencing March 31, 1999 and continuing for each fiscal
quarter through the fiscal quarter ending December 31, 2001, the Borrower shall
not permit the aggregate Gross Revenue for the Borrower Group on a combined
basis to be less than the following for the fiscal quarters indicated:
<TABLE>
<CAPTION>
QUARTER ENDING MINIMUM REVENUE
-------------- ---------------
<S> <C>
03/31/99 $5,000,000
06/30/99 $5,000,000
09/30/99 $5,750,000
12/31/99 $6,250,000
03/31/00 $7,000,000
06/30/00 $7,000,000
09/30/00 $7,000,000
12/31/00 $7,000,000
03/31/01 $9,000,000
06/30/01 $9,000,000
09/30/01 $9,000,000
12/31/01 $9,000,000
</TABLE>
<PAGE> 58
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SECTION 7.13 MINIMUM UNITS IN SERVICE.
Commencing June 30, 1999 and continuing for each fiscal
quarter through the fiscal quarter ending December 31, 2001, the Borrower shall
not permit the minimum number of Units in Service to be less than the following
for the fiscal quarters indicated:
<TABLE>
<CAPTION>
MINIMUM UNITS
QUARTER ENDING IN SERVICE
-------------- ----------
<S> <C>
06/30/99 245,000
09/30/99 260,000
12/31/99 260,000
03/31/00 275,000
06/30/00 275,000
09/30/00 300,000
12/31/00 300,000
03/31/01 350,000
06/30/01 350,000
09/30/01 400,000
12/31/01 400,000
</TABLE>
SECTION 7.14 MINIMUM OPERATING CASH FLOW TEST
Commencing September 30, 1999 and continuing for each fiscal
quarter through the fiscal quarter ending December 31, 2001, the Borrower shall
not permit the aggregate Operating Cash Flow for the Borrower Group on a
combined basis to be less than the following for the fiscal quarters indicated:
<TABLE>
<CAPTION>
QUARTER ENDING MINIMUM OPERATING CASH FLOW
-------------- ---------------------------
<S> <C>
09/30/99 $ 250,000
12/31/99 $ 575,000
03/31/00 $ 975,000
06/30/00 $ 975,000
09/30/00 $ 975,000
12/31/00 $ 975,000
03/31/01 $1,200,000
06/30/01 $1,200,000
09/30/01 $1,200,000
12/31/01 $1,200,000
</TABLE>
SECTION 7.15 AFFILIATE TRANSACTIONS.
Except for those agreements described in Schedule 4 hereto, the
Borrower shall not, and shall not permit any of its 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, 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.
<PAGE> 59
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SECTION 7.16 REAL ESTATE
Neither the Borrower nor any of its Subsidiaries shall purchase any
Real Estate or enter into any sale/leaseback transaction.
SECTION 7.17 ERISA LIABILITIES
The Borrower shall not, and shall cause each of its ERISA Affiliates
not to enter into any Multiemployer Plan.
ARTICLE 8
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 Applicable Law or pursuant to any judgment or order
of any court or any order, rule or regulation of any Person:
(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;
(b) The Borrower shall default in the payment of: (i) any interest
under any of the Loan Documents or fees or other amounts payable to the Banks
and the 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 Loan Documents when due;
(c) The Borrower shall default in the performance or observance of any
agreement or covenant contained in Section 5.2 or Section 5.10 or in Article 6
or Article 7 hereof; provided however, that on any date on which the aggregate
of Accommodations outstanding hereunder is less than the aggregate amount of
the Equivalent Canadian Dollar Amount of Permitted Collateral held by the Agent
pursuant to the Deposit Agreement and the Letter of Credit, the failure to
comply with Section 7.12 , Section 7.13 or Section 7.14 hereof shall not
constitute a default hereunder until any such failure has continued for a
period of two (2) consecutive complete calendar quarters;
(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 or there shall occur any default in
the performance or observance of any agreement or covenant contained in any of
the Loan Documents (other than this Agreement or as otherwise provided in
Section 8.1 of this Agreement) by the Borrower, any of its Subsidiaries, or any
other obligor thereunder, and such default shall not be cured within a period
of thirty (30) days from the date on which the Borrower becomes aware of or
receives notice of such default;
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(e) The Borrower or any of its Subsidiaries shall: (i) become
insolvent or generally not pay its debts as such debts become due; (ii) admit
in writing its inability to pay its debts generally or shall make a general
assignment for the benefit of creditors; (iii) file a notice of intention to
file a proposal under any Applicable Law relating to bankruptcy, insolvency or
reorganization or relief of debtors; (iv) have instituted against it any
proceeding, which proceeding continues undismissed or unstayed for a period of
sixty (60) consecutive days or any of the actions sought in such proceeding
(including the entry of an order for relief against it or the appointment of a
receiver, trustee, custodian or other similar official for it or for any
substantial part of its Assets) shall occur, or institute any proceeding
seeking: (A) to adjudicate it a bankrupt or insolvent; (B) any liquidation,
winding-up, reorganization, arrangement, adjustment, protection, relief or
composition of it or its debts under any Applicable Law relating to bankruptcy,
insolvency or reorganization or relief of debtors; or (C) the entry of an order
for relief or the appointment of a receiver, trustee or other similar official
for it or for any substantial part of its Assets; or (v) take any corporate
action to authorize any of the foregoing actions;
(f) A notice is sent to or received by the Borrower or any of its
Subsidiaries from any creditor with respect to the intention of such creditor
to enforce security on: (i) any of the Collateral; or (ii) any Assets of the
Borrower or any of its Subsidiaries (other than the Collateral) unless such
notice is being contested in good faith by appropriate legal proceedings and
such notice does not involve any immediate danger of the sale, forfeiture or
loss of any of the Assets of the Borrower or any of its Subsidiaries (other
than the Collateral) that are the subject of such notice;
(g) A judgment or order for the payment of money 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, commenced and not stayed, after the expiration of any
such stay, such judgment, warrant or process shall not have been paid or
discharged or removed to bond;
(h) There shall be at any time any "accumulated funding deficiency,"
as defined in ERISA or in Section 412 of the Code, with respect to any Plan
maintained by the Borrower or any ERISA Affiliate, or to which the Borrower 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
Employee Pension Plan; or PBGC shall institute proceedings to terminate any
Employee Pension Plan; or the Borrower or any ERISA Affiliate shall incur any
liability to PBGC in connection with the termination of any Employee Pension
Plan; or any Plan or trust created under any Plan of the Borrower 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 the
Borrower or any Subsidiary to any tax or penalty on "prohibited transactions"
imposed by Section 502 of ERISA or Section 4975 of the Code;
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(i) There shall occur (i) any default which entitles the holders to
accelerate the maturity thereof under any document, instrument or agreement
relating to any Indebtedness of any member of the Borrower Group having an
aggregate principal amount exceeding $1,000,000; or (ii) any default which
entitles the holders to terminate any Interest Rate Hedge Agreement having a
notional principal amount of $1,000,000 or more;
(j) One or more Licenses shall be terminated or revoked, substantially
adversely modified or no longer available to the Borrower such that the
Borrower and its Subsidiaries are no longer able to operate the related
wireless messaging 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 such that the Borrower and its Subsidiaries are no longer
able to operate the related wireless messaging system or portions thereof and
retain the revenue received therefrom, if any, and, in either case, there shall
be a loss of revenue of the Borrower or any of its Subsidiaries as a direct or
indirect result thereof which loss of revenues could reasonably be expected to
have a Materially Adverse Effect;
(k) 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;
(l) Subject only to Permitted Liens, any Security Document shall for
any reason (other than as a result of the action or inaction of the Agent or
any Bank), fail or cease 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;
(m) Any Change Event shall occur or exist; or
(n) There shall occur any default by the Borrower or any Subsidiary of
the Borrower under or a cancellation of, in any case without contemporaneous
replacement, any Transponder Lease Agreement, the Network and Equipment
Agreement or the Sales and Distribution Agreement which default is not cured
within any applicable cure period and which default would be reasonably likely
to have a Materially Adverse Effect.
SECTION 8.2 REMEDIES.
(a) If an Event of Default specified in Section 8.1 hereof (other than
an Event of Default under Section 8.1(e) hereof) shall have occurred and shall
be continuing, the Agent, at the request of the Majority Banks subject to
Section 9.8(a) hereof, shall (i) terminate the Commitment, and/or (ii) declare
the principal of and interest on the Accommodations and all other amounts owed
to the Banks and the Agent under this Agreement and any other Loan Documents to
be forthwith due and payable without presentment, demand, protest or other
notice of any kind, all of which are hereby expressly waived, anything in this
Agreement or any other
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Loan Document to the contrary notwithstanding, and the Commitment shall
thereupon forthwith terminate, and/or (iii) the security constituted by the
Security Documents and any other security now or hereafter held by the Agent
shall become and be enforceable.
(b) Upon the occurrence and continuance of an Event of Default
specified in Section 8.1(e) hereof, all principal, interest and other amounts
due hereunder and under the Loan Documents, and all other Obligations, shall
thereupon and concurrently therewith become due and payable and the Commitment
shall forthwith terminate and the principal amount of the Accommodations
outstanding hereunder shall bear interest at the Default Rate, all without any
action by the 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 Obligations, as provided in subsection
(a) or (b) of this Section 8.2, the 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) Upon acceleration of the Obligations, as provided in subsection
(a) or (b) of this Section 8.2, the 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 its Subsidiaries, and the Borrower, for itself and
on behalf of its 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 Agent
on behalf of the Banks, in connection therewith.
(e) The rights and remedies of the Agent and the Banks hereunder shall
be cumulative, and not exclusive.
ARTICLE 9
THE AGENT
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 pro
rata portion of the Accommodations irrevocably to appoint and authorize, the
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 Agent nor any of its directors, officers,
employees, agents or counsel, shall be liable to the Banks 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 wilful misconduct as determined
by a final, non-appealable judicial order of a court of competent jurisdiction.
SECTION 9.2 INTEREST HOLDERS
The Agent may treat each Bank, or the Person designated in the last
notice filed with the Agent, as the holder of all of the interests of such Bank
in its pro rata portion of the
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Accommodations until written notice of transfer, signed by such Bank (or the
Person designated in the last notice filed with the Agent) and by the Person
designated in such written notice of transfer, in form and substance
satisfactory to the Agent, shall have been filed with the Agent.
SECTION 9.3 CONSULTATION WITH COUNSEL
The Agent may consult with legal counsel selected by it and shall not
be liable to the Banks for any action taken or suffered by it in good faith in
consultation with such counsel and in reasonable reliance on such
consultations.
SECTION 9.4 DOCUMENTS
The Agent shall be under no duty to examine, inquire into, or pass
upon the validity, effectiveness or genuineness of this Agreement, any other
Loan Document, or any instrument, document or communication furnished pursuant
hereto or in connection herewith, and the 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 AGENT AND AFFILIATES
With respect to the Commitment and the Accommodations, the Bank which
is the Agent shall have the same rights and powers hereunder as any other Bank
and the Agent and Affiliates of the 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 Agent and without any
obligation to account therefor.
SECTION 9.6 RESPONSIBILITY OF THE AGENT
The duties and obligations of the Agent under this Agreement are only
those expressly set forth in this Agreement. The 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 Agent shall not be liable hereunder for any action taken or
omitted to be taken except for its own gross negligence or wilful misconduct as
determined by a final, non-appealable judicial order of a court of competent
jurisdiction. The 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 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 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.
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SECTION 9.8 ACTION BY THE AGENT.
(a) The Agent shall be entitled to use its discretion with 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 or any
other Loan Document, unless the Agent shall have been instructed by the
Majority Banks (or, where expressly required, all the Banks) to exercise or
refrain from exercising such rights or to take or refrain from taking such
action; provided that the 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 Agent
shall incur no liability to the Banks 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 wilful
misconduct as determined by a final, non-appealable judicial order of a court
of competent jurisdiction.
(b) The Agent shall not be liable to the Banks or to any Bank or the
Borrower or any of its 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 Agent shall not be obligated to take any action which is
contrary to Applicable Law or which would in the Agent's reasonable opinion
subject the Agent to liability.
SECTION 9.9 NOTICE OF DEFAULT OR EVENT OF DEFAULT
In the event that the Agent or any Bank shall acquire actual
knowledge, or shall have been notified, of any Default or Event of Default, the
Agent or such Bank shall promptly notify the Banks and the Agent, as applicable
(provided failure to give such notice shall not result in any liability on the
part of such Bank or the Agent), and the 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 Agent shall not be subject to
any liability by reason of its acting pursuant to any such request. If the
Majority Banks (or, where expressly required, all the Banks) shall fail to
request the 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 Agent or any Bank, the Agent may, but shall not be required
to, take such action and assert such rights (other than rights under Sections
8.2(a) or 11.12 of this Agreement) as it deems in its discretion to be
advisable for the protection of the Banks, except that, if the Majority Banks
have instructed the Agent not to take such action or assert such right, in no
event shall the Agent act contrary to such instructions.
SECTION 9.10 RESPONSIBILITY DISCLAIMED
The Agent shall not be under any liability or responsibility
whatsoever as 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 or any of the other Loan
Documents;
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(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 any other Loan Document, or (ii) the Borrower, 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 Loan Document, or any information
provided pursuant to this Agreement, or any other Loan Document, or for the
validity, effectiveness, enforceability or sufficiency of this Agreement or any
other Loan Document; or
(d) To any Person for any act or omission other than that arising from
gross negligence or wilful misconduct of the 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 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
Agent in any way relating to or arising out of this Agreement or any other Loan
Document or any action taken or omitted by the Agent under this Agreement or
any other Loan Document, except that no Bank shall be liable to the Agent for
any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses, or disbursements resulting from the
gross negligence or wilful misconduct of the Agent as determined by a final,
non-appealable judicial order of a court of competent jurisdiction.
SECTION 9.12 CREDIT DECISION
Each Bank represents and warrants to each other and to the Agent that:
(a) In making its decision to enter into this Agreement and to make
its pro rata portion of the Accommodations 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 Agent or information provided by the Agent (other than
information provided to the Agent by the Borrower and forwarded by the Agent to
the Banks); and
(b) So long as any portion of the Accommodations remains outstanding
or such Bank has an obligation to make its pro rata 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 AGENT
Subject to the appointment and acceptance of a successor Agent as
provided below, the Agent may resign at any time by giving fifteen (15) days
prior written notice thereof to the
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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, and prior to
the occurrence of a Default with the consent of the Borrower not to be
unreasonably withheld, shall have the right to appoint a successor Agent. If no
successor Agent shall have been so appointed by the Majority Banks and shall
have accepted such appointment within thirty (30) days after the retiring Agent
gave notice of resignation or the Majority Banks' removal of the retiring
Agent, then the retiring Agent may, on behalf of the Banks, appoint a successor
Agent which shall be any Person organized under the laws of Canada which has
combined capital and reserves in excess of $250,000,000. Upon the acceptance of
any appointment as Agent hereunder by a successor Agent, such successor Agent
shall thereupon succeed to and become vested with all the rights, powers,
privileges, duties and obligations of the retiring Agent and the retiring Agent
shall be discharged from its duties and obligations hereunder and under the
other Loan Documents. After any retiring Agent's resignation or removal
hereunder as 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 Agent.
SECTION 9.14 DELEGATION OF DUTIES
The 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 rely upon advice of counsel concerning all matters pertaining to
such duties.
SECTION 9.15 DETERMINATION BY AGENT CONCLUSIVE AND BINDING
Any determination to be made by the Agent on behalf of or with the
approval of the Banks or the Majority Banks under this Agreement shall be made
by the Agent in good faith and, if so made, shall be binding on the Banks,
absent manifest error.
ARTICLE 10
COMPUTATIONS AND INDEMNITIES
SECTION 10.1 INDEMNITY FOR CHANGE IN CIRCUMSTANCES
If with respect to the Banks: (a) any change in Applicable Law, or any
change in the interpretation or application by any Governmental Entity of any
Applicable Law occurring or becoming effective after the date hereof; or (b)
any compliance by the Agent or any of the Banks with any direction, request or
requirement (whether or not having the force of Applicable Law) of any
Governmental Entity made or becoming effective after the date hereof, in either
case shall have the effect of causing Loss to the Agent or any of the Banks by:
(a) increasing the cost to the Agent or any of the Banks of performing
its obligations under this Agreement or in respect of any Advance or Bankers'
Acceptance (including the costs of maintaining any capital, reserve or special
deposit requirements in connection therewith);
(b) requiring the Agent or any of the Banks to maintain or allocate
any capital or additional capital or affecting its allocation of capital in
respect of its obligations under this Agreement or in respect of any Advances
or Bankers' Acceptances;
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(c) reducing any amount payable to the Agent or any of the Banks under
this Agreement or in respect of any Advance or Bankers' Acceptance by any
amount it deems material (other than a reduction resulting from a higher rate
of income tax or other special tax relating to the Agent's or any Bank's income
in general); or
(d) causing the Agent or any of the Banks to make any payment or to
forgo any return on, or calculated by reference to, any amount received or
receivable by the Agent or any of the Banks under this Agreement in respect of
any Advance or Bankers' Acceptance;
then the Agent may give notice to the Borrower specifying the nature of the
event giving rise to such Loss and the Borrower shall, within thirty (30) days
or, if earlier, on the Maturity Date, pay such amounts as the Agent may specify
to be necessary to compensate the Agent or any of the Banks for any such Loss
incurred after the date of such notice. The Agent or any Bank claiming
compensation under this Section 10.1 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 Person may use any reasonable averaging and attribution methods
which are consistently applied to similarly situated borrowers of such Person.
SECTION 10.2 INDEMNITY FOR TRANSACTIONAL AND ENVIRONMENTAL LIABILITY
(a) The Borrower hereby agrees to indemnify, exonerate and hold the
Agent and each Bank and each of their respective officers, directors,
employees, agents and other representatives (collectively, the "Indemnified
Parties") free and harmless from and against any and all claims, demands,
actions, causes of action, suits, losses, costs (including all documentary,
recording, filing, mortgage or stamp taxes or duties), charges, liabilities and
damages, and expenses in connection therewith (irrespective of whether such
Indemnified Party is a party to the action for which such indemnification
hereunder is sought), and including reasonable legal fees and disbursements
(collectively, in this Section 10.2(a), the "Indemnified Liabilities") paid,
incurred or suffered by, or asserted against, the Indemnified Parties or any of
them or, with respect to, or as a direct or indirect result of: (i) any
transaction financed or to be financed in whole or in part, directly or
indirectly, with the proceeds of any Accommodation obtained hereunder; or (ii)
the execution, delivery, performance or enforcement of this Agreement or any
other Loan Document, except for such Indemnified Liabilities that a court of
competent jurisdiction determines by a final non-appealable order are on
account of the relevant Indemnified Party's gross negligence or wilful
misconduct.
(b) Without limiting the generality of the indemnity set out in
Section 10.2(a) hereof, the Borrower hereby further agrees to indemnify,
exonerate and hold the Indemnified Parties free and harmless from and against
any and all claims, demands, actions, causes of action, suits, losses, costs,
charges, liabilities and damages, and expenses in connection therewith,
including reasonable legal fees and disbursements (collectively, in this
Section 10.2(b), the "Indemnified Liabilities") paid, incurred or suffered by,
or asserted against, the Indemnified Parties or any of them for, with respect
to, or as a direct or indirect result of any Environmental Liabilities and
Costs.
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(c) All obligations provided for in this Section 10.2 shall not be
reduced or impaired by any investigation made by or on behalf of the Agent or
any of the Banks.
(d) The Borrower hereby agrees that, for the purposes of effectively
allocating the risk of loss placed on the Borrower by this Section 10.2, the
Agent and each of the Banks shall be deemed to be acting as the agent or
trustee on behalf of and for the benefit of its officers, directors and agents.
(e) If, for any reason, the obligations of the Borrower pursuant to
this Section 10.2 shall be unenforceable, the Borrower agrees to make the
maximum contribution to the payment and satisfaction of each obligation that is
permissible under Applicable Law, except to the extent that a court of
competent jurisdiction determines by a final non-appealable order such
obligations arose on account of the gross negligence or wilful misconduct of
any Indemnified Party.
SECTION 10.3 TAXATION ON PAYMENTS
The Borrower hereby agrees:
(a) that any and all payments made by the Borrower under or pursuant
to any of the Loan Documents shall be made without set-off or counterclaim and
free and clear of, and without deduction for, any and all present or future
Taxes, levies, imposts, deductions, charges, fees, duties or withholding or
other charges of any nature imposed by any taxing authority, and all
liabilities with respect thereto, imposed by any jurisdiction as a consequence
or result of any action taken by the Borrower, including the making of any
payment under or pursuant to any of the Loan Documents, excluding, in the case
of the Agent, or any Bank, taxes imposed on its income or capital taxes or
receipts and franchise taxes. If the Borrower shall be required by Law to
deduct any Taxes from or in respect of any sum payable to the Agent or any Bank
hereunder or pursuant to any of the Loan Documents, the sum payable to the
Agent or such Bank, as the case may be, shall be increased as may be necessary
so that after making all required deductions (including deductions applicable
to additional sums payable under this Section 10.3) the Agent or such Bank, as
the case may be, receives an amount equal to the sum it would have received had
no such deductions been made. If a Tax credit is received by the Agent or such
Bank for any Taxes deducted or withheld by the Borrower in accordance with this
Section 10.3(a) and in respect of which additional amounts have been paid by
the Borrower under this Section 10.3(a), then, to the extent such Tax credit is
reasonably identified by the Agent or such Bank as being related to the
additional amounts paid by the Borrower under this Section 10.3(a) and has been
received and utilized by the Agent or such Bank, the Agent or such Bank shall
pay to the Borrower an amount equal to such Tax credit; provided that such
amount shall not exceed the additional amounts paid by the Borrower to the
Agent or such Bank under this Section 10.3(a); and
(b) to indemnify and hold harmless the Agent and each Bank for the
full amount of Taxes (excluding, in the case of the Agent, or any Bank, taxes
imposed on its income or capital taxes or receipts and franchise taxes) and for
any incremental Taxes due to the Borrower's failure to remit to the Agent and
the Banks the required receipts or other required documentary evidence of
payment of such Taxes or due to the Borrower's failure to pay any Taxes
(excluding, in the case of the Agent, or any Bank, taxes imposed on its income
or capital taxes or receipts and franchise
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taxes) when due to the appropriate taxing authority (including any Taxes
imposed by any taxing authority on amounts payable under this Section 10.3)
paid by the Agent or any Bank and any liability (including penalties, interest
and expenses) arising therefrom or with respect thereto, whether or not such
Taxes were correctly or legally assessed. The Agent or any Bank shall promptly
notify the Borrower of such payment and, if such payment was made pursuant to
an incorrect or illegal assessment, shall reasonably co-operate with the
Borrower, at the expense of the Borrower, in any dispute of such assessment.
The Agent or 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. Payment pursuant to this indemnification shall be made within
thirty (30) days from the date the Agent or such Bank makes written demand
therefor or if earlier, on the Maturity Date.
SECTION 10.4 JUDGMENT CURRENCY
If, for the purposes of obtaining judgment in any court, it is
necessary to convert any sum due, or owing hereunder or under any other Loan
Document to the Agent or any one or more of the Banks in any currency (the
"Original Currency") into another currency (the "Other Currency"), the parties
hereto agree, to the fullest extent that they may effectively do so, that the
rate of exchange used shall be that at which in accordance with normal banking
procedures the Agent could purchase the Original Currency with the Other
Currency on the Business Day preceding that on which final judgment is granted.
The obligations of the Borrower in respect of any sum due in the
Original Currency from it to the Agent or any one or more of the Banks under
any of the Loan Documents shall, notwithstanding any judgement in any Other
Currency, be discharged only to the extent that on the Business Day following
receipt by the Agent of any sum adjudged to be so due or owing in such Other
Currency, the Agent may in accordance with normal banking procedures purchase
the Original Currency with such Other Currency. If the amount of the Original
Currency so purchased is less than the sum originally due or owing to the Agent
or any one or more of the Banks in the Original Currency, the Borrower shall,
as a separate obligation and notwithstanding any such judgement, indemnify the
Agent or such Bank against such Loss, and if the amount of the Original
Currency so purchased exceeds the sum originally due or owing to the Agent or
such Bank in the Original Currency, the Agent or such Bank shall remit such
excess to the Borrower.
SECTION 10.5 CLAIMS FOR INCREASED COSTS AND TAXES
Prior to the occurrence of a Default in the event that any Bank shall
have notified the Borrower that it is entitled to claim compensation pursuant
to Section 10.01 or 10.3 hereof (each such Bank being an "Affected Bank"), the
Borrower may designate a replacement Canadian chartered bank reasonably
acceptable to the Agent (a "Replacement Bank") to assume the Commitment and the
obligations of any such Affected Bank hereunder, and to purchase the
outstanding Accommodations of such Affected Bank and such Affected Bank's
rights hereunder and with respect thereto, without recourse upon, or warranty
by, or expense to,
<PAGE> 70
- 66 -
such Affected Bank, for a purchase price equal to the outstanding principal
amount of the Accommodations of such Affected Bank plus all interest accrued
and unpaid thereon and all other amounts owing to such Affected Bank hereunder
and upon such assumption and purchase by the Replacement Bank, such Replacement
Bank shall be deemed to be a "Bank" for purposes of this Agreement and such
Affected Bank shall cease to be a "Bank" for purposes of this Agreement and
shall no longer have any obligations or rights hereunder (other than any
obligations or rights which according to this Agreement shall survive the
termination of the Commitment).
ARTICLE 11
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
personally delivered to an officer or other responsible employee of the
addressee or sent by facsimile, charges prepaid, at or to the applicable
addresses or facsimile numbers, as the case may be, set forth in this Section
11.1. Any communication which is personally delivered as aforesaid shall be
deemed to have been validly and effectively given on the date of such delivery
if such date is a Business Day and such delivery was made during normal
business hours of the recipient; otherwise, it shall be deemed to have been
validly and effectively given on the Business Day next following such date of
delivery. Any communication which is transmitted by facsimile as aforesaid
shall be deemed to have been validly and effectively given on the date of
transmission if such date is a Business Day and such transmission was made
during normal business hours of the recipient; otherwise, it shall be deemed to
have been validly and effectively given on the Business Day next following such
date of transmission. All notices and other communications under this Agreement
shall be given to the parties hereto at the following addresses:
(i) If to the Borrower, to it at:
Madison Telecommunications Holdings, Inc.
c/o Madison Venture Corporation
1970 Alberta Street
Vancouver, British Columbia
V5Y 3X4
Attn: Mr. Bruce W. Aunger
Telecopy No.: (604) 879-1483
<PAGE> 71
- 67 -
with a copy to:
Blake, Cassels & Graydon
1700-1030 West George Street
Vancouver, BC V6E2Y3
Attn: Anne M. Stewart, Q.C.
Telecopy No.: (604) 631-3309
Paging Network of Canada Inc.
c/o Paging Network, Inc.
14911 Quorum Drive
Dallas, Texas 75240
Attn: Chief Financial Officer
Telecopy No.: (972) 801-8973
Paging Network of Canada, Inc.
3250 Bloor Street, West
Suite 700
Toronto, Ontario
Canada M8X 2X9
Attn: President
Telecopy No.: (416) 207-4321
John Schmidt, Esq.
Mayer, Brown & Platt
190 South La Salle Street
Chicago, Illinois 60603-3441
Telecopy No.: (312) 701-7711
Blake Cassels & Graydon
Commerce Court West
2800 - 199 Bay Street
Toronto, Ontario
M5L 1A9
Attn: Mr. Rob Granatstein
Telecopy No.: (416) 863-2653
<PAGE> 72
- 68 -
(ii) If to the Agent, to it at:
Toronto Dominion Bank Tower, 9th Floor
Toronto Dominion Centre
Toronto, Ontario M5K 1A2
Attn: Manager, Agency
Telecopy No.: (416) 982-5535
(iii) If to the Banks, to them at the addresses set forth
beside their names on the signature pages hereof.
(b) Each Accommodation Notice and Repayment Notice shall be
irrevocable and binding on the Borrower. With respect to any Accommodation
Notice or Repayment Notice, the Agent may act upon the basis of telephonic
notice believed by it reasonably and in good faith to be from the Borrower
prior to receipt of an Accommodation Notice or Repayment Notice. In the event
of conflict between the Agent's record of the applicable terms of any
Accommodation or repayment and such Accommodation Notice or Repayment Notice,
as the case may be, the Agent's record shall prevail.
(c) Any party hereto may change the address to which notices shall be
directed under this Section 11.1 by giving five (5) days' prior written notice
of such change to the other parties.
SECTION 11.2 EXPENSES
The Borrower will promptly pay, or reimburse:
(a) all reasonable and customary out-of-pocket expenses of the 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
reasonable fees and disbursements of counsel for the Agent;
(b) all reasonable and customary out-of-pocket expenses of the 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 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 counsel for the
Agent; and
(c) all reasonable and customary 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 Obligations, which in each case shall include reasonable
fees and out-of-pocket expenses of counsel for the Agent and the Banks.
<PAGE> 73
- 69 -
SECTION 11.3 WAIVERS
The rights and remedies of the 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 Agent, the Majority Banks, or the Banks, or any of them, in exercising any
right, shall operate as a waiver of such right. The Agent and the Banks
expressly reserve the right to require strict compliance with the terms of this
Agreement and the other Loan Documents in connection with any future funding of
an Accommodation Notice. In the event the Banks decide to fund an Accommodation
Notice at a time when the Borrower is not in strict compliance with the terms
of this Agreement and the other Loan Documents, such decision by the Banks
shall not be deemed to constitute an undertaking by the Banks to fund any
further Accommodation Notice or preclude the Banks or the Agent from exercising
any rights available under the Loan Documents or at law or equity. Any waiver
or indulgence granted by the 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 RIGHT TO COMBINE AND SET-OFF
Upon the occurrence and during the continuance of any Event of
Default, the Agent or any one or more of the Banks is hereby authorized at any
time and from time to time, to the fullest extent permitted by Applicable Law,
to combine, set-off and apply any and all deposits (general or special, time or
demand, provisional or final) at any time held and other indebtedness at any
time owing by the Agent or such Bank to or for the credit or the account of the
Borrower with or against any and all of the Obligations of the Borrower now or
hereafter existing under any of the Loan Documents, irrespective of whether or
not the Agent shall have made any demand under any of the Loan Documents and
although such Obligations may be unmatured. The Agent or such Bank agrees
promptly to notify the Borrower after any such combination or set-off and
application made by the Agent or such Bank provided that the failure to give
such notice shall not affect the validity of such combination or set-off and
application. The rights of the Agent and the Banks under this Section are in
addition to other rights and remedies (including, without limitation, other
rights of combination and set-off) which the Agent or the Banks may have.
SECTION 11.5 ASSIGNMENT.
(a) The Borrower may not assign or transfer any of its rights or
obligations hereunder or under any other Loan Document without the prior
written consent of each Bank and the Agent.
(b) Any Bank may, without the consent of the Borrower grant
participations in all or any part of the Commitment to one or more Persons
(each a "Participant"). Any Bank may, with prior written notice to the Agent,
and, prior to the occurrence and continuance of a Default, with the consent of
the Borrower (which consent is not to be unreasonably withheld or delayed),
assign all or any part of its respective interest in the Commitment to one or
more Persons;
<PAGE> 74
- 70 -
provided that prior to the occurrence and continuance of a Default (i) such
Person is a resident of Canada for the purpose of the Income Tax Act (Canada)
or (ii) such assignment will not cause the Borrower to incur any increased
costs pursuant to Section 10.3 hereof (each an "Assignee").
(c) The Agent or any Bank may deliver a copy of any financial
statement or any other information relating to the prospects, business, Assets
or condition (financial or otherwise) of the Borrower or any of its
Subsidiaries which may be furnished to it under this Agreement or otherwise to
any Participant or Assignee or any prospective Participant or Assignee;
provided that each such delivery is made on the understanding that the
information contained therein is confidential in nature. For greater certainty,
the Agent shall have no obligation to communicate or have any involvement with
any Participant.
(d) Without limitation of its obligations hereunder, the Borrower
shall, at its sole cost and expense, give such certificates, acknowledgements
and other further assurances in respect of this Agreement and the Commitment as
any Bank may reasonably require in connection with any participation or
assignment pursuant to this Section.
(e) Except in the case of an Assignee which has delivered an
Assignment and Assumption Agreement substantially in the form of Exhibit G
hereto, prior to the occurrence of a Default or an Event of Default, a Bank
granting a participation or making an assignment shall act on behalf of all of
its Participants and Assignees in all dealings with the Borrower in respect
hereof.
(f) Any Bank shall deliver to the Agent an Assignment and Assumption
Agreement substantially in the form of Exhibit G hereto by which any Assignee
of such Bank assumes the obligations and agrees to be bound by all the terms
and conditions of this Agreement, all as if such Assignee had been an original
party hereto. Any such assignment and assumption shall become effective upon
the consent of the Borrower if and to the extent required pursuant to Section
11.5(b) and the receipt by the Agent of an Assignment and Assumption Agreement
executed by the assigning Bank and the Assignee. In no event shall such
assignment and assumption become effective until such date as specified in the
Assignment and Assumption Agreement (the "Effective Date") which shall be no
earlier than five Business Days following receipt of an Assignment and
Assumption Agreement by, and the payment of an administrative fee of $5,000 to,
the Agent by the assigning Bank. On the Effective Date, the assigning Bank and
the Borrower shall be mutually released from their respective obligations to
each other hereunder to the extent of such assignment and assumption and from
thenceforth have no liability or obligations to each other to such extent,
except in respect of matters which shall have arisen prior to such assignment
and assumption.
SECTION 11.6 ACCOUNTING PRINCIPLES
All accounting terms used herein without definition shall be used as
defined under GAAP. GAAP shall be applied on a basis consistent with prior
fiscal years of the Borrower.
<PAGE> 75
- 71 -
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 all Loan Documents shall be governed by and
interpreted in accordance with the Applicable Laws of the Province of Ontario
and the Applicable Laws of Canada applicable therein which apply to contracts
made and to be performed entirely in Ontario; provided that any Loan Document
stated to be governed by and interpreted in accordance with the laws of any
other jurisdiction shall be governed by and interpreted in accordance with the
laws of such jurisdiction. The parties hereby irrevocably attorn and submit to
the non-exclusive jurisdiction of the courts of Ontario with respect to any
matter arising under or related to this Agreement or any Loan Document;
provided that, with respect to any other Loan Document stated to be governed by
the laws of any other jurisdiction, the parties agree to attorn and submit to
the non-exclusive jurisdiction of the courts of such 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
If any provision of this Agreement or any Loan Document is, or
becomes, illegal, invalid or unenforceable, such provision shall be severed
from this Agreement or such Loan Document and be ineffective to the extent of
such illegality, invalidity or unenforceability. The remaining provisions
hereof or thereof shall be unaffected by such provision and shall continue to
be valid and enforceable.
SECTION 11.10 INTEREST.
(a) For purposes of the Interest Act (Canada): (i) whenever any
interest or fee under this Agreement is calculated using a rate based on a year
of 360 or 365 days, such rate determined pursuant to such calculation, when
expressed as an annual rate, is equivalent to (x) the applicable rate based on
a year of 360 or 365 days, (y) multiplied by the actual number of days in the
calendar year in which the period for which such interest or fee is calculated
ends, and (z) divided by 360 or 365; (ii) the principle of deemed reinvestment
of interest shall not apply to any interest calculation under this Agreement;
and (iii) the rates of interest stipulated in this Agreement are intended to be
nominal rates and not effective rates or yields.
(b) Notwithstanding any provision to the contrary contained in this
Agreement, in no event shall the aggregate "interest" (as defined in Section
347 of the Criminal Code, Revised Statutes of Canada, 1985, c.46 as the same
may be amended, replaced or re-enacted from time to time) payable under this
Agreement exceed the maximum amount of interest on the "Credit advanced" (as
defined in that section) under this Agreement lawfully permitted under that
section and, if any payment, collection or demand pursuant to this Agreement in
respect of "interest" (as defined in that section) is determined to be contrary
to the provisions of that
<PAGE> 76
- 72 -
section, such payment, collection or demand shall be deemed to have been made
by mutual mistake of the Borrower and the Agent and the Banks and the amount of
such payment or collection shall be refunded to the Borrower. For purposes of
this Agreement, the effective annual rate of interest shall be determined in
accordance with generally accepted actuarial practices and principles over the
term of the Credit Facilities are outstanding on the basis of annual
compounding of the lawfully permitted rate of interest and, in the event of
dispute, a certificate of a Fellow of the Canadian Institute of Actuaries
appointed by the Agent will be conclusive for the purposes of such
determination absent manifest error.
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 other Loan Document nor any term hereof
or thereof 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 Agent
and, in the case of an amendment, by the Borrower, except that in the event of
(a) any increase in the amount of the Commitment, (b) any delay or extension in
the terms of repayment of the Accommodations or any mandatory reductions in the
Commitment provided in Sections 2.6 or 2.8 hereof or amend the provisions of
this Agreement dealing with the types of Accommodations available hereunder,
(c) any reduction in principal, interest or fees due hereunder (without a
corresponding payment by the Borrower in the amount of such reduction) or
postponement or subordination of the payment thereof without a corresponding
payment by the Borrower, (d) any release of any portion of the Collateral for
the Accommodations, 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 or amendment of any Security Document except in connection with
a merger, sale or other disposition otherwise permitted hereunder (in which
case, such release or amendment shall require no further approval by the
Banks), or (g) any amendment of this Section 11.12, or the definitions of
Majority Banks or Permitted Collateral, 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 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 Agent solely to any of the Banks may be made only by an
instrument in writing signed by the Agent and by each of the Banks.
SECTION 11.13 NON-MERGER
Except as otherwise expressly provided in this Agreement, the
covenants, representations and warranties of the parties contained in this
Agreement and the other Loan Documents shall not merge on and shall survive the
Restatement Date and the making of any Accommodation, and notwithstanding such
closing or Accommodation, or any investigation made by or on behalf
<PAGE> 77
- 73 -
of any party, shall continue in full force and effect. Neither the Restatement
Date nor the making of any Accommodation shall prejudice any right of one party
against any other party in respect of anything done or omitted hereunder or
under any of the other Loan Documents or in respect of any right to damages or
other remedies.
SECTION 11.14 OTHER RELATIONSHIPS
No relationship created hereunder or under any other Loan Document
shall in any way affect the ability of the 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 Agent and each of the Banks notwithstanding any
investigation heretofore or hereafter made by them, and (ii) shall survive the
execution and delivery of this Agreement and shall continue in full force and
effect so long as any Obligation is outstanding and unpaid. Any right to
indemnification hereunder, including, without limitation, rights pursuant to
Sections 2.13, 10.1, 10.2, 10.3 and 11.2 hereof, shall survive the termination
of this Agreement and the payment and performance of all Obligations for a
period of three (3) years thereafter.
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 Agent and each of the Banks hereunder are
several, not joint.
SECTION 11.19 CONFIDENTIALITY
The Banks and the Agent shall hold all non-public, proprietary or
confidential information (which has been identified as such by the Borrower)
obtained pursuant to the requirements of this Agreement in accordance with
their customary procedures for handling confidential information of this nature
and in accordance with safe and sound banking practices; provided, however, the
Banks and the Agent may make disclosure of any such information to such of
their examiners, Affiliates, outside auditors, counsel, consultants, appraisers
and other professional advisors as may be reasonably necessary in connection
with this Agreement or as
<PAGE> 78
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reasonably required by any proposed participant or assignee or as required or
requested by any Governmental Entity or representative thereof or in connection
with the enforcement hereof or of any other Loan Document or related document
or pursuant to legal process or with respect to any litigation between or among
the Borrower and any of the Banks or the Agent; provided, however, that, as a
condition to receipt of any such information, each such Affiliate, auditor,
counsel, consultant, appraiser, professional advisor, proposed participant or
assignee shall agree in writing to treat all such information as confidential;
and provided, further, that prior to any such disclosure to any unrelated
entity outside the ordinary course of business or pursuant to legal process,
the disclosing Bank or the Agent shall give notice of such disclosure to the
Borrower and co-operate with the Borrower in any efforts to limit or restrict
such disclosure. In no event shall any Bank be obligated or required to return
any materials furnished to it by the Borrower. The foregoing provisions shall
not apply to a Bank or the Agent with respect to information that (i) is or
becomes generally available to the public (other than through such Bank or the
Agent), (ii) is already in the possession of such Bank or the Agent on a
nonconfidential basis, or (iii) comes into the possession of such Bank or the
Agent in a manner not known to such Bank or the Agent to involve a breach of a
duty of confidentiality owing to the Borrower.
SECTION 11.20 TIME OF THE ESSENCE
Time shall be of the essence of this Agreement.
SECTION 11.21 THIRD PARTY BENEFICIARIES
Each party hereto intends that this Agreement shall not benefit or
create any right or cause of action in or on behalf of any Person, other than
the parties hereto and the Persons contemplated in Section 10.2 hereof, and no
Person, other than the parties hereto and the Persons contemplated in Section
10.2 hereof, shall be entitled to rely on the provisions hereof in any action,
suit, proceeding, hearing or other forum.
SECTION 11.22 ENUREMENT
This Agreement shall enure to the benefit of and be binding upon the
parties hereto and any Person becoming a party to this Agreement through the
procedure set out in Section 11.5 hereof. This Agreement shall be binding upon
any assigns and enure to the benefit of any permitted assigns.
<PAGE> 79
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement or
caused it to be executed under seal by their duly authorized officers, all as
of the day and year first above written.
BORROWER: MADISON TELECOMMUNICATIONS HOLDINGS
INC., a Canada corporation
By: GARRY R. FITZGERALD
-----------------------------
Its: Director
--------------------
AGENT: THE TORONTO-DOMINION BANK
By: MICHAEL A. FREEMAN
-----------------------------
Its: Manager-Agency,
Syndicated Loans
--------------------
BANKS:
ADDRESS: THE TORONTO-DOMINION BANK
9th Floor By: JOHN DAVID
Toronto Dominion Bank Tower -----------------------------
Toronto Dominion Centre Its: Manager
Toronto, Ontario M5K 1A2 --------------------
By: KEN KLASSEN
-----------------------------
Its: Assistant Vice President
------------------------
ADDRESS: CANADIAN IMPERIAL BANK OF COMMERCE
161 Bay Street By: ANDREW WALLER
8th Floor -----------------------------
Toronto, Ontario Executive Director
M5J 2S8
By: MAURO SPAGNOLO
-----------------------------
Director
ADDRESS: NATIONAL BANK OF CANADA
150 York Street By: WILLIAM CROSSLAND
Suite 200 -----------------------------
Toronto, Ontario Its: Senior Manager
M5H 3S5 --------------------
By: WILLIAM WASSON
-----------------------------
Its: Manager
--------------------
<PAGE> 80
EXHIBIT A
COMMITMENT RATIOS
<TABLE>
<S> <C>
The Toronto-Dominion Bank 44.9541284%
Canadian Imperial Bank of Commerce 32.1100917%
National Bank of Canada 22.9357799%
</TABLE>
<PAGE> 81
EXHIBIT B
ACCOMMODATION NOTICE
Madison Telecommunications Holdings Inc., a Canada corporation (the
"Borrower"), acting by and through _______, the duly elected and qualified
_______________ of the Borrower, in connection with that certain Amended and
Restated Loan Agreement (as in effect on the date hereof, the "Loan
Agreement"), dated as of August 5, 1999, among the various financial
institutions which are party thereto (the "Banks"), The Toronto-Dominion Bank,
as Agent (the "Agent"), and the Borrower, hereby certifies to the Agent and the
Banks that:
1. The Borrower hereby requests an Advance as follows:
(a) Date
--------------------------
(b) Aggregate Amount of Accommodation: $
--------------------------
(c) Type and Amount of Accommodation:
<TABLE>
<CAPTION>
(i) COLLATERALIZED PRIME RATE AMOUNT CONVERTED FROM
ADVANCE (IF APPLICABLE)
- ---------------------------------------- -------------------------------------- --------------------------------------
<S> <C> <C>
$
- ---------------------------------------- -------------------------------------- --------------------------------------
- ---------------------------------------- -------------------------------------- --------------------------------------
</TABLE>
<TABLE>
<CAPTION>
(ii) UNCOLLATERALIZED PRIME AMOUNT CONVERTED FROM
RATE ADVANCE (IF APPLICABLE)
- ---------------------------------------- -------------------------------------- --------------------------------------
<S> <C> <C>
$
- ---------------------------------------- -------------------------------------- --------------------------------------
- ---------------------------------------- -------------------------------------- --------------------------------------
</TABLE>
<TABLE>
<CAPTION>
(iii) COLLATERALIZED BANKERS' ACCEPTANCES
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
CONVERTED FROM
FACE AMOUNT TERM IN MONTHS ROLLOVER AMOUNT (IF APPLICABLE)
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
<S> <C> <C> <C>
Cdn. $ Cdn. $
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
</TABLE>
<PAGE> 82
- 2 -
<TABLE>
<CAPTION>
(iv) UNCOLLATERALIZED BANKERS'ACCEPTANCES
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
CONVERTED FROM
FACE AMOUNT TERM IN MONTHS ROLLOVER AMOUNT (IF APPLICABLE)
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
<S> <C> <C> <C>
Cdn. $ Cdn. $
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
</TABLE>
2. All of the representations and warranties of the Borrower made under
the Loan Agreement (including, without limitation, all representations and
warranties with respect to the Borrower's Subsidiaries) and the other Loan
Documents, which, pursuant to Section 4.2 of the Loan Agreement or otherwise,
are made on the date hereof, are as of the date hereof, and will be as of the
date of such Advance, true and correct in all material respects both before and
after giving effect to the application of the proceeds of the Advance in
connection with which this Accommodation Notice is given, and after giving
effect to any updates to information provided to the Banks in accordance with
the terms of the representations and warranties.
3. There does not exist, as of this date, and there will not exist after
giving effect to the Advance requested in this Accommodation Notice,any Default
under the Loan Agreement.
4. All Necessary Authorizations have been obtained or made, are in full
force and effect and are not subject to any pending or threatened reversal or
cancellation.
5. There has occurred no event having, or which could be reasonably
expected to have, a Materially Adverse Effect since December 31, 1998.
6. All other conditions precedent to the Advance requested hereby set
forth in Section 3.2 of the Loan Agreement have been satisfied.
Capitalized terms used in this Accommodation Notice and not otherwise
defined are used as defined in the Loan Agreement.
IN WITNESS WHEREOF, the Borrower, acting through an Authorized
Signatory, has signed this Accommodation Notice, as of the __ day of ____.
MADISON TELECOMMUNICATIONS
HOLDINGS INC., a Canada corporation
By:
--------------------------------------
Its:
----------------------------------
Schedule 1 - Wiring Instructions
Schedule 2 - Compliance Calculations
<PAGE> 83
EXHIBIT C
FORM OF REPAYMENT NOTICE
[DATE]
TO: THE TORONTO-DOMINION BANK, AS BOOKRUNNER, ARRANGER AND ADMINISTRATION
AGENT
1. This Repayment Notice is delivered to you pursuant to Section o of
that certain amended and restated loan agreement made as of August 5, 1999
among the undersigned as Borrower, the Banks named therein, and you, as amended
or amended and restated from time to time (the "Loan Agreement"). All defined
terms set forth in this Repayment Notice shall have the respective meanings set
forth in the Loan Agreement.
2. We hereby give notice of a repayment as follows:
a) Date of Repayment: ________________________________________________
b) Accommodation Type: _______________________________________________
c) Principal Amount: _________________________________________________
d) Manner of Repayment (if applicable): ______________________________
3. We hereby give notice of a cancellation or permanent reduction as
follows:
(a) Date of Reduction: _______________________________________________
(b) Principal Amount: ________________________________________________
DATED this _________ day of ____________________, 19[YEAR].
MADISON TELECOMMUNICATIONS HOLDINGS INC.
By:
--------------------------------------
Its:
--------------------------------------
<PAGE> 84
EXHIBIT D
FORM OF BORROWER'S LOAN CERTIFICATE
The undersigned, who is the [ ] of Madison Telecommunications Holdings Inc., a
Canada corporation (the "Borrower"), does hereby certify on behalf of the
Borrower that he is the duly elected and qualified [ ] of the Borrower and an
Authorized Signatory of the Borrower.
In connection with the making of certain Accommodations to the
Borrower by the Banks under that certain Amended and Restated Loan Agreement of
even date herewith (the "Loan Agreement") by and among the Borrower, The
Toronto-Dominion Bank, as bookrunner, arranger and administration agent (the
"Agent), and The Toronto-Dominion Bank, Canadian Imperial Bank of Commerce,
National Bank of Canada and such other financial institutions as become "Banks"
thereunder (collectively, the "Banks"), the undersigned hereby further
certifies to the Agent and the Banks on behalf of the Borrower that:
1. Attached hereto as Exhibit A is a true, complete, and correct copy of
the Certificate and Articles of Incorporation of the Borrower, certified by
appropriate government officials of the jurisdiction of incorporation of the
Borrower, as in full force and effect on the date hereof.
2. Attached hereto as Exhibit B is a true, complete and correct copy of
the By-Laws of the Borrower, together with all amendments thereto, as in full
force and effect on the date hereof.
3. Attached hereto as Exhibit C is a true, complete and correct copy of
the resolutions of the Board of Directors of the Borrower authorizing the
execution of the Loan Agreement, each other Loan Document to which the Borrower
is a party, and the creation and assumption, by the Borrower, of the
Obligations.
4. Attached hereto as Exhibit D are true, complete, and correct copies of
certificates of good standing for the Borrower from appropriate government
officials of the jurisdiction of incorporation of the Borrower and for each
other jurisdiction in which the Borrower carries on business. The Borrower has,
from the dates of such certificates to the date hereof, remained in good
standing under the laws of such jurisdiction.
5. Attached hereto as Exhibit E are true, complete and correct copies of
any shareholders' agreements or voting trust agreements in effect with respect
to the Capital Stock of the Borrower.
6. The following persons are the Authorized signatories of the Borrower,
each of such persons having been duly elected, and set forth opposite their
respective names below are their respective genuine signatures:
<TABLE>
<CAPTION>
NAME SIGNATURE DATE
- ----------------------------------- ------------------------------------ ------------------------------------
<S> <C> <C>
- ----------------------------------- ------------------------------------ ------------------------------------
- ----------------------------------- ------------------------------------ ------------------------------------
- ----------------------------------- ------------------------------------ ------------------------------------
</TABLE>
<PAGE> 85
Capitalized terms used herein and not otherwise defined are used as
defined in the Loan Agreement.
IN WITNESS WHEREOF, I have signed this Certificate on the [ ] day of
1999.
MADISON TELECOMMUNICATIONS
HOLDINGS INC., a Canada corporation
By:
------------------------------
Name:
Title:
EXHIBITS:
Exhibit A - Certificate and Articles of Incorporation
Exhibit B - By-Laws
Exhibit C - Authorizing Resolutions
Exhibit D - Certificates of Good Standing
Exhibit E - Shareholder's Agreements or Voting Trust Agreements
<PAGE> 86
EXHIBIT E
FORM OF SUBSIDIARY LOAN CERTIFICATE
The undersigned, who is the [ ] of [ ], a [corporation] [partnership)
(the "Subsidiary"), does hereby certify on behalf of the Subsidiary that he is
the duly elected and qualified [ ] of [[ ], the [ ] of] the Subsidiary and an
Authorized Signatory.
In connection with the making of certain Accommodations to Madison
Telecommunications Holdings Inc., a Canada corporation (the "Borrower") by the
Banks under that certain Amended and Restated Loan Agreement of even date
herewith (the "Loan Agreement") by and among the Borrower, The Toronto-Dominion
Bank, as bookrunner, arranger and administration agent (the "Agent), and The
Toronto-Dominion Bank, Canadian Imperial Bank of Commerce, National Bank of
Canada and such other financial institutions as become "Banks" thereunder
(collectively, the "Banks"), the undersigned hereby further certifies to the
Agent and the Banks on behalf of the Subsidiary that:
1. Attached hereto as Exhibit A is a true, complete, and correct copy of
the Certificate and Articles of Incorporation of the Subsidiary, certified by
appropriate government officials of the jurisdiction of incorporation of the
Subsidiary, as in full force and effect on the date hereof.
2. Attached hereto as Exhibit B is a true, complete and correct copy of
the By-Laws of the Subsidiary, together with all amendments thereto, as in full
force and effect on the date hereof.
3. Attached hereto as Exhibit C is a true, complete and correct copy of
the resolutions of the Board of Directors of the Subsidiary authorizing the
execution of each Loan Document to which the Subsidiary is a party.
4. Attached hereto as Exhibit D are true, complete, and correct copies of
certificates of good standing for the Subsidiary from appropriate government
officials of the jurisdiction of incorporation of the Subsidiary and for each
other jurisdiction in which the Subsidiary carries on business. The Subsidiary
has, from the dates of such certificates to the date hereof, remained in good
standing under the laws of such jurisdiction.
5. Attached hereto as Exhibit E are true, complete and correct copies of
any shareholders, agreements or voting trust agreements in effect with respect
to the Capital Stock of the Subsidiary.
6. The following persons are the Authorized Signatories of the Subsidiary,
each of such persons having been duly elected, and set forth opposite their
respective names below are their respective genuine signatures:
<TABLE>
<CAPTION>
NAME SIGNATURE DATE
- ----------------------------------- ------------------------------------ ------------------------------------
<S> <C> <C>
- ----------------------------------- ------------------------------------ ------------------------------------
- ----------------------------------- ------------------------------------ ------------------------------------
- ----------------------------------- ------------------------------------ ------------------------------------
</TABLE>
<PAGE> 87
-2-
Capitalized terms used herein and not otherwise defined are used as
defined in the Loan Agreement.
IN WITNESS WHEREOF, I have signed this Certificate this [ ] day of [ ],
1999.
[[ ], a Canada corporation
By:
-----------------------------------
Name:
Title:
EXHIBITS:
Exhibit A - Certificate and Articles of Incorporation/Partnership
Exhibit B - By-Laws/Partnership Agreement
Exhibit C - Authorizing Resolutions
Exhibit D - Certificates of Good Standing
Exhibit E - Shareholder's Agreements or Voting Trust Agreements
<PAGE> 88
EXHIBIT F
FORM OF PERFORMANCE CERTIFICATE
The undersigned, who is the [ ] of Madison Telecommunications Holdings
Inc., a Canada corporation (the "Borrower"), does hereby certify on behalf of
the Borrower that he is the duly elected and qualified [ ] of the Borrower and
an Authorized Signatory of the Borrower.
1. [WITH RESPECT TO QUARTERLY STATEMENTS: The accompanying unaudited
financial statements of the Borrower on a consolidated and consolidating
(unconsolidated) basis with its Subsidiaries as of [DATE] and for the quarterly
accounting period ended [DATE] are complete and correct and present fairly, in
accordance with GAAP, the financial condition of the Borrower on a consolidated
and consolidating (unconsolidated) basis with its Subsidiaries, and the results
of operations for such quarter, and for the elapsed portion of the fiscal year
ended with the last day of such quarter, in each case on the basis presented
and subject only to normal year-end adjustments and the absence of footnotes.]
[WITH RESPECT TO FISCAL YEAR STATEMENTS: The accompanying audited
financial statements of the Borrower on a consolidated and consolidating
(unconsolidated) basis with its Subsidiaries as of [DATE] and for the fiscal
year ended [DATE], and for the previous fiscal year, are complete and correct
and present fairly, in accordance with GAAP, the financial condition of the
Borrower on a consolidated and consolidating (unconsolidated) basis with its
Subsidiaries as of the end of such period, and the results of operations for
such fiscal year, and for the previous fiscal year.]
2. Attached hereto are arithmetical calculations required to establish
(i)any adjustment to the Applicable Margins, as provided for in Section 2.6(d)
of the Loan Agreement, and (ii) whether or not the Borrower was in compliance
with the requirements of the following Sections of the Loan Agreement:
(a) Section 7.8 - Leverage Ratio
(b) Section 7.9 - Annualized Operating Cash Flow to Interest Expense
(c) Section 7.10 - Total Debt Per Subscriber
(d) Section 7.11 - Capital Expenditures
(e) Section 7.12 - Minimum Revenue Test
(f) Section 7.13 - Minimum Units in Service (including a breakdown by
each category set forth in the definition of Units in service)
(g) Section 7.14 - Minimum Operating Cash Flow
3. Based on an examination sufficient to enable me to make an informed
statement, no Default exists at the end of such quarter or fiscal year, as
applicable.
<PAGE> 89
-2-
4. All capitalized terms not otherwise defined herein are used herein as
defined in the Loan Agreement.
Date:
-------------------------- -----------------------------------
[OFFICER]
[TITLE]
<PAGE> 90
EXHIBIT G
FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT
This Assignment and Assumption Agreement is made and entered into as
[ ] of [ ] by and between [ ] (the "Assignor"), and [ ] (the "Assignee").
Recitals
A. Madison Telecommunications Holdings Inc., a Canada corporation (the
"Borrower"), the Assignor (together with any other Person which becomes a
`Bank' under the Loan Agreement, as such term is hereinafter defined, the
"Banks") and The Toronto Dominion Bank, as bookrunner, arranger and
administration agent (the "Agent"), are parties to a certain Amended and
Restated Loan Agreement dated as of August 5, 1999 (the "Loan Agreement").
Pursuant to the Loan Agreement, the Banks have agreed to make Accommodations to
the Borrower pro rata in an aggregate original principal amount of the
Commitment, as such amount may be reduced from time to time pursuant to the
Loan Agreement. The Assignor's pro rata portion of the Commitment is the amount
specified in Item 1 of Schedule 1 hereto (the "Assignor's Commitment"). The
aggregate principal amount of the outstanding Accommodations made by the
Assignor to the Borrower under the Commitment pursuant to the Assignor's
Commitment is specified in Item 2 of Schedule 1'hereto (the "Assignor's
Accommodations"). All capitalized terms not otherwise defined herein are used
herein as defined in the Loan Agreement.
B. The Assignor wishes to sell and assign to the Assignee, and the
Assignee wishes to purchase and assume from the Assignor, (i) the portion of the
Assignor's Commitment specified in Item 3 of Schedule 1 hereto ("Assigned
Commitment"), and (ii) the portion of the Assignor's Accommodations under the
Commitment specified in Item 4 of Schedule 1 hereto (the "Assigned
Accommodations").
The parties agree as follows:
1. Assignment. Subject to the terms and conditions set forth herein, the
Assignor hereby sells and assigns to the Assignee, and the Assignee purchases
and assumes from the Assignor, without recourse and except as provided in
Section 3(a) hereof, without representation or warranty to the Assignor, on the
date set forth above (the "Assignment Date") (a) all right, title, and interest
of the Assignor to the Assigned Accommodations and (b) all obligations of the
Assignor under the Loan Agreement with respect to the Assigned Commitment. As
full consideration for the sale of the Assigned Accommodations and the Assigned
Commitment, the Assignee shall pay to the Assignor on the Assignment Date such
amount as shall have been agreed to between the Assignor and the Assignee (the
"Purchase Price").
2. Notice. Prior written notice of the assignment made herein has been
provided to the Agent.
3. Representations and Warranties. Each of the Assignor and the Assignee
represents and warrants to the other, to the Agent and to the Borrower (a) that
(i) it has full power and legal right to execute and deliver this Agreement and
to perform the provisions of this Agreement; (ii) the execution, delivery, and
performance of this Agreement have been authorized by all necessary action,
corporate or otherwise, on its part and do not violate any provisions of its
<PAGE> 91
-2-
charter or by-laws or any contractual obligations or requirement of law binding
on it; and (iii) this Agreement constitutes its legal, valid and binding
obligation, enforceable against it in accordance with its terms subject, as to
enforcement of remedies, to the following qualifications: (A) 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 (B) 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 Assignee or the Assignor, as
the case may be), and (b) that its purchase of the Assigned Accommodations and
the Assigned Commitment does not constitute a "prohibited transaction" as
defined in Section 4.1(m) of the Loan Agreement.
4. Condition Precedent. The obligations of the Assignor and the Assignee
hereunder shall be subject to the fulfilment of the condition that (a) the
Assignor shall have received payment in full of the Purchase Price and (b) the
Assignor and the Assignee shall have complied with other applicable provisions
of Section 11.5 of the Loan Agreement.
5. Notice of Assignment. The Assignor hereby gives notice of the
assignment and assumption of the Assigned Accommodations and the Assigned
Commitment to the Agent and hereby instructs the Borrower to make payments with
respect to the Assigned Accommodations and the Assigned Commitment directly to
the Agent for the benefit of the Assignee as provided in the Loan Agreement;
provided, however, that the Borrower and the Agent shall be entitled to continue
to deal solely and directly with the Assignor in connection with the interests
so assigned until the Agent shall have received a copy of this Assignment and
Assumption Agreement duly executed by the Assignor, the Assignee, the Agent,
and, if applicable, the Borrower, and shall have received the assignment fee
described in Section 11.5 of the Loan Agreement. From and after the Assignment
Date, the Assignee shall be deemed to be a party to the Loan Agreement and, to
the extent that rights and obligations thereunder shall have been assigned to
Assignee as provided herein, shall have the rights and obligations of a Bank
under the Loan Agreement. After the Assignment Date, and with respect to all
such amounts accrued from the Assignment Date, (a) all interest, principal,
fees, and other amounts that would otherwise be payable to the Assignor in
respect of the Assigned Accommodations and the Assigned Commitment shall be
paid to the Assignee, (b) if the Assignor receives any payment on account of
the Assigned Accommodations or the Assigned Commitment that is payable to the
Assignee, the Assignor shall promptly deliver such payment to the Assignee, and
(c) if the Assignee receives any payment in respect of Obligations of the
Borrower accrued prior to the Assignment Date, then Assignee shall pay over the
same to Assignor.
6. Independent Investigation. The Assignee acknowledges that it is
purchasing the Assigned Accommodations and the Assigned Commitment from the
Assignor without recourse and, except as provided in Section 3(a) hereof,
without representation or warranty. The Assignee further acknowledges that it
has made its own independent investigation and credit evaluation of the Borrower
in connection with its purchase of the Assigned Accommodations and the Assigned
Commitment and has received copies of all Loan Documents that it has requested.
Except for the representations or warranties set forth in Section 3(a), the
Assignee acknowledges that it is not relying on any representation or warranty
of the Assignor, expressed or implied, including without limitation, any
representation or warranty relating to the legality, validity, genuineness,
enforceability, collectibility, interest rate, repayment schedule, or accrual
status of the Assigned
<PAGE> 92
-3-
Accommodations or the Assigned Commitment, the legality, validity, genuineness,
or enforceability of the Loan Agreement, or any other Loan Document referred to
in or delivered pursuant to the Loan Agreement, or the financial condition or
creditworthiness of the Borrower. The Assignor has not acted and will not be
acting as either the representative, agent or trustee of the Assignee with
respect to matters arising out of or relating to the Loan Agreement or this
Agreement. From and after the Assignment Date, the Assignor shall have no
rights or obligations with respect to the Assigned Accommodations or the
Assigned Commitment.
7. Effective Date. This Agreement will be effective on the date that is
the later of:
(i) the date hereof; and
(ii) five Business Days following receipt of an executed copy of this
Agreement by, and the payment of an administrative fee of $5,000
to, the Agent by the Assignor.
8. Method of Payment. All payments to be made by the Assignor or the
Assignee party hereunder shall be in funds available at the place of payment
on the same day and shall be made by wire transfer to the account designated
by the party to receive payment.
9. Integration. This Agreement shall supersede any prior agreement or
understanding between the parties (other than the Loan Agreement or other Loan
Documents) as to the subject matter hereof.
10. Counterparts. This Agreement may be executed in any number of
counterparts,each of which shall be deemed to be an original and shall be
binding upon the parties, their successors and assigns.
11. Governing Law. This Agreement shall be governed by, and construed in
accordance with, the Applicable Laws of the Province of Ontario and the
Applicable Laws of Canada applicable therein which apply to contracts to be
performed entirely in Ontario.
IN WITNESS WHEREOF, the Assignor and Assignee have executed, sealed
and delivered this Agreement as of the date first above written.
[ASSIGNOR]
By:
---------------------------------
Title:
[ASSIGNEE]
By:
---------------------------------
Title:
<PAGE> 93
-4-
The undersigned hereby acknowledge the
assignment made herein.
THE TORONTO-DOMINION BANK,
as Agent
By:
---------------------------------
Title:
MADISON TELECOMMUNICATIONS
HOLDINGS INC., a Canada corporation
By:
---------------------------------
Title:
<PAGE> 94
SCHEDULE 1
TO
ASSIGNMENT AND ASSUMPTION AGREEMENT
RELATING TO
AMENDED AND RESTATED LOAN AGREEMENT AMONG MADISON
TELECOMMUNICATIONS HOLDINGS INC., THE TORONTO-DOMINION
BANK AND SUCH OTHER FINANCIAL INSTITUTIONS AS BECOME "BANKS"
THEREUNDER, AND THE TORONTO-DOMINION BANK, AS AGENT DATED AS OF
AUGUST 5, 1999
<TABLE>
<S> <C>
Item 1. Assignor's Commitment: $[ ]
Item 2. Assignor's Accommodations $[ ]
Item 3. Amount of Assigned Commitment $[ ]
Item 4. Amount of Assigned Accommodations $[ ]
Item 5. Applicable Lending Office of Assignee
and Address for Notices under the Loan
Agreement
</TABLE>
--------------------------------
--------------------------------
--------------------------------
--------------------------------
<PAGE> 95
Notes to Schedule 1
1. Insert the dollar amount of Assignor's Commitment under the Commitment
prior to assignment.
2. Insert the total amount of outstanding Accommodations of Assignor.
3. Insert the dollar amount of the Assignor's Commitment under the
Commitment, including the outstanding Accommodations, being assigned.
4. Insert the total amount of the outstanding Accommodations of Assignor
being assigned to Assignee.
5. Insert the name and address of the applicable lending office of the
Assignee.
<PAGE> 96
SCHEDULE 1
LICENSES
1. Industry Canada letter to Madison Telecommunications Inc. dated
October 26, 1995 re: national paging frequency 929.2875Mhz.
2. Industry Canada letter to Madison Telecommunications Inc. dated
October 27, 1995 re: 50Khz paired channel of 901.525Mhz/940.525Mhz.
<PAGE> 97
SCHEDULE 2
SECURITY DOCUMENTS
1. Debenture of the Borrower
2. Debenture Pledge Agreement of the Borrower
3. Collateral Hypothec of the Borrower
4. General Assignment of Book Debts of the Borrower
5. Securities Pledge Agreement by the Borrower with respect to the Stock
of Madison Telecommunications Inc.
6. Security from the Borrower under Section 427 of the Bank Act
7. Specific Assignment of Receivables by the Borrower
8. Guarantee of Madison Telecommunications Inc.
9. Debenture of Madison Telecommunications Inc.
10. Debenture Pledge Agreement of Madison Telecommunications Inc.
11. Collateral Hypothec of Madison Telecommunications Inc.
12. General Assignment of Book Debts of Madison Telecommunications Inc.
13. Security from Madison Telecommunications Inc. under Section 427 of the
Bank Act
14. Guarantee of Paging Network Canadian Holdings, Inc. (re: securities
pledge)
15. Securities Pledge Agreement by Paging Network Canadian Holdings, Inc.
16. Guaranty of Paging Network Canadian Holdings, Inc. (re: deposit
agreement)
17. Deposit Agreement by Paging Network Canadian Holdings, Inc.
18. Guarantee of Madison Venture Corporation
19. Deposit Agreement by Madison Venture Corporation
20. Securities Pledge Agreement by Madison Venture Corporation
21. Letter of Credit from Madison Venture Corporation
<PAGE> 98
SCHEDULE 3
SUBSIDIARIES
Madison Telecommunications, Inc., a Canada corporation
<PAGE> 99
SCHEDULE 4
AGREEMENTS WITH AFFILIATES
Madison Telecommunications Holdings Inc. Unanimous Shareholders' Agreement
dated as of October 28, 1994, among Madison Venture Corporation, Paging
Network, Inc. and Madison Telecommunications Holdings Inc.
Amendment No. 1 to Unanimous Shareholders' Agreement dated as of October 26,
1995, among Madison Venture Corporation, Paging Network. Canadian Holdings,
Inc., Madison Telecommunications Holdings Inc. and Paging Network, Inc.
Network Co-ordination and Equipment Supply Agreement dated October 28, 1994, by
and between Paging Network, Inc. and Madison Telecommunications Inc.
Amendment No. 1 to Network Co-ordination and Equipment Supply Agreement dated
October 26, 1995, by and between Paging. Network, Inc. and Madison
Telecommunications Inc.
Sales and Distribution Agreement dated October 28, 1994, by and between Madison
Telecommunications Inc. and Paging Network of Canada Inc.
Amendment No. 1 to Sales and Distribution Agreement dated October 26, 1995, by
and between Madison Telecommunications Inc. and Paging Network of Canada Inc.
<PAGE> 100
SCHEDULE 5
YEAR 2000 PLAN
<PAGE> 1
EXHIBIT 12
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(in thousands)
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
---------------------- ----------------------
1998 1999 1998 1999
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Earnings:
Loss before cumulative effect of a change in
accounting principle ............................... $ (15,619) $ (95,311) $(107,991) $(147,069)
Fixed charges, less interest capitalized ............... 43,119 46,203 86,421 90,156
--------- --------- --------- ---------
Earnings ............................................ $ 27,500 $ (49,108) $ (21,570) $ (56,913)
========= ========= ========= =========
Fixed charges:
Interest expense, including interest capitalized ........ $ 40,347 $ 42,120 $ 80,592 $ 82,619
Amortization of deferred financing costs ................ 1,103 1,143 2,215 2,260
Interest portion of rental expense ...................... 6,366 8,433 12,890 16,355
--------- --------- --------- ---------
Fixed charges ....................................... $ 47,816 $ 51,696 $ 95,697 $ 101,234
========= ========= ========= =========
Ratio of earnings to fixed charges ......................... -- -- -- --
========= ========= ========= =========
Deficiency of earnings available to cover
fixed charges ....................................... $ (20,316) $(100,804) $(117,267) $(158,147)
========= ========= ========= =========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> APR-1-1999
<PERIOD-END> JUN-30-1999
<CASH> 11,343
<SECURITIES> 0
<RECEIVABLES> 79,841
<ALLOWANCES> 12,318
<INVENTORY> 10,406
<CURRENT-ASSETS> 102,432
<PP&E> 1,488,508
<DEPRECIATION> (693,722)
<TOTAL-ASSETS> 1,433,266
<CURRENT-LIABILITIES> 231,143
<BONDS> 1,864,142
0
0
<COMMON> 1,040
<OTHER-SE> (675,771)
<TOTAL-LIABILITY-AND-EQUITY> 1,433,266
<SALES> 22,930
<TOTAL-REVENUES> 254,565
<CGS> 10,462
<TOTAL-COSTS> 302,351
<OTHER-EXPENSES> 37,063
<LOSS-PROVISION> 6,624
<INTEREST-EXPENSE> 37,770
<INCOME-PRETAX> (95,311)
<INCOME-TAX> 0
<INCOME-CONTINUING> (95,311)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (95,311)
<EPS-BASIC> (0.92)
<EPS-DILUTED> (0.92)
</TABLE>
